Description
Simavita is part of the exciting and expanding digital healthcare sector and has developed an innovative, wearable platform which is a patented, worldfirst solution for the assessment and management of urinary incontinence.
Digitizing aged care
2014 Annual Report
Contents
1
About Simavita
2
Letter from the CEO
4
Board of Directors and Senior Management
6
Industry overview
9
Simavita’s business and product
14 Sales model and strategy
16 Marketing
22 New product roadmap and strategy
24 Product registration, marketing approvals and standards
25 Intellectual property
29 Financial report
IBC Corporate Information
Unless otherwise noted, all currency amounts contained in this Annual Report are stated in Australian dollars.
About Simavita
Simavita is part of the exciting and expanding digital healthcare sector and
has developed an innovative, wearable platform which is a patented, worldfirst solution for the assessment and management of urinary incontinence.
The Company’s flagship product is the Smart Incontinence Management
(SIM™) platform technology. The first application of SIMTM is a software
enabled instrumented incontinence assessment which provides evidencebased care plans. The first market for SIMTM is the elderly living in long-term
care facilities. This reduces the cost of the care of elderly people while
providing significant clinical benefits.
The SIM™ technology developed and commercialised by Simavita provides a
cost effective solution to the growing global problem of urinary incontinence
assessment and management, the global market for which exceeds
USD 6 billion per annum.
The first application of the Company's SIM™ product
has taken many years of hard work, customer interface,
and more than $40 million of private investor funds
and Australian government grants to develop and
commercialise. Simavita has been recognised for its
aged-care technology innovation and leadership and
has received a number of prestigious industry awards.
Dual listed on both the TSX Venture Exchange in Canada
(TSX-V: SV) and the Australian Securities Exchange
(ASX: SVA), the Company’s first platform application,
for which there are currently no known commerciallyavailable competitors, is protected by a valuable and
expanding portfolio of intellectual property assets.
With its registered office in Vancouver, Canada and its
head office in North Sydney, Australia, the Company
currently employs approximately 30 staff in Australia
together with a small, but growing, team of sales and
marketing professionals in the USA to support the
Company’s exclusive distributor in that market, Medline
Industries, Inc.
Significant milestones achieved by the Company during
the 2014 financial year include:
?? The successful development and commercialisation
of the fourth (Wi-Fi enabled) generation of SIM™.
?? The receipt of further clearances, approvals and
accreditations from all regulatory agencies,
including FDA, CE and TGA.
?? The expansion of sales of SIM™ in the Company’s
local (Australian) market.
?? The appointment of a large and successful
distributor in the US and the commencement of
sales in that market.
?? The expansion of an extensive patent family in all
target markets.
?? The commencement of negotiations with
distributors in both Europe and Canada.
?? The successful dual listing of the Company and the
raising of more than $20 million in new capital.
2014? ANNUAL Report?
1
Letter from the CEO
Dear Shareholders,
I am delighted to report to you as CEO of Simavita Limited
(“Simavita”), following the conclusion of Simavita’s first
financial year as a listed public company. The 2014 financial
year has been an extremely busy and productive one.
Our first product is the Smart Incontinence Management
(“SIM™”) technology. This application is currently marketed
to the aged care sector and is dedicated to providing an
instrumented care planning solution for incontinence sufferers,
particularly elderly people throughout the world.
We have worked hard to build a solid foundation for the
expansion of sales of Simavita’s SIM™ technology. The fourth
generation of the technology, the Wi-Fi enabled SIM™ product,
was completed in early 2014.
Simavita's vision is to ensure that its
technology platform provides a foundation
for the horizontal integration of other digital
applications in the growing market of aged
care monitoring.
The technical development of SIM™ occurred largely in
Australia and we are pleased to report the execution of supply
agreements with a number of Australian aged care providers,
including some leading chains. We anticipate that domestic
sales will continue to grow as we promote the many benefits of
SIM™ through a variety of means, including direct marketing,
attendance at trade shows, the use of key opinion leaders and
peer reviewed research.
Simavita has also executed an important exclusive distribution
agreement with Chicago-based Medline Industries, Inc.
(“Medline”) for the distribution of SIM™ in the United States.
Medline is a Forbes top 100 private company with a turnover
in excess of USD 5 billion. We are pleased to report that sales
of SIM™ have already commenced in the United States and
we anticipate that these will continue to expand through our
distributor, Medline.
There are currently no known commercially available
competing products with similar benefits to SIM™. Simavita
has the “first mover” advantage and part of its core strategy is
focussed on exploiting this important advantage in as many
major markets as possible.
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A showcase site has been established in Copenhagen, Denmark.
This is a collaboration with the Municipality of Copenhagen and
Abena A/S, a global manufacturer of incontinence products.
Simavita has advanced discussions with several other parties
regarding potential distribution agreements for specific
territories in Europe and Canada and we expect further
showcase sites to be established in Sweden and Canada in 2015.
Simavita is also poised to maximise its future in the digital
healthcare space. Our SIM™ technology will provide a platform
that will allow for connectivity, data analysis and integration.
The collection, interpretation and management of health data
forms a major part of our global growth strategy. Software as
an enabler is a growing phenomenon and Simavita’s vision is to
capitalise on the growing opportunities in this sector.
The Company’s technology provides a strategically important
platform to integrate smart monitoring technology and “big
data” collection. Relationships with strong partners who have
established routes to market or a core competency in respect of
expanding the platform application underpins the Company’s
overall strategy.
We are pleased with what has been achieved by Simavita during
2014. Our product is now well validated and protected, and
distribution rights have been granted or are being sought by
well-credentialed parties in a number of large markets. As we
continue to develop improvements to our unique and costeffective product offering, we are confident that the expansion
of Simavita’s global footprint will continue, delivering benefits
for all stakeholders.
Simavita has been successful in attracting a number of key
executives during the year. Tom Howitt, our CFO and Company
Secretary, has had considerable listed public company
and international experience; Paul Won, Global Head of
Manufacturing and Supply Chain, has broad experience in
manufacturing and supply chain, including procurement and
demand planning, customer service, tenders and contracts,
and warehousing and logistics; and Dr. Mehdi Azimi, who will
manage Simavita’s expanding intellectual property portfolio.
The 2014 financial year also included a number of important
achievements in respect of corporate and financing matters.
A successful capital raising of $14.3 million and a dual listing
on the Canadian TSX Venture Exchange and the Australian
Securities Exchange was followed prior to the end of the
financial year by an additional capital raising of $6 million.
Proceeds from Simavita’s various capital raisings have been
used to fund the development of new global markets for
Simavita’s proprietary SIM™ technology, support product
improvements, establish an inventory pipeline and provide
working capital for the expansion of the business.
In what has been an exciting year, I would like to thank
Simavita’s Board and our staff for their dedication and hard
work. I would also like to thank our shareholders for their
patience and loyalty and I look forward to working with you all
as Simavita takes its next major steps forward.
The Company’s vision holds great promise for Simavita and
I believe we have a clear plan to achieve our goals.
Yours sincerely,
Philippa M. Lewis
Chief Executive Officer
2014? ANNUAL Report?
3
Board of Directors and Senior Management
Directors
Ari B. Bergman? (Acting Chairman and Non-Executive Director)
Ari was appointed as a Director of Simavita Holdings Limited in 2007 and, following its acquisition by the
Company, of Simavita in November 2013. He is currently a Non-Executive Director of the Company and
Acting Chairman. Ari worked with his late father, Dr. Fred Bergman, in the early stages of development
of the SIM™ technology.
Ari worked as a commercial lawyer in private practice at one of Australia’s most prestigious law firms;
co-founded Nutech Health, a medical technology distribution business, and currently acts as General
Manager and General Counsel of the Spotlight family office which controls one of Australia’s largest
and most diverse private groups which includes the Spotlight and Anaconda retail chains, and a large
property portfolio, in addition to a variety of other businesses.
Ari is completing a doctorate in law at Monash University and is a member of the Australian Institute of Company Directors.
Philippa M. Lewis? (Chief Executive Officer and Executive Director)
Philippa was appointed as a Director of Simavita Holdings in 2007 and of Simavita in November 2013.
She is the Chief Executive Officer of the Group and an Executive Director of the Company.
Philippa has over 30 years of local and international business experience across multiple industry
sectors including retail, healthcare, construction, international technology transfer, franchising, patent
management, import, distribution and manufacturing. In 2002, Philippa was recognised as one of the
Zurich Business Leaders of the Year.
Prior to joining Simavita, Philippa was the Chief Executive Officer and founder of Sanicare, an Australasian
import and distribution business for textile based and non-woven adult incontinence products. Under her
guidance, Sanicare grew to be a market leader with over $20 million in turnover. In 2005, she sold the Sanicare business to a FTSE-listed
entity, staying on as Chief Executive Officer and Director.
Philippa’s academic qualifications span Business and Law. She is a member of the Australian Institute of Company Directors and the
Institute of Arbitration and Mediation. Philippa has recently joined the Board of the Medical Technology Association of Australia (MTAA).
Damien M. Haakman? (Non-Executive Director)
Damien was appointed as a Director of Simavita Holdings in 2012 and of Simavita in November 2013.
Damien is the Managing Director of a private family office. He manages and invests in a portfolio including
commercial property, property development joint ventures, and mezzanine finance and bridging loans
as well as investments in start-up and pre-listed companies. Damien’s background includes; due diligence
work, forecasting, market assumptions and trends. He has a keen interest in the technology sector
including the impacts of new disruptive technologies and their effects on their market. Damien is
a member of the Australian Institute of Company Directors.
Senior Management
Thomas G. Howitt? (Chief Financial Officer and Company Secretary)
Tom was appointed as a Director of the Company in June 2005. He subsequently resigned as a Director
to assume the role of CFO and Company Secretary in April 2014. He is a Chartered Accountant, member
of the Taxation Institute of Australia and Institute of Chartered Secretaries.
During a career spanning more than 20 years, he has served as CFO (and Company Secretary) for a
number of public companies, listed on the ASX and foreign stock exchanges (NASDAQ, TSX, NZSE). His
experience covers all facets of financial management and control across a variety of industries, including
resources and technology. Tom has played key roles in the successful raising of significant bank debt and
equity capital and the management of complex due diligence programs. He has also worked as a Taxation
Consultant for international accountants Ernst & Young and in the investment banking industry. Tom is an
International Associate of the American Institute of Certified Public Accountants (AICPA), a member of the US Society of Corporate
Secretaries & Governance Professionals and a current member of the Victorian Branch Committee of AusBiotech Ltd.
4
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Senior Management? continued
Peter J. Curran? (Chief Technology Officer)
Peter was appointed as Executive VP of Operations at Simavita Holdings in 2009, responsible for R&D and
Operations. He was appointed Chief Technology Officer in 2014 to ensure close executive focus on R&D
and related IP activities. He has nearly 30 years’ experience in engineering, operations, and commercial
management and has been active in consumer, industrial and defence markets across power,
telecommunications, computer technology, gaming, and medical device products and services. Peter
spent his early working career as an electronics design engineer of industrial power equipment for
Lincoln Electric before moving into senior and principal engineering roles in defence with GEC Marconi
Systems and Stanilite and then into executive management positions in manufacturing and commercial
management within the electronics industry. Peter holds qualifications in electrical engineering, business
administration and has accreditations in business improvement.
Paul Won? (Vice President - Manufacturing and Supply Chain)
Paul was recently appointed as Manufacturing and Supply Chain VP, based in Australia. He has held senior
management positions in manufacturing and supply chain at a number of companies including Baxter
Healthcare, Bard Australia, and Hill-Rom. Paul is responsible for managing the implementation of the
Company's manufacturing and supply chain function and has degrees in electrical engineering and a
masters degree in management.
Veronica E. Travierso-Mitchell? (General Counsel)
Veronica joined Simavita Holdings in 2010 and is responsible for the provision of legal advice on a range of
matters to the Simavita Group. She has over 15 years’ experience in commercial and corporate law gained
both in Sydney, Australia and London, England. Her experience includes general commercial law,
intellectual law and corporate finance and mergers and acquisitions, working with private, public and
listed companies. Veronica is admitted to practice as a solicitor in Australia and England and Wales.
Dr. Mehdi Azimi? (Research Manager - Intellectual Property)
Dr. Mehdi Azimi has a proven track record in leading and managing the development of high technology
products, taking them from product inception to commercialisation. His areas of expertise include
electronics, computing systems, microelectronics, biomicroelectromechanical systems, and medical
devices. He has held senior technical and managerial positions at companies that include NIR Technology
Systems Pty. Ltd. (now Next Instruments), Miva Corporation, Silverbrook Research Pty. Ltd., Geneasys Pty.
Ltd., and Kimiya Pty. Ltd. and he was a faculty member at the University of Tehran. Dr. Azimi has a PhD in
electrical engineering from Auburn University in Alabama, USA.
Dr. Peter H. Aigner? (Vice President - Engineering)
Peter is responsible for the day-to-day research and development engineering activities of the Company.
He has over ten years’ experience in engineering, project management and business development in
Australia and overseas with Invetech and Corbett Robotics. He has primarily been involved with the
development of instrumentation for human diagnostics and life science applications including DNA
analysis. Peter holds qualifications in electrical engineering and holds a Ph.D. in Robotic Engineering.
Dr. Hadi Mashinchi? (Research Project Manager)
Dr. Hadi Mashinchi (PhD, Macquarie University, IEEE member) is an inventor and an expert in data mining.
Hadi has experience in sensor data analysis, statistical analysis, mathematical modelling and
optimisation including the publication of a number of inventions and scientific papers. At Simavita,
he has been involved in research and development activities such as algorithm prototyping and
development, mathematical modelling and also intellectual property related matters.
Hadi has served on the review boards of scientific journals and international conferences. He is currently
serving as member of international review board of International Journal of Energy Optimization and
Engineering (IJEOE) and the program committee member of International Symposium on MapReduce
and Big Data Infrastructure to be held in December 2014 in Sydney, Australia.
2014? ANNUAL Report?
5
Industry overview
THE RAPIDLY EXPANDING DIGITAL
HEALTHCARE SECTOR
"Smart, connected products raise
a new set of strategic choices about
how value is created and captured,
how companies work with traditional
and new partners, and how they
secure competitive advantage as
the new capabilities reshape industry
boundaries. For many firms, smart,
connected products will force the
fundamental question, 'What business
am I in?'"
(M. Porter et.al., Harvard Business Review, November 2014)
Simavita is in the "business" of digitizing aged care.
Wearable technology is a growing technology category that
broadly defines sensor-based devices worn by consumers,
typically providing convenient mobile monitoring for health
and fitness purposes. Digitizing and monitoring the care of the
elderly is an important solution for a sustainable future.
Sensors used in wearable electronic devices are forecast to rise
by a factor of seven from 2013 through 2019, as illustrated in
Figure 1 on page 7.
The wearable electronics market is forecast to increase from
over USD 14 billion in 2014 to over USD 70 billion in 2024
(IDTechEx 2014), with the dominant sector remaining healthcare
which merges medical, fitness and wellness.
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The inclusion of low power communications protocols in
smart devices, such as phones, tablets and most recently
watches, combined with smaller, more energy efficient sensor
designs and increased applied research into smart textiles, will
accelerate opportunities in the wearables space, including in
the aged care market.
Simavita is well positioned to actively participate in the
wearables space given its:
?? Real world, in-market experience of a medical device worn
by patients (SIM™);
?? Real world, in-market experience embedding sensors in
incontinence products (SIM™);
?? Extensive partner network in global centres of excellence
for sensor design;
?? Extensive IP and in-house expertise in algorithms;
?? Acquisition of applied communication IP; and
?? A natural market fit with convenient, unobtrusive
assessment and monitoring for independent living.
The predicted increase in the size of the digital healthcare
market has resulted in an increase in investment in this
expanding sector. US investment in the sector has already
exceeded USD 3 billion in 2014 with further transactions in
the pipeline.
The rising tide in the digital health space is supported by
healthcare and payment reform, and federal incentives.
The clear objective is “costs out” of the system. Simavita is
well placed to not only reduce healthcare costs but to provide
enhanced clinical outcomes at the same time in a rapidly
expanding market.
Simavita is also well positioned across the main subsectors
of digital health, being “big data” healthcare analytics, where
companies offer predictive and prescriptive data and analytics
for the healthcare sector, and the quantified self where
companies use sensor and data technologies to track health
and wellness, which strongly intersects the “wearables” space,
and real time healthcare.
THE GROWING AGED CARE MARKET
At the forefront of the aged care provision deficit is the inability
to effectively assess and manage diseases and disabilities such
as dementia and incontinence, cut costs and labour while at the
same time improve clinical outcomes.
“The world stands on the threshold
of a stunning demographic
transformation. It is called global
aging, and it promises to reshape
virtually every dimension of the
economy and society over the next
few decades.”
Urinary incontinence (UI) is defined as the involuntary leakage
of urine. UI is not a disease, but rather a symptom associated
with a wide range of patho-physiological factors. Although it is
not an inevitable part of aging, it is more common among the
older population than in the general population.
As life expectancy increases, so too does the number of people
affected by incontinence. These percentages are especially high
in long-term care facilities.
(The Global Aging Preparedness Index, 2013)
During the past 70 years, improvements in health care and
nutrition have brought about dramatic increases in life
expectancy, in both the developed and developing world.
The next 20 years will see an explosion in the percentage of the
developed world’s population who will be over 65 years of age.
In developed economies, aged care expenditure as a percentage
of GDP is growing dramatically.
Directly linked to the accelerating increase in the size of the
elderly population will be a growing demand on industry and
governments to establish the workforce and infrastructure
required to service the aged care industry, in all of its forms. This
challenge of sourcing, securing, training and retaining a work
force large enough to fulfil the demands of the emerging aging
population is unfeasible without a dramatic change in the current
approach. There are already indications of an emerging deficit.
In the US, in long-term care, the prevalence of urinary
incontinence is estimated to be above 70% of residents.
These figures are similar in other developed countries.
Technology is seen as having a vital role in the quality and
range of care available to older citizens, reducing the strain on
care workers.
There is a need to harness new cost effective assistive
and information technologies that offer opportunities for
productivity gains and higher quality care. Due to expected
labour shortages in the aged care sector, it is expected that
productivity gains would need to be in the order of 20% to
30% per annum.
Figure 1: Global forecast of micro electro mechanical systems and sensor shipment for wearable devices
Source: IHS Technology, 2014
500
450
mILLIOnS OF unITS
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
2017
2018
2019
2014? ANNUAL Report?
7
"The Company’s flagship product
is the Smart Incontinence
Management (SIM™) platform
technology. The first application
of SIMTM is a software enabled
instrumented incontinence
assessment which provides
evidence-based care plans."
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Simavita’s business and product
An exciting and growing sector
What is SIM™ technology?
Simavita is part of the digital healthcare sector and has
developed an innovative, patented, world-first solution for the
assessment and management of urinary incontinence, with
an initial focus on the elderly. SIM™ is a platform technology
and the first product is a software enabled instrumented
incontinence assessment which provides evidence-based
incontinence management care plans to the residential aged
care market. This product reduces the cost of the care of elderly
people while providing major clinical benefits.
The Company’s Smart Incontinence Management (SIM™)
technology is a unique digital sensor technology that collects
and interprets information needed in the formation of the care
plan for the elderly person. It takes assessments from being
manual to being instrumented while providing a digitised
evidence-based care incontinence profile which is integral
for controlling costs and delivering improved health care
outcomes. Conducting incontinence assessments is accepted
practice in all target countries and is an important element of
the care of each individual resident/patient.
Critical issues for success
In the US, Simavita has appointed Medline Industries, Inc., a
leading distributor to the Long Term Care (LTC) market and, in
mid-2014, commenced a national roll-out targeted across the
US which has already generated sales of SIM™. To support a
successful roll-out in the US, the Company has established its
own small sales force.
A number of advancing negotiations with European companies
are underway regarding potential distribution arrangements
in those markets. The Company will need to negotiate supply
agreements with these parties and provide the support necessary
in order for them to be successful in their respective markets.
Simavita’s SIM™ platform technology places the Company in a
strong position to exploit new product applications, markets
and geographies. These new markets are substantial and
offer both mainstream and niche segments for further SIM™
applications. By leveraging off the current technology quickly
and effectively, product development will lead to lower cost of
goods and revenue commencement can be accelerated. Human
and financial resources will need to be deployed to ensure these
developments occur in a timely fashion.
Simavita’s business model is evolving quickly from the early
manufacturing and sales model originally established in
Australia to a distribution model for its core LTC product. In
the future, Simavita will use its platform technology to drive
a business model which also recognises a potentially large
contribution from royalty and licensing revenue streams.
It is estimated that at least 15 million manual assessments
are currently performed annually around the world. SIM™
instruments this existing manual activity. SIM™ replaces the
current, inaccurate, process of manual assessments which are
highly labour intensive during the incontinence assessment
process for staff and disruptive to residents.
A SIM™ assessment delivers information that supports
subsequent integrated care planning activities:
?? an evidence-based incontinence report that creates an
individualised toileting program for residents;
?? support for appropriate urinary incontinence product
allocation;
?? a protocol to validate the newly-created toileting program
and incontinence product usage; and
?? information to assist the validation of aged care funding
around Activities of Daily Living (“ADLs”).
How does SIM™ address the incontinence problem?
SIM™ technology is addressing the impact of incontinence on
patients in Residential Aged Care Facilities (RACFs) globally.
The impact of urinary incontinence (UI) on residents of long
term care has a range of associated medical problems with
both physical and psychological consequences, including
damage to skin, urinary tract infections, increased risk of falls
and incontinence-associated dermatitis (IAD) that can lead to
pressure ulcers.
The prevalence of UI in RACFs in Australia is 71% or almost
129,000 residents and is set to climb with an accelerating
ageing population. A review of client records from aged care
assessment teams (41,000) and nursing homes (128,900) in
Australia found that 87% of registered nurses recorded UI as
a “very significant” or “significant” reason for relocating into
a nursing home. Management of UI is also a challenge for
family carers.
2014? ANNUAL Report?
9
Simavita’s business and product?
continued
In Australia, aged care services at a Federal level are provided
in accordance with a set of accreditation standards (Aged
Care Standards and Accreditation Agency Ltd, 1997). The
Continence Management Standard is a subset of Standard 2:
‘Health and Personal Care’. The primary goal of the continence
standard is to identify residents who are incontinent or at risk
of becoming incontinent, and then to assess them with a view
to formulating individualised treatment and management care
plans. RACFs rely on a manual urinary incontinence assessment
practice to establish individualised care. This typically involves
care workers asking residents about their voiding patterns or
manually checking their clothes/continence product every
one to three hours over a 72-hour period to profile their
physiological bladder control and to determine their frequency
and pattern of incontinence.
The accuracy of the data collected during manual assessments
is often questionable. If assessment data is inaccurate the
whole care plan process will be ineffective, and will not deliver
optimal outcomes for the residents. As a result, staff may lose
confidence in the current continence management process and
their ability to improve continence for the resident. The use of
evidence-based plans prepared using SIM™, however, can lead
to patients regaining independence, improved socialisation and
overcoming depression which increases the patients’ quality of
life in an RACF.
Product development history
The original concept for the SIM™ technology was developed
by an Australian medical doctor, the late Dr. Fred Bergman,
while working with residential aged care facilities in Melbourne.
Dr. Bergman’s observations of the inadequacy of existing
incontinence management processes led him to file his first
patent application in 1996 for the development of a technology
to effectively assess and manage incontinence.
In 2004, the technology had reached a point where it was
appropriate for field testing and the Company applied for and
was provided with a grant from the Australian Government
to conduct the first field trial. Preliminary findings confirmed
significant efficiencies and improvements in quality of care as a
result of the use of early stage SIM™ technology.
From 2008, under the leadership of current CEO, Philippa Lewis,
commercialisation of the SIM™ technology began and has been
refined over a number of product generations of in-market
testing in Australia and is now in its fourth generation.
With the maturing of the SIM™ technology, including significant
cost reductions delivered with successive generations,
the Company’s business has evolved through different
commercialisation models, all in the Australian market. Sales
of the latest Generation 4 SIM™ product have commenced
in Australia with more than 40 facilities having adopted the
technology. Internationally, the Company has appointed an
exclusive distributor in the United States, Medline Industries,
Inc., where sales of SIM™ have now also commenced. The
Company is planning expansion into Canada, Europe and Japan
and into different aged care sectors.
Figure 2 below outlines the history of the Company and its
potential technology evolution.
Figure 2: Overview of Simavita’s history and SIM™ technology evolution
2004
Australian
Commonwealth
Government grant
to conduct a clinical
trial of the concept
10
2008
Philippa Lewis
joins as CEO and
drives SIM™ to
commercialisation
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2010
Soft product
launch on the
eastern seaboard of
Australia to prove
commerciality and
refine product/
service offer
2011
Commercial team
developed to drive a
direct entry into the
Australian market
2012
Signed major
distribution deal
with Medline (US)
Overview of the SIM™ technology process
Typically, SIM™ is used by carers in residential aged care
facilities during an incontinence assessment to gather relevant
information and record events which are automatically plotted
as a bladder diary. This process helps create an accurate
incontinence record of bladder control and related nursing
interactions with the individual.
The data is collected by carers providing care to residents as
they conduct their normal daily activities. Direct physiological
urinary incontinence data is gathered by a sensor contained in
an absorbent incontinence product worn by the resident during
the assessment period. Incontinence events are detected and
transmitted by a small pod (“SIM™ pod”) attached to the sensor
that is worn by the resident during the assessment.
The SIM™ pod has been designed to operate continuously
over the entire assessment period and uses Wi-Fi to transmit
event data back to a server based software application
(“SIM™ manager”) for processing into useful information
for clinicians to review. In addition to the direct urinary
incontinence data feedback, carers collect related observational
data using an intuitive point of care application called
“SIM™ assist”.
SIM™ assist operates on smart devices (phones and tablets)
using Google’s Android and Apple’s iOS operating systems.
The portability of the devices containing the SIM™ assist allows
the carer to record relevant data about the resident under
assessment at the time of each data event including food
and fluid intake, successful and unsuccessful toileting, sensor
changes, behaviours and other therapy activity related to
urinary incontinence care.
potential product roadmap
2013
2014
Food & Drug
Authority clearance
(US), GEN 4 Product
Launch (AU & US)
GEN 4 Rollout
(AU & US),
GEN 4 Launch (EU)
2015
Community
Care Rollout
(AU, US & EU),
Data Management/
EMRs Product
(AU, US & EU)
2016
Everyday Smart
Pod Launch Aged
and Community
Care, Aged Care
Launch Japan
retail Everyday
product and
four categories
of Smart Sensor
technology
applications
2014? ANNUAL Report? 11
Simavita’s business and product?
continued
When a SIM™ assessment has been completed and the collected
data can be viewed in a comprehensive bladder (continence)
diary, the SIM™ manager software provides a structured
decision support process to guide the development of effective
individualised care plans for each assessed resident. This
assessment process can be depicted as a cycle, as illustrated in
Figure 3 below.
The components of the SIM™ technology
SIM™ operates over a Wi-Fi network, but does not require
continuous connection. The SIM™ pod is capable of completing
an entire assessment without connection to a network via Wi-Fi,
but requires such a connection in order to upload all collected
information. Figure 5 on page 13 illustrates the operation of the
SIM™ network.
The SIM™ manager software produces real time bladder
information combined with a carer’s observations, a sample of
which is shown in Figure 4 below.
Figure 3: Overview of SIM™ assessment process
1
2
3
4
SIM™ SENSOR
WI-F
I NEtWORk
SIM™ ASSISt
SIM
RE
™M
ANAgER SOFtWA
Events and observations
are recorded in real time
Mobile SIM™ assist device
to record observations
and monitor assessments
Profiling used to develop
a person centred care
plan
SIM™ sensor captures
incontinence data
(worn for 72 hours)
cycle
Figure 4: Sample of bladder and assessment chart
12
? gracing life
Manufacturing and logistics
All raw material and manufacturing inputs for SIM™ are
currently outsourced. Figure 6 provides an overview of the
manufacturing arrangements for the key components of the
SIM™ technology.
The Customer Service team manages orders from the
Company’s customers for SIM™ consumables. Customer Service
places orders with the Company’s third party logistics partner
for pick up and dispatch of products directly to the customer’s
site. In the United States, this activity is managed by Simavita’s
US exclusive distributor, Medline.
The Company currently carries out all raw material
procurement. It does this to ensure that it has a high level of
awareness and control of material costs designed into the
product. The Company qualifies and monitors critical suppliers
and undertakes quality checks and performance feedback.
The Company manages site support activities through the
Customer Service group. Helpdesk support is in place, with all
calls logged, ticketed, and triaged for resolution. In the United
States, the Company’s distribution partner carries out similar
support activities.
As sales of SIM™ expand globally, the Company will transition to
in-region outsourcing solutions for its new markets, particularly
in the United States and Europe.
The Company has recently appointed a dedicated Vice
President, Manufacturing and Supply Chain to lead the strategy
and manage the implementation of the manufacturing and
supply chain function.
The Company purchases all materials and components required
for product assembly and carries out final assembly and testing
of all hardware and software in-house.
Figure 6: Key components of the SIM™ technology
Figure 5: SIM™ network
CONSUMABLES
Internet
Customer Service/
Remote Support
Server runs SIM™
(optional offsite with VPN)
SIm™ sensors
For SIM
assessments
Light (6015)
Moderate (6016)
Heavy (6017)
Assembled in Australia for Simavita
Main components
Light: 30 x SIM™ sensor, 9 x SIM™ pants
Moderate: 20 x SIM™ sensor, 6 x SIM™ pants
Heavy: 20 x SIM™ sensor, 9 x SIM™ pants
SIm™ sensor
Pad with
integrated sensor
Light (01505)
Moderate (01508)
Heavy (01511)
Assembled in Australia for Simavita
Main components
Incontinence pad: Light, Moderate, Heavy
SIM™ sensor strip: Light, Moderate, Heavy
Plastic clip: Light, Moderate, Heavy
SIm™ pod kit
Model 601
contains SIM™ pod
and charging dock
Assembled in Australia by Simavita
Main components
1 x SIM™ pod
1 x SIM™ dock
1 x power adaptor
1 x USB cable
SIm™ pod
Sensor data
acquisition
Assembled and tested in Australia
by Simavita
Main components
SIM™ pod printed circuit assembly battery
Plastic housing (top and bottom)
SIm™ dock
Charges SIM™ pod
PC connectivity
via USB
Assembled and tested in Australia
by Simavita
Main components
Plastic housing (top and base)
SIM™ dock printed circuit assembly
SIm™ assist app
Point of care
application for
the collection of
observational data
and for messaging
Available through Simavita
Application file available for installation
onto Android and iOS devices
SIm™ manager
Processes SIM™
sensor data
and hosts SIM™
manager web
interface
Available through Simavita
Server based software, including integrated
web based assessment and care planning
tools
DATA ACQUISITION
SIM™ Manager Web Software
SIM™ assist
SIM™ sensor with SIM™ pod
network
Wi-Fi network
Facility network
SOFTWARE
WAN/Internet
2014? ANNUAL Report? 13
Sales model and strategy
The first target market for SIM™
The first target market for Simavita’s SIM™ technology is the
residential aged care market where the customers are the
providers of institutionalised care to the elderly, including
private, government and not for profit entities. As an extension
of this group, the Company anticipates that SIM™ could in future
also be marketed to the community care sector, initially through
care providers.
The potential customers of SIM™ in the community are persons
suffering from incontinence who still live at home (and their
families) demanding SIM™ related services, especially in relation
to maintaining a normal functional life at home for as long as
possible. While this would be a user pays business model, the
Company is also exploring reimbursement opportunities in the
home care space as there are a number of government bodies
that provide reimbursement for incontinence management
for those living at home. The Company has also targeted
opportunities for the use of SIM™ in hospitals, geriatric wards,
rehabilitation wards and palliative care wards.
Benefits of SIM™ for the Residential Aged Care Facility
The decision for a residential aged care facility to purchase
SIM™ and conduct assessments on residents is based on both
the clinical benefits it provides in this important area of care for
the elderly, as well as the financial benefits for the operator of
the facility.
The financial benefits available fall into a number of areas
depending on market funding models and dynamics, including:
?? direct product cost savings from the more efficient use of
incontinence products and better selection of products
according to the resident’s needs;
?? workplace cost efficiencies/labour savings from reduced
toileting activity;
?? certification/accreditation costs from the provision of a
comprehensive incontinence management application
documenting quality incontinence care;
?? there is reputational enhancement and increased
occupancy for facilities that have deployed SIM™ at their
site/s; and
?? cleaning and waste savings linked directly to the better
allocation of products supported by effective toileting
activity.
SIM™ Business Model
Earlier generations of the SIM™ technology were trialled in the
Australian market. Expansion in this market has leveraged off the
well-established customer base where there is already growing
market awareness leading to repeat sales of the product.
Simavita’s business is a software enabled “razor/razor blade”
model. The razors are the SIM pods™ and software subscriptions
which provide revenue to the Company, and the assessments
(the sensor diapers and special pants) the “razor blades” – sold at
margins that produce recurring gross profit at attractive margins.
In addition to the upfront revenue generated from facilities
purchasing the enabling software and hardware, and the
on-going revenue from the sale of consumables, there is
additional revenue generated by the Company through the
provision of associated services, such as clinical assessment
services, or training and support services. The market dynamics
determine where this is feasible and/or demanded.
Product offering
Simavita’s SIM™ solution goes beyond a simple offering:
Core product
?? instrumented assessment tool: assessment provides
evidence-based care plans to deliver an effective toileting
program and continence aid selection;
?? SIM™ sensor detects multiple incontinence episodes in
real time;
?? structured process for assessing, treating and managing
people with incontinence; and
?? reduction of risk of sanction by regulators arising from poor
quality health care outcomes;
?? ability to develop and validate individualised toileting
assistance programs.
?? potential revenue uplift based on a more accurate
assessment. Funding is based on a per diem payment
according to the level of disability of the resident and
the requisite care required. Examples of reimbursement
opportunities can be identified in the Australian Aged
Care Funding Instrument. Currently there is no specific
reimbursement code for SIM™ in the US however per
diem payments flow to the provider from the US Medicare
Prospective Payments System;
Core benefit
?? support for Rehabilitation and Occupational Therapy
programs which, in many cases, attract additional
government funding;
14
? gracing life
?? better health outcomes for older people with reductions
in the number of falls, improvements in skin integrity and
better quality of life;
?? optimising care staff labour resources during an assessment
and with productive toileting;
?? provides savings in continence aid selection, laundry costs
and government funding; and
?? reduced risk by embracing evidence-based nursing.
Compelling need
Ineffective manual process provides a compelling need for SIM™:
Financial
?? reduced time and effort in undertaking assessments;
Manual, paper-based practice
?? reduced time and effort in the on-going continence care
process based on patient centred toileting program;
?? inaccurate process of recording timed information on
incontinence events;
?? reduced direct cost on over-capacity continence aids and
reduced need for aids from effective toileting;
?? time consuming requiring one to three hourly checks to
identify bladder pattern; and
?? reduced costs from associated health issues (skin integrity
issues, falls);
?? lacks dignity and respect for residents, requiring a visual
inspection of continence aids.
?? reduced waste costs;
SIM™ continence management practice
?? reduced compliance and accreditation risk.
?? positive continence management leads to a patient
regaining his/her independence, improved socialisation and
overcomes depression associated with incontinence; and
Organisational
?? effective continence management can significantly improve
a patient’s health outcome through the early detection and
management of urinary incontinence, reducing a range of
associated problems including reduced risk of urinary tract
infections, reduced risk of skin breakdown, and reduced risk
of falls and adverse or aggressive behaviours.
Savings potential for governments, Care Providers / patients
in a Community Care environment
?? >20% incontinence product cost reduction in RACFs;
?? >20% reduced waste disposal and landfill costs;
?? >20% less toileting provides a significant opportunity for
staff redeployment;
?? reduction in labour costs associated with continence
assessment and treatment;
?? reduction in wound care product costs; and
?? reduced laundering costs.
?? evidence-based support for funding claims; and
?? improved staffing availability from optimising continence
care time; and
?? improved staff engagement to provide valuable, caring
activity.
Environmental
?? reduced waste from lower capacity pads and reduced
pad usage.
Revenue drivers for the Long Term Care customer
Benefits delivered by the use of SIM™ leading to potential
increases in revenue include:
?? Enhanced reputation by using SIM™;
?? Increases in occupancy rates driven by reputation, leading
to increased profits;
?? Government Funding is validated and secured by use of
SIM™ reports; and
?? Risks are mitigated by evidence-based care.
Value proposition
Cost benefits to customer
Value of using SIM is centered firmly around clinical and cost
benefits and has several aspects:
Benefits delivered by the use of SIM™ leading to potential
reductions in cost include:
Clinical
?? Labour – head count ratio reduction from 1:8 carers per
patient to 1:12 carers per patient;
TM
?? improved care around continence aid usage and toileting
based on accurate assessment;
?? less functional incontinence; and
?? fewer continence related health impacts.
?? Consumables – reduced by up to 30%;
?? Time management – daily toileting average 8 to 10 times
reduced by up to 50%; and
?? Waste – 23% reduction in both volume and cost.
Simavita has estimated that the operator of a 100-bed aged
care facility in the US could expect to generate annual net
cost savings of approximately $128,000 from the deployment
of SIM™. This assumes that the cost of SIM™ to the facility
is around $28,000 to $35,000 (higher in year one than in
subsequent years).
2014? ANNUAL Report? 15
Marketing
Overview
SIM™ is a disruptive technology and, as such, the approach
to establishing it as the standard for continence care, and for
developing adoption broadly, is different to traditional product
marketing approaches.
Simavita has employed a “customer engagement” method to
define all aspects of its commercialisation approach. The basis
of this approach is to ensure that customer problems are well
understood and addressed by validating marketing elements
starting from the product itself, but also including branding,
positioning, and the market offer. This has involved establishing
hypotheses which have then been tested and refined in an
interactive and iterative engagement with early adopting
customers and the market more broadly. This has resulted in the
SIM™ Generation 4 product, a related branding and positioning
approach, and an in-market offering which has seen the product
adopted more broadly. This approach will be replicated in new
markets as SIM™ is globalised, as well as for potential product
variations in the future (such as the assisted living market).
Incontinence is a significant challenge for residential aged
care facilities around the world and is set to become more so as
the total market rapidly expands (in line with developing countries
globally). To manage the challenge of a shortage in labour supply
and funding, technology will be required and SIM™ is one such
technology which addresses both clinical shortcomings as well as
the macroeconomic challenge facing the aged care industry.
The Simavita marketing plan addresses a number of necessary
elements for successful communication and adoption in the
market including product positioning, product development,
sales model, customer targeting, promotional mix, commercial
model and clinical research. A critical part of the Company’s
marketing communication involves outcomes from a clinical
research program designed to position SIM™ as the benchmark
by addressing current practice shortfalls as well as the
significant positive outcomes from using SIM™.
Global market trends
There is a perfect storm brewing in aged care, as illustrated
in Figure 7 below and Figures 8, 9 and 10 on page 17. While
the number of people aged over 65 as a percentage of the
population increases, the number of skilled staff available to
care for them is falling. At the same time, the associated cost
burden on the community continues to rise.
The Australian incontinence market
Incontinence has a major impact on care service expenditure
and is a significant reason for older people moving into a
Residential Aged Care Facility (RACF):
?? 71% of residents living in RACFs experience incontinence;
?? incontinence has the third largest impact on the quality of
life of older people after dementia and stroke;
?? 25% of a carer’s staff time is spent on continence care;
?? incontinence is not a disease, but rather a symptom which
relates to various patho-physiological factors;
?? incontinence is not an inevitable part of ageing, it is
sometimes curable, and always manageable;
?? current manual incontinence assessment and management
processes often lead to institutionalised incontinence; and
?? current accepted practice requires a 72 hour (3 day)
assessment to determine continence status and
recommend appropriate care plans – but this is a manual
process and is largely ineffective.
Figure 7: Growth in the number of people over 65 years of age as a percentage of the population
? JApAn ? Eu (4) ? AVErAgE
? AuSTrALIA ? uSA
40
35
pErCEnTAgE (%)
30
25
20
15
10
5
0
1950
1980
2010
Source: Population division of the UN Department of Economics and Social Affairs
16
? gracing life
2040
Figure 8: Australian aged care expenditure and a percentage of Gross Domestic Product
? 1969-70 ? 2009-10 ? 2049-50
2.5
2.0
1.5
1.0
0.5
0
AuSTrALIA
uSA
EurOpE
JApAn
Source: European Centre for Social Welfare Policy and Research – Facts and Figures on Long Term Care Europe and North America;
Australian Government – The Intergenerational Report 2010;? World Bank – GDP by country;? CIA – World Fact Books
Figure 9: The pending crisis in Australian skilled care staff
? LICEnCEd rEgISTErEd nurSES (rns)
? pOpuLATIOn AgEd OVEr 65 (OVEr 65s)
3.5
THE TECHnOLOgy ImpErATIVE
3.0
50
rns (mILLIOnS)
40
2.0
30
1.5
20
1.0
OVEr 65s (mILLIOnS)
2.5
10
0.5
0
60
1980
1984
1988
1992
1996
2000
2004
2010
2015
2020
0
Source: Health Resources and Administration 2008
Figure 10: The cost of continence care is significant and driven by direct labour costs
56
CONTINENCE
ASSESSMENTS
90
CONTINENCE AIDS
?? Labour costs account for 92% of continence
management costs – and so represent a
significant opportunity for efficiency gains
CONTINENCE
MANAGEMENT
(LABOUR)
?? $56 million is spent in Australia on continence
assessments per year, primarily with the view to
satisfy funding requirements without delivering
any material benefit in care
1,061
Cost of continence in Australian
aged care facilities ($millions)
?? Continence care is a significant cost to
Australian aged care facilities – estimated to be
$1.2 billion per annum in labour and materials
Source: Deloitte Access Economics – The Impact of Incontinence
in Australia, CFA 2011
1,207
2014? ANNUAL Report? 17
Marketing?
continued
The global incontinence market
Currently, in excess of 240 million people in the western world
are incontinent and more than 15 million manual incontinence
assessments are conducted every year. The aggregate cost of
incontinence assessments in nursing homes has been estimated
at over USD 6 billion dollars per annum globally. When the
total costs of labour and consumables are considered, the
assessment and management of incontinence could be seen
as the biggest single cost area in the operation of long-term
residential aged care facilities.
To address this growing problem, the Company has developed
and commercialised SIM™, the world’s first instrumented and
integrated incontinence assessment and management system.
SIM™ offers dignity to an aging population and a practical and
cost-effective solution for carers and aged-care providers.
Sales of the SIM™ product for incontinence assessment and
management have commenced in Australia and the USA.
The size of the global incontinence market is significant and
the opportunities it presents for the Company are in turn
considerable.
Some key facts and figures include:
240 million
people in the western world are
incontinent
15+ million
incontinence assessments are performed
per annum
USD 6 billion
assessment labour costs per annum
(nursing homes only)
USD 9 billion
continence products sold per annum,
increasing to USD 30 billion by 2030
Number 2
nursing home cost (after labour)
25%+
of labour attributed to incontinence
management in aged care facilities
70%+
of residents in aged care are incontinent
5.4 million
assessments (approximate) per annum –
US addressable market
Figure 11 below summarises details of the global incontinence
market.
Figure 11: The global incontinence market
LEGEND
18
uSA
CAnAdA
uK
nETHErLAndS
EurOpE
JApAn
AuSTrALIA
FACILITIES
47,200
2,600
14,500
2,900
60,000
14,800
2,800
TOTAL BEDS (ROUNDED)
2,700,000
250,000
510,000
150,000
3,300,000
740,000
180,000
TARGET MARKET (BY 2017/18)
10%
14%
8%
13%
6%
2%
28%
? gracing life
Addressable markets for SIM™
Competitors
The addressable target market for SIM™ in long term care is
7,170,000 beds, as represented in Figure 11 on page 18, by the
Company’s key markets:
Simavita is the first company to market an instrumented
alternative to the manual process of incontinence assessment.
There are currently no commercially-available competitors to
the Company’s SIM™ technology which is protected by a strong
and expanding portfolio of intellectual property.
Europe
3,300,000
USA
2,700,000
Japan
740,000
Canada
250,000
Australia
180,000
The residential aged care sector accounts for less than 20%
of elderly people in the community. The larger cohort of
elderly people are in assisted living environments within the
community and this represents a natural extension market for
the SIM™ application.
In the future, further products all leveraging off the Company’s
underlying core technology could open up new and potentially
larger markets around the world for Simavita.
In conjunction with its exclusive US distribution partner,
Medline, the Company launched SIM™ in the US market in July
2014. Since then, sales have commenced in that market, with a
number of additional aged care groups now actively assessing
the technology. Key drivers for the deployment of SIM™ in the
US market include:
?? Long Term Care facilities in the US total 2,700,000 beds
(as above);
?? Urinary incontinence costs USD 7,300 per bed per annum
in labour alone (or USD 19.9 billion in total);
?? SIM™ reduces labour and other costs and improves
occupancy; and
?? Importantly, SIM™ results in a net savings estimated to be
approximately USD 1,580 per bed per annum.
Competitive advantages of SIM™
Improvements over existing manual methods
Performing an incontinence assessment is a necessary step
before an incontinence management plan can be created.
Such incontinence assessments are usually mandatory and are
manually performed in residential aged care facilities across the
USA, Canada, parts of Europe, Japan and Australia.
There have been attempts by others to provide a solution
for improved incontinence management, however, most of
the products operating in the incontinence space could be
characterised as “saturation monitors”, which may be useful
for informing care staff when a pad needs to be changed,
but not useful for collecting more detailed information
relating to the volume and frequency of events. Unlike simple
saturation monitors, SIM™ technology is designed to collect the
information needed for detailed incontinence care planning.
Some of the important features of SIM™ include:
?? sensitivity to multiple individual micturition (urination)
events, enabling a pattern of the incontinence condition to
be established;
?? algorithms that help to provide robust incontinence data
under live field conditions;
?? a sensor data transceiver (“SIM™ pod”) that is waterproof
for easy cleaning and maintenance and uses industry
standard Wi-Fi;
?? point of care smart apps to facilitate the collection of
observational information by care givers; and
?? a process driven software front end GUI that supports care
givers through the steps of assessment, care planning and
reporting.
Barriers to entry
The technology associated with SIM™ is currently protected by
a number of patent families. There are other significant barriers
to entry which the Company believes makes Simavita’s position
robust in the short to medium term. These include the cost of
development (the Company’s development of the SIM™ product
has taken over six years and has cost more than $40 million),
obtaining know how from testing the product in the field and
the time, expense and knowledge required to obtain regulatory
clearance from government authorities including the FDA in the
United States.
The SIM™ technology offers a detailed and instrumented
alternative to the manual process of incontinence assessment
that can often lead to inaccurate and unreliable results. The
manual process is laborious for care staff and causes significant
disruption to residents.
2014? ANNUAL Report? 19
Marketing?
continued
Exclusive US Distribution Agreement
Expansion into Canada
In late 2012, Simavita executed an exclusive Distribution
Agreement with Chicago-based Medline Industries, Inc.
(“Medline”) for the distribution of the first SIM™ application
in the United States. Under this Agreement, training of the
extensive Medline sales force and preliminary marketing
of SIM™ has commenced and first sales are now being
generated. Simavita has now employed a small team in the
US of professionals operating in the areas of technical, clinical
training and business development to assist the Medline teams.
The Canadian market is targeted for appointment of
distributors in early 2015. Market research has identified several
potential distributors and discussions have commenced. The
market place in Canada is assessment driven, much the same
as the United States, European Union and Australia. Initial sales
of SIM™ in the United States have already created interest and
market awareness of the Company’s products in Canada.
Medline Industries, Inc., is the largest privately held
manufacturer and distributor of quality medical supplies and
clinical solutions in the United States. Based in Mundelein,
Illinois, the company has 1,200 direct sales representatives
who are dedicated points of contact for customers across the
continuum of care.
Medline offers a comprehensive array of consulting and
management services encompassing supply chain and logistics.
One of its key product lines is incontinence products. It has
invested heavily in incontinence product manufacturing
including a custom built production facility in Atlanta, Georgia.
It is also a major supplier of other associated products and
services in healthcare. Medline has a fully integrated learning
platform, the “Medline University”, where staff are provided
with training across a range of products and protocols.
The exclusive Distribution Agreement between Simavita and
Medline remains in force for an initial term of five years from
January 2014, after which time the Agreement may be renewed
for further three-year terms automatically or with Simavita’s
approval. Medline is required to meet agreed performance
criteria under the Agreement and, if it fails to do so, Simavita
may remove Medline’s exclusivity rights.
POTENTIAL Future roll-out of SIM™
Distribution in Europe
Europe is a collection of heterogeneous markets and the
incontinence market there is mature and sophisticated.
There are a variety of models of funding and care including
reimbursement, insurance and “user pays”. Simavita has
completed a preliminary assessment of key markets including
Germany, France, Switzerland, Austria, Denmark, Netherlands,
Sweden, Spain and the UK, all of which are potential first
entry points.
The Company has now established a show-case site for SIM™ in
Copenhagen, Denmark in collaboration with the municipality of
Copenhagen and local manufacturer Abena A/S.
The Company is in active discussions with European distributors
who are eager to see the SIM™ technology in operation and to
discuss potential distribution arrangements for the product in
their respective countries.
20
? gracing life
The Japanese market
Japan is at the forefront of the global ageing phenomenon. It
already has an extremely old population and the trend is set to
continue for at least the next 20 years. As such, Japan is viewed
by the Company as an important additional market of interest.
The Company will further explore the potential of entry into the
Japanese market where a preliminary investigation has already
been undertaken. Whilst there are cultural differences, the basic
principles of aged care, including incontinence assessments are
similar. For example, the assessment includes rigorous manual
hourly checking and changing during a 72 hour period where an
instrumented alternative, such as SIM™, could be very desirable.
Brand elements
?? Fit:? SIM™ provides a position in the customers’ minds that
technology can enhance their existing manual incontinence
assessment process and care plan practice with an
instrumented process.
?? Essence:? SIM™ enriches the lives of residents and care staff in
nursing homes by providing a new culture of continence care.
?? Value:? SIM™ provides value to the customer through
improved clinical outcomes, ease of use (leading to better
staff compliance), evidence-based continence care plans
that are patient centred, reduction in costs - labour,
continence aids and environmental waste, and assistance
with government funding.
?? Uniqueness:? SIM™ is the first instrumented urinary
continence tool that can detect multiple incontinence
episodes during an assessment period.
?? Sustainability:? SIM™ is using evidence-based research
to support product claims, and continuing product
development from direct market interaction to enhance
product features and benefits.
?? Credibility:? SIM™ is building its reputation from flagship
sites, thought leader endorsement, global expansion and
continued research to prove the integrity and reliability of
its product attributes.
SIM™ Case Study?
Based on results observed by Simavita at a facility in Victoria, Australia in 2012 and updated in February 2014.
Resident benefits from habit training
Outcome
Situation
Mr. X benefited from a habit training program that resulted
in more successful toileting with less toileting times per day
(4 times per day, as depicted in Figure 13 below):
A male resident (Mr. X) is 70 years of age and lives in an
Aged Care Facility in Melbourne, Australia. His general
condition has changed since he was placed in the care
facility and he now requires full assistance with his
Activities Daily of Living (ADL’s).
Mr. X was continent during the day. Urinary voids into the pad
were reduced by 90% enabling a smaller pad capacity to be
used during the day. His behaviour was also resolved which was
linked more to incontinence episodes rather than his level of
cognitive impairment.
Mr. X has frequent behaviour issues (he is often agitated
and verbalises) in the early morning and late afternoon.
Staff assume it is part of his dementia and ignore this
behaviour. This situation has led to staff being reluctant
to toilet Mr. X during these behaviour episodes.
Testimonials
“The wellbeing of our residents has improved in many areas of care
since we introduced SIM™. This includes effective toileting times,
correct pad allocation (in most cases reducing cost), and reduced
anxiety for residents around continence management can all be
attributed to the introduction of SIM™ over the past 12 months”.
SIM™ insights
Ms. Fiona Kelman, Facility Manager - Twilight, Horton House
The SIM™ assessment in Figure 12 below shows Mr. X’s bladder
patterns and voided volumes; regular toileting prescribed
was 12 times over 3 days, but the carer actually did more than
17 toileting times, with 13 unsuccessful toileting events. The
total voids in pads: 1,317 ml over the 3 day period, as depicted
in the figure below. SIM™ assessment also documented that
behaviours occurred just prior to a voiding event into the sensor.
“SIM™ is less time consuming compared to the old manual
continence assessment practice. The system provides
supporting documentation to assist in generating extra funding
or ACFI uplift, especially for residents who are difficult to
diagnose as being incontinent or in denial of being incontinent.
We have never looked back”.
Ms. Dianne Licastro, ACFI Coordinator - Arcare Greenhill
Figure 12:? SIM™ assessment
Figure 13:? SIM™ training program
2014? ANNUAL Report? 21
New product roadmap and strategy
Application focus
New products, exploiting SIM™ technology
Simavita’s technology is aimed at maximising the independence
of individuals, supported by two paths:
The SIM™ technology currently used in residential aged
care facilities is a first to market instrumented incontinence
assessment solution and is covered by a broad patent and
know-how portfolio. Simavita is in a strong position to
potentially exploit a raft of new product applications in new
markets associated with the global aging challenge and with
incontinence more broadly, all of which leverage the Company’s
existing SIM™ technology.
Assessment/Care Planning
Accurately assessing a condition (in the case of SIM™ it is
incontinence), and following through with integrated care
planning to deliver person-centred care.
Continuous Monitoring
In future, the Company could potentially leverage its existing
technology to develop intelligent active alert technology for
every day, continuous monitoring and management.
Maximising independence is a key objective for all stakeholders,
including the individual in question, their loved ones and
caregivers, insurance groups and governments. Maximising
independence minimises the economic burden on society and
promotes dignity and wellness for the individual. The term
Activities of Daily Living (ADLs) is recognised by governments
and health organisations and is used to refer to those daily
self-care activities that an individual should be able to perform
to live independently. The ability or inability to perform ADLs is
used as a measurement of the functional status of an individual;
toileting hygiene, or the ability to manage the act of urinating
and defecating, is a basic ADL.
Existing products
SIM™: Smart Incontinence Management system, used in
institutional settings, including Nursing Homes
SIM™ is a combination of sensor, algorithm and software
technologies that addresses the assessment and management
of functional issues associated with a lack of control of bladder
and/or bowel (i.e. the toilet hygiene ADL) and can be applied
to any individual where such a functional issue exists, whether
at home or in an institutional setting (e.g. nursing home,
assisted living or hospital). SIM™ is commercially available for
institutional settings in Australia and the US, with plans to enter
markets in Canada, Europe and Japan.
22
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Potential new products scheduled for development in the next
12 months to 36 months may include:
?? SIM™ assessment technology for the elderly in community
care or in the home;
?? Everyday SIM™ in residential aged care facilities in Australia,
United States, Canada, the EU and Japan;
?? Everyday SIM™ for in the home or community settings; and
?? Retail Everyday Sensor.
These new markets are substantial and, if suitable products
could be developed, may offer both mainstream and niche
segments for SIM™ applications.
The key features of the SIM™ technology are also now
Wi-Fi enabled and the possibility exists for the software to be
integrated into other data management technologies such as
electronic medical records (“EMRs”).
potential Future areas of focus outside
of core technology
Diagnostics
The Company anticipates that trends in the size, functionality
and cost of sensors could enable it to collaborate with
development partners to embed diagnostic capabilities in SIM™
disposable products, effectively leveraging the SIM™ brand and
footprint in aged care.
An example of this diagnostic capability could include
hydration. Scientists warn that the ability to be aware of and
respond to thirst is slowly blunted as we age. As a result,
older people do not feel thirst as readily as younger people,
increasing the likelihood of them consuming less water and
consequently suffering dehydration. If dehydration is not
identified and treated, the potential consequences to health
are significant, including reduced or even loss of consciousness
(with associated likelihood of a falls risk), rapid but weak pulse,
and lowered blood pressure. If rehydration is not started, the
situation can become life-threatening.
Smart Falls Management
Falls in older adults can result in serious injury, including
death, and is a significant economic cost to health systems.
For example, in 2012, the direct medical cost of older adult
falls in the US was USD30 billion; with the population
aging, both the number of falls and the costs incurred to
treat fall injuries are likely to increase (http://www.cdc.gov/
homeandrecreationalsafety/falls/fallcost.html).
Although there are plenty of Falls Alert products in the market
that provide an alarm when an individual has a fall, Simavita’s
interest is in the area of assessment and care planning to
maximise independent living. Smart Falls Management could
potentially integrate existing third-party sensor technology and
associated algorithms into the Simavita products to assess an
individual’s stability while undertaking their daily activities and
follow through with integrated care planning to mitigate the risk
of falling.
Business strategy to develop additional
product applications
The Company’s business strategy includes the possible strategic
development of additional product applications through joint
development agreements with relevant partners. This could
result in two potential revenue streams:
?? license and product development fees (from the joint
development activities); and
?? royalties from sale of products by the joint development partner.
Each potential new SIM™ application has a possible fit in
market segments containing multinational, often dominant,
corporations. These corporations have expertise and core
products in categories that are large, well penetrated and
mature. They are often looking to add value for their customers,
protect and defend their market shares and minimise margin
decline. They are all seeking to differentiate their brands and
expand their categories.
In this case, Simavita could provide product development
expertise, patents, trade secrets and know-how and may take
the lead in some cases in the development of the product
application. The joint development partner could potentially
provide Simavita with an up-front license payment/royalty
advance as well as a contribution, financially and technically,
to product development. In such cases, the partners would
also most likely take on responsibility for market research,
commercialisation plans, sales and distribution.
Research studies supporting
product benefits
The foundational clinical study conducted on the SIM™ technology’s
predecessor, AEGIS, was undertaken in 2005 as part of the
Australian Government’s Department of Health and Ageing's Clinical
IT in Aged Care Project. The aim of this project was to test the ability
of the predecessor technology to provide an accurate pattern of
urinary voiding in order to tailor a care plan for individuals.
The outcome of the project was significantly positive for
the resident, carers and staff and was the basis for the
commercialisation of SIM™. Key outcomes included:
?? fewer unnecessary attendances;
?? fewer instances of attendance to residents with soaked pads;
?? improvement in labour efficiency around incontinence
management; and
?? improved quality of life and health outcomes for residents
(as perceived by staff), including reductions in skin issues
and better toileting plans.
Two clinical research projects were conducted in 2011 in
association with the University of Wollongong in New South
Wales, Australia. The first study was a review and evaluation
of current incontinence assessment practices in residential
aged care facilities in Australia. The second was a study of
the effectiveness of SIM™ in providing a predictive toileting
schedule that would improve incontinence care outcomes,
benchmarked against existing practice. Both research projects
have been completed and papers written, including a peerreviewed publication. Key outcomes of the research included:
Study 1 – Survey of current practice
?? current incontinence assessment process and information
collection is inconsistent and unreliable;
?? effective incontinence care plan preparation from
assessments conducted was virtually impossible; and
?? resulting care is based on a “one size fits all” toileting
approach – known as “toilet rounds” – but this is rarely
practiced due to staffing constraints.
Study 2 – SIM™ based care improvements
?? it was found that existing care plans resulting from the
manual incontinence assessment approach were not
adhered to in practice; and
?? while not directly investigated in this research project, the
likely reason implied from Study 1 is that there is little belief
in the effectiveness of care plans resulting from inaccurate
manual assessments.
With SIM™ based care planning, based on accurate Bladder
Charts and incontinence records, there was a statistically
significant increase in care plan adherence and more effective
toileting, indicating that staff were confident in the value of the
recommendation. The resulting incontinence outcomes were
increased successful toileting events and reduced urine output
in incontinence products.
2014? ANNUAL Report? 23
Product registration, marketing approvals and standards
Australia
SIM™ is a registered Class I device (Registration: ARTG ID
140328) with the Australian Therapeutic Goods Administration
(“TGA”).
United States
SIM™ is a Class II medical device in the United States. The
Company filed a 510(k) submission for SIM™ and was cleared
by the US Food and Drug Administration (“FDA”), with an
exemption finding, on August 22, 2013.
The FDA has advised that the Company can market SIM™
in accordance with its intended use, as indicated for use by
healthcare professionals to remotely monitor wetness events,
and collect, transmit and report wetness events and other
medical information from multiple patients within a clinical
setting (i.e., hospitals, skilled nursing facilities, residential care
facilities) to establish effective management care plans for
incontinence events.
European Union
SIM™ is a Class 1 medical device in the EU. SIM™ is CE marked
for launch within the European Union.
Quality management systems
The Company is accredited to ISO 9001:2008 Quality
Management Standard (since June 2010). The Company is
also accredited to ISO 13485:2003 Medical Device - Quality
Management Systems – Requirements for Regulatory Purposes
(since April 2013).
24
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Intellectual property
Introduction
Simavita relies on patents, trademarks, know-how and trade
secrets, in combination with non-disclosure, confidentiality and
non-compete agreements to establish, promote and protect
the intellectual property rights surrounding its technology
and business.
Simavita’s technology has been in development for a number of
years and is protected by a substantial portfolio of intellectual
property, including 10 filed patent families and an exclusive
licence to two CSIRO patent families. Details of these patent
families are set out on the following pages.
Simavita has followed a strategy of filing international patent
applications under the Patent Cooperation Treaty 1978
(PCT) administered under the World Intellectual Property
Organization. The benefit of the PCT is that it facilitates
the filing of a patent application in a number of countries
simultaneously, although it is important to note that a PCT
patent application will need to be “nationalised” in countries
where patent protection is required.
A further point of particular value in the Simavita intellectual
property position is the considerable amount of know-how that
has been developed by the research and development team
and generated from putting the technology into practice in the
market. While much of this information is captured in patent
applications, there is also a substantial amount of know-how
and trade secrets.
Simavita expects to continue to invest in the expansion of
its intellectual property portfolio and in further building and
strengthening that portfolio, including its know-how and
trade secrets.
Simavita has recently recruited an in-house patent manager
which should improve the management of the Company's
intellectual property portfolio and lead to the reduction of
external patent attorney fees.
2014? ANNUAL Report? 25
Intellectual property?
continued
Patent details
The Company’s patent portfolio has been summarised below:
Patent family 1a – Incontinence management system and diaper
Application no. /
National Phase
Granted patent
Australia
(expires on 28 October 2025)
US (expires on 2 August 2029)
United States
(13/158,136)
Status
Description
In progress
Whereas the Generation 1 patent (which expired on
27 May 2014) was directed to remote detection of
incontinence, these Generation 2 families (1a and
1b) are directed toward systems for diagnosis and
treatment of incontinence.
Status
Description
In progress in
Europe, India
and Canada
The main independent claim pursued in this Family 1b
application is as set out below.
A moisture monitoring system for monitoring wetness
in one or more absorbent articles, the system
including: (1) An input for receiving one or more
sensor signals indicative of a presence of wetness in
an absorbent article; (2) A processor for processing
the one or more sensor signals and for performing
an analysis of the signals to characterize wetness
events occurring in an absorbent article; and (3) User
interface for communicating with a user of the system.
Patent family 1b – Moisture monitoring system
Application no. /
National Phase
Granted patent
Japan (expires on 2 May 2027)
China (expires on 2 May 2027)
Europe (07718814.2)
India (4591/
KOLNP/2008)
Canada (2,685,889)
Patent family 2 – Improvements in incontinence monitoring and assessment
Application no. /
National Phase
Granted patent
Status
Australia (2010314813) In progress
New Zealand (599423)
Canada (2,776,785)
Europe (10827718.7)
Japan (2012. 537266)
United States
13/508,071
None yet granted
Description
This invention covers technical improvements to
the SIM system. Claims are directed to a system for
monitoring incontinence using a processor, display
device, remote transmitter units transmitting
signals containing continence-related data to the
processor via a receiver. A visual representation of the
continence related information in an absorbent article
worn by the subject being monitored is provided on
the display.
Patent family 3 – A system for managing patient assessment (ACFI calculator)
Application no. /
National Phase
Granted patent
In progress
United States
(13/115,490)
Australia (2011202419)
None yet granted
26
Status
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Description
This invention relates to the system and computer
program for analysing patient data by allocating a
value to a patient based on patient assessment data,
comparing the allocated value with a limit value and
identifying patients who are candidates for further
assessment according to proximity of patient value to
a limit of a predetermined value range.
Patent family 4 – Apparatus and method for analysing events from sensor data by optimisation
Granted patent
None yet granted
Application no. /
National Phase
Status
Australia (2011267839) In progress
Canada (2,802,503)
Europe (11794955.2)
United States
(13/704,153)
New Zealand (603953)
Description
This invention claims mathematical methodology
for analysing wetness events based on sensor data.
The method includes a learning phase to determine
a relationship between sensor signal data and
characteristics of the incontinence events, such as
void volume.
Patent family 5 – A capacitive wetness sensor and method for manufacturing the same
Granted patent
None yet granted
Application no. /
National Phase
Status
Australia (2012289823) In progress
United States
(14/236,255)
Europe (128202030.6)
Description
This invention relates to sensing wetness events
such as urinary and faecal events as occur from
time to time in a pad or diaper or similar absorbent
article worn by a subject. Also relates to a system for
coupling such sensors to a receiver and to methods
for manufacturing sensors and/or absorbent articles
incorporating sensors.
Patent family 6 – Improvements relating to event detection algorithms (moving window)
Granted patent
None yet granted
Application no. /
National Phase
Status
Australia (2012278931) In progress
United States
(14/130,833)
Europe (12808152.8)
Canada (2,839,943)
Description
This invention relates to processing sensor signals
from wetness sensors that may be employed to detect
wetness in incontinence pad, nappies, would dressings
and the like. Relates to algorithms for processing
sensor using a moving window.
Patent family 7 – Methods and systems for scheduling procedures such as toileting
Granted patent
Application no. /
National Phase
Status
Description
None yet granted
PCT/AU2014/000768
In progress
This inventions relates to a method for determining
points in time for taking an action, such as toileting a
patient, e.g. for use in care planning.
Patent family 8 – A system for detecting the presence of moisture
Granted patent
Germany (No. 69928949.1)
(expires 10 Sept. 2019)
France (No. 1114313)
(expires 10 Sept. 2019)
United Kingdom (No. 1114313)
(expires 10 Sept. 2019)
United States (No. 6,832,507)
(expires 10 Sept. 2019)
Application no. /
National Phase
Status
Description
N/A
N/A
The invention comprises at least one reading device
for obtaining information from the sensor about the
presence of moisture.
2014? ANNUAL Report? 27
Intellectual property?
continued
Patent family 9 – A moisture detecting module and a receiving unit
Application no. /
National Phase
Granted patent
Status
Australia (2010269226) In progress
Canada (2,767,525)
China
(201080040041.3
Netherlands
(No. 2003163)
(expires 9 July 2029)
Description
The invention aims at providing a moisture detecting
module that indicates the need for a napkin
replacement more reliably. The moisture detecting
module also comprises a moisture non-permeable
layer covering the sensor, the moisture non-permeable
layer being arranged for attachment to a napkin
surface that, during use of the napkin, is facing
towards the person’s skin such that the moisture
sensitive sensor contacts the napkin surface.
Patent family 10 – A moisture sensing module and a napkin
Granted patent
Application no. /
National Phase
Status
Netherlands (NL2010569)
Filed 4 April 2013
In progress
Description
CSIRO in-licensed family 1 – Moisture monitor system for diapers and alike
Application no. /
National Phase
Granted patent
Australia
(expires on 31 January 2027)
Status
Europe (07701419.9) In progress
Japan (JP2009252080)
United States
(12/278,058)
Description
The invention relates to a moisture monitoring system
that can be used to monitor wetting of garments,
diapers, nappies, incontinence pads and alike sanitary
products.
CSIRO in-licensed family 2 – Flexible electronic device
Application no. /
National Phase
Granted patent
Australia (No. 2006218256)
(expires on 28 February 2026)
United States (No. 11/816,795)
(expires on 28 February 2026)
28
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Status
In progress
China
(200680006339.6)
Europe (06704928.9)
Japan (JP2008531137)
Eurasian Patent
(201290019)
EU Patent App.
(10734361.8)
India (10734361.8)
Japan
(2012-519491)
United States
(13/382,830)
Description
This invention is directed toward an electronic device
that may comprise a flexible display, a flexible circuit
substrate and a power source.
Financial Report
for the year ended June 30, 2014
30? Management Discussion and Analysis (Form 51-102F1)
38? Consolidated Statement of Comprehensive Loss
39? Consolidated Statement of Financial Position
40? Consolidated Statement of Changes in Equity
41? Consolidated Statement of Cash Flows
42? Notes to the Consolidated Financial Statements
71? PricewaterhouseCoopers Audit Opinion
72? Corporate Governance Statement
82? ASX Additional Information
2014? FINANCIAL Report? 29
Management Discussion and Analysis (Form 51-102F1)
for the year ended June 30, 2014
The following Management Discussion and Analysis (“MD&A”) of the results and financial position of the Company for the
year ended June 30, 2014 should be read in conjunction with the information provided in the Company’s consolidated
financial statements for the same period (“Financial Statements”) and the material contained herein.
Unless otherwise noted, all currency amounts contained in this MD&A and in the Financial Statements are stated in
Australian dollars. The information presented in the Financial Statements is prepared in accordance with International
Financial Reporting Standards (“IFRS”).
DATE
This MD&A is dated August 28, 2014.
OVERALL PERFORMANCE
Acquisition of Simavita Holdings
On July 29, 2013, the Company announced that it had executed a Scheme Merger Agreement (“Agreement”) with Sydneybased company Simavita Holdings Limited (“Simavita Holdings”). Pursuant to the Agreement, an annual and special meeting
of the Company’s shareholders (the “Meeting”) was held on November 20, 2013 to approve the issue of new shares by the
Company to the Simavita Holdings shareholders to acquire 100% of the issued capital of Simavita Holdings (the “Merger”).
The Merger was subsequently implemented by way of a scheme of arrangement under the Australian Corporations Act.
At the Meeting held on November 20, 2013, a number of resolutions were passed by the Company’s shareholders pursuant
to which:
1. The Company undertook a consolidation of its share capital on the basis of one post-consolidation common share for
every three pre-consolidation common shares such that the number of common shares on issue was reduced from
5,168,167 to 1,722,722.
2. The Company changed its business as a result of it issuing a total of 56,053,772 post-consolidation common shares to
the shareholders of Simavita Holdings, following which Simavita Holdings became a wholly-owned subsidiary of the
Company. The transaction was accounted for as an asset acquisition.
3. The Company changed its name from Gtech International Resources Limited to Simavita Limited.
4. The Company continued into British Columbia, Canada under the Business Corporations Act (British Columbia)
(“BCBCA”) and adopted constating documents that comply with the BCBCA.
5. The Company adopted certain changes to its Stock Option Plan and subsequently issued options and warrants.
6. Dr. Malcolm R. Brandon and Alison J. Mew were not re-elected as Directors of the Company.
7. Maxwell C. Lloyd-Jones, Philippa M. Lewis, Ari B. Bergman, Peter C. Cook and Damien M. Haakman were appointed as
Directors of the Company, with Mr. Lloyd-Jones being appointed as Chairman and Ms. Lewis being appointed as CEO.
Thomas G. Howitt was re-elected as a Director of the Company and continued in his role as Secretary.
8. The Company resumed trading on the TSX Venture Exchange (“TSX-V”) under the symbol “SV”.
30
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OVERALL PERFORMANCE? continued
Acquisition of Simavita Holdings? continued
Subsequent to the Company’s resumption of trading on the TSX-V, the following events occurred:
1. On January 31, 2014, the Company granted a total of 6,876,664 stock options to certain Directors under its Stock Option
Plan. Each option vested immediately and is exercisable at any time up to, and including, December 3, 2016. The exercise
prices of the options that were granted are as follows: 1,469,166 options have an exercise price of $0.41 each; 2,469,166
options have an exercise price of $0.52 each; 1,469,166 options have an exercise price of $0.65 each; and 1,469,166
options have an exercise price of $0.82 each.
2. Also on January 31, 2014, the Company issued a total of 634,835 common share purchase warrants (the “Broker
Warrants”) to a party associated with Lodge Corporate Pty. Ltd. and 519,410 Broker Warrants to Integrated Equity Pty.
Ltd., all of which are exercisable at a price of $0.41 each up until December 3, 2016. These Broker Warrants were issued in
connection with: (a) the completion of the prospectus offering by Simavita Holdings (the company that was acquired by
the Company) pursuant to which a total of $13,899,963 was raised; and (b) the completion of the prospectus offering by
Simavita Limited pursuant to which a total of $405,965 was raised.
3. The Company also issued on January 31, 2014 a total of 1,155,298 non-transferable common share purchase warrants
(the “Medline Warrants”) to Medline Industries, Inc. (“Medline”) in connection with a US exclusive distribution agreement
between Simavita Holdings and Medline dated October 10, 2012. The first tranche of 1,155,298 Medline Warrants, which
vested immediately, had an exercise price of CAD$0.42 per share. The Company also agreed to grant two further tranches
of options to Medline. A second tranche comprises 1,444,412 Medline Warrants which will be granted, subject to the
satisfaction of certain performance requirements, on January 1, 2015. These Medline Warrants will have an exercise price
of the greater of CAD$0.504 per share or the 30-day volume weighted average price (“VWAP”). A third tranche comprises
1,444,412 Medline Warrants which will be granted, subject to the satisfaction of certain performance requirements,
on January 1, 2016. These Medline Warrants will have an exercise price of the greater of CAD$0.604 per share or the
30-day VWAP.
4. On January 31, 2014, Maxwell Lloyd-Jones resigned as Chairman and a Director of the Company. In his place, Peter Cook
was appointed as the Company’s new Chairman. As previously announced, Mr. Cook was elected to the Board of the
Company at the Meeting held on November 20, 2013.
5. On February 11, 2014, the Company received conditional approval from the Australian Securities Exchange (“ASX”)
for quotation of its CHESS Depositary Instruments (“CDIs”) on the Official List of the ASX. The Company received final
approval from ASX for admission to the Official List on February 18, 2014, with trading of its CDIs commencing under the
code “SVA” at 10:30 am (Sydney time) on February 20, 2014.
6. On February 19, 2014, the Company issued a total of 990,159 common shares at an issue price of $0.41 per share which
raised a total of $405,965, before the payment of associated costs.
7. On February 28, 2014, the Company announced that Thomas Howitt had resigned as a Director of the Company (effective
as from April 14, 2014) and that he would take up the executive position of Chief Financial Officer. Mr. Howitt continued in
his role as Secretary.
Previous activities
Previously, the Company was a junior resource company engaged in the acquisition and exploration of mineral properties in
British Columbia and the Yukon Territory. The Company still retains a 1.5% net smelter royalty on the Aurex Property which
Stratagold Corporation may purchase at any time for CAD$1,000,000. The Company also owned 69 mineral claims, which
it sold on January 16, 2002 to ATAC Resources Limited (“ATAC”). The Company agreed to accept 200,000 common shares in
ATAC and a cash payment of $5,000 in final settlement for the transfer of the project. These shares were then subsequently
sold by the Company during the fiscal year ended April 30, 2004. The Company retains a 1.5% net smelter royalty which ATAC
may purchase from the Company for CAD$600,000.
2014? FINANCIAL Report? 31
Management Discussion and Analysis (Form 51-102F1)?
continued
for the year ended June 30, 2014
OVERALL PERFORMANCE? continued
Group overview
The Simavita Group of companies (the “Group”) has developed an innovative world-first solution for the management of
urinary incontinence, with a focus on the elderly. The Group’s first product is the SIM™ platform technology which is an
instrumented incontinence assessment application that provides evidence-based incontinence management care plans to
the residential aged care market.
The original concept for the Company’s SIM™ technology was developed by an Australian medical doctor, the late Dr.
Fred Bergman, while working with residential aged care facilities in Melbourne, Australia. Dr. Bergman’s observations of
the inadequacy of existing incontinence management practices led him to file his first patent application in 1996 for the
development of a technology to effectively assess and manage urinary incontinence.
By 2004, the technology had reached a point where it was appropriate for field testing and the Group applied for, and was
awarded, a grant from the Australian Government to conduct the first field trial. Preliminary findings confirmed significant
efficiencies and improvements in quality of care as a result of the use of the early stage SIM™ technology.
From 2008, and under the leadership of the current CEO, Philippa Lewis, SIM™ has been refined over a number of product
generations and is now in its fourth generation. The current SIM™ technology has evolved from many years of development,
customer interface, extensive long-term field trials and the expenditure of significant funds from both private investors and
the Australian Government.
With the maturing of the SIM™ technology, including significant cost reductions delivered with each successive generation,
the Group’s business has evolved through different commercialisation models, all historically servicing the Australian
market. Sales of SIM™ in Australia are increasing and, during the 2014 calendar year, the Company expanded its operations
internationally, initially into the United States, via an exclusive agreement with a large US-based distribution partner. The
Company also has plans to expand its sales activities into Canada, Europe and Japan and into different markets and sectors,
with products leveraging off its underlying core technology.
Results from operations
The Simavita Group received clearance from the US Food and Drug Administration in August 2013, enabling it to market its
urinary incontinence assessment and management product, SIM™, in the US market. The Company has subsequently carried
out successful trials of the product at a number of sites in the US and distribution of the product has now commenced in
collaboration with the Company’s exclusive US distribution partner, Medline Industries, Inc.
During the year ended June 30, 2014, the Company successfully completed the development of its fourth generation
platform, including regulatory testing, and released it for live site trials. This latest version eliminates costly bespoke network
infrastructure and embraces a rapid deployment approach leveraging WiFi technology. Based on the positive results of
the live trials, the Company rolled out its fourth generation SIM™ technology to its existing customers in Australian market
and to new customers globally. Completion of this rollout to existing customers occurred shortly after the end of the 2014
financial year.
The Group reported a net consolidated loss after tax for the year ended June 30, 2014 of $10,491,790. This loss represented
an increase of $3,105,979, or 42%, over the net loss for the previous corresponding period. The loss for the current period,
however, included significant one-off expenses including a non-cash, share-based payments expense in respect of warrants
and options granted as part of the Company’s recent listing ($1,302,333), transaction expenses associated with the
Company’s acquisition by Gtech International Resources Limited and subsequent dual stock exchange listings ($1,221,125)
and a non-cash loss arising on acquisition of $792,397. After deducting these three amounts, the adjusted loss for the
year ended June 30, 2014 would have fallen to $7,175,935, or $209,876 (approximately 3%), less than the loss for previous
corresponding period.
Revenues generated by the Group from the sale of its SIM™ solution increased by $33,605, or 11%, during the year ended
June 30, 2014 from $316,290 in 2013 to $349,895 in 2014. This rate of sales growth, however, was reduced due to a focus by
the Company on the completion of its Generation 4 SIM™ product for launch in the US market rather than securing further
sales of earlier Generation 3 products in Australia.
32
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OVERALL PERFORMANCE? continued
Results from operations? continued
In addition, as existing customers transitioned from the earlier Generation 3 product to the more advanced Generation 4
product, the number of incontinence assessments performed fell resulting in a temporary decline in both sales and revenue.
With the rollout of the Generation 4 product now complete and the addition of new customers in both the US and Australian
marketplaces, the rate of sales growth has already increased and is anticipated to increase further in the 2015 financial year.
The Company’s cost of sales decreased markedly during the 2014 year by $109,483, or 53%, from the previous year. The
transition by existing customers to the Company’s new Generation 4 product was accompanied by a revenue model more
heavily focussed on the sale of consumable products which is less impacted by the sale of the more expensive hardware
associated with the now-superseded Generation 3 product. It is envisaged that additional product developments now
underway will result in further reductions in costs, delivering benefits for the Company and its customers alike.
The Company’s total employee benefits expense for year ended June 30, 2014 was $4,545,658, representing a modest
increase of $134,445, or only 3%, over the figure for the previous year of $4,411,213. In the consolidated statement of
comprehensive loss, the total employee benefits expense is allocated across the respective functions of general and
administration, research and development and sales, marketing and distribution.
Finance costs incurred by the Company fell by a significant $729,766, or 69%, during the year under review, from $1,050,369
in 2013 to only $320,603 in 2014. This fall arose as a result of the extinguishment during the year of outstanding interestbearing liabilities via the conversion of certain debt instruments into equity and the repayment in cash of other loans from
the proceeds of the Company’s various capital raisings. It is anticipated that, in the coming year, finance costs will be nominal
following the complete repayment by the Company of all interest-bearing liabilities by June 30, 2014.
General and administration expenses incurred by the Company increased during the year by $573,548, or 15%, from
$3,898,541 in 2013 to $4,472,089 in 2014. This increase is primarily due to additional expenses incurred in relation to the
scrapping of obsolete inventories as a result of the transition from the Generation 3 to the Generation 4 product ($202,186)
and management and consulting fees associated indirectly with the acquisition of Simavita Holdings. The Company also
incurred expenses associated with the recruitment of employees in anticipation of future growth.
Occupancy costs incurred by the Group during the year ended June 30, 2014 of $331,437 were in line with those incurred
during the previous year. During the 2014 financial year, the Company entered into leases in respect of new premises in
Sydney, New South Wales and Melbourne, Victoria. Notwithstanding this, the Group’s total occupancy costs for the 2015
financial year are not expected to increase significantly from those incurred in 2014.
As part of the acquisition of Simavita Holdings Limited by the Company in late 2013, a loss of $792,397 was incurred by
the consolidated Group. In essence, this loss represented the market value of the 1,722,722 common shares held by the
Company’s shareholders immediately prior to the date of acquisition (December 3, 2013) plus the value of the Company’s net
liabilities ($86,081) on the date of acquisition.
Research and development expenses incurred by the Company during the year increased by $305,388, or 18%, from
$1,715,843 in 2013 to $2,021,231 in 2014. This increase in expenditure related to costs incurred in the successful development
of the Company’s Generation 4 SIM™ solution and other related activities aimed at developing further refinements of existing
products and the development of new applications based around the Company’s proprietary core technology, all of which
will deliver additional products for sale.
Sales, marketing and distribution expenses incurred by the Company during the year increased by $82,601, or 5%, from
$1,633,163 in 2013 to $1,715,764 in 2014. This modest increase was attributable to the launch of the Company’s product in
the US marketplace in collaboration with its exclusive distribution partner, Medline Industries Inc., and to engage with and
assist existing customers during the transition from the Generation 3 to the Generation 4 product. It is expected that as the
Company strives to increase its sales in the US, and potentially European, markets during the 2015 financial year, additional
sales, marketing and distribution expenses will be incurred.
During the 2014 financial year, a significant non-cash share-based payment expense of $1,302,333 was incurred in respect of
2,309,543 warrants and 6,876,664 options granted as part of the Company’s listing, as described on page 30.
2014? FINANCIAL Report? 33
Management Discussion and Analysis (Form 51-102F1)?
continued
for the year ended June 30, 2014
OVERALL PERFORMANCE? continued
Results from operations? continued
As part of the acquisition of Simavita Holdings Limited by the Company in late 2013, total transaction expenses of $1,221,125
were incurred. A nominal amount of $64,651 in similar expenses was also incurred during the 2013 financial year in respect of
the same transaction. These expenses included legal fees, consulting fees, regulatory costs, expert’s fees and travel expenses
all associated with the acquisition of Simavita Holdings by the Company.
The Company’s income tax benefit increased by an estimated $176,439, or 17%, from $1,037,916 in 2013 to $1,214,355
in 2014. This benefit relates to a research and development tax incentive payment which is reflected in the Company’s
receivables as at June 30, 2014. The Company anticipates that the incentive payment will be received prior to the end of the
2014 calendar year.
As at June 30, 2014, the Company’s total cash and cash equivalents were $6,844,197, as compared to an amount of $737,978
as at the previous corresponding balance date. This increase arose from net cash flows from financing activities, largely
attributable to funds raised from equity raisings ($14,357,674), offset by net cash used in operating activities of $8,287,600.
SELECTED FINANCIAL DATA
The following selected financial data covers the three financial years ended June 30, 2014. The data has been prepared in
accordance with IFRS and is reported in Australian dollars.
Total revenues
$
Year ended
Net profit/(loss)
$
Total assets
$
Total non-current
liabilities
$
June 30, 2014
349,895
(10,491,790)
8,789,924
-
June 30, 2013
316,290
(7,385,811)
2,489,457
3,369,678
June 30, 2012
704,973
(6,945,652)
3,446,684
2,945,353
SUMMARY OF QUARTERLY RESULTS
The following is a comparison of revenue and earnings for the previous eight quarters ended June 30, 2014, being the
information contained in the first financial statements prepared by the Company since its reverse takeover of Simavita
Holdings. Financial information is prepared in accordance with IFRS and is reported in Australian dollars.
Total revenues
$
Quarter ended
Net profit/(loss)
$
Net loss per share
$
June 30, 2014
95,774
(867,099)
(0.03)
March 31, 2014
102,838
(4,406,615)
(0.15)
December 31, 2013
75,957
(2,865,887)
(0.09)
September 30, 2013
75,326
(2,352,189)
(0.07)
349,895
(10,491,790)
(0.34)
June 30, 2013
37,103
(1,153,445)
(0.51)
March 31, 2013
100,211
(2,405,992)
(1.07)
December 31, 2012
72,743
(2,193,494)
(0.98)
September 30, 2012
106,233
(1,632,880)
(0.73)
Totals - year ended June 30, 2013
316,290
(7,385,811)
(3.29)
Totals - year ended June 30, 2014
The significant increase in the net loss for the quarter ended March 31, 2014 arose from the recording of a share-based
payments expense of $1,302,333. The significant reduction in the net loss for the quarter ended June 30, 2014 arose from the
recording of a year-end receivable in respect of an income tax benefit relating to a research and development tax incentive
amount of $1,124,355.
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LIQUIDITY
The Group incurred total expenses of $12,176,979 during the year ended June 30, 2014 and net cash outflows from
operations during the same period of $8,287,600, which included a number of significant one-off expenses as detailed above.
As at June 30, 2014, the Company had working capital of $7,216,954. The Company believes it has sufficient funds to meet its
current working capital requirements. Details regarding the Company’s liquidity position have been provided in Note 30 to
the Financial Statements.
TRANSACTIONS WITH RELATED PARTIES
Up until December 3, 2013, the Company was a subsidiary of Genetic Technologies Limited (“GTG”), a company listed on
both the Australian Securities Exchange and NASDAQ Capital Market. During the year ended June 30, 2014, there were minor
expenses paid by GTG on the Company’s behalf that were subsequently reimbursed.
Details of the amounts paid to related parties, including members of Key Management Personnel, during the year ended
June 30, 2014, have been provided in Note 23 to the Financial Statements.
Outstanding interest-bearing liabilities that were repaid during the year ended June 30, 2014 had been advanced to the
Company to provide it with sufficient working capital to fund its continuing operations until such time as the transaction
with the former Gtech International Resources Limited and its accompanying major fundraising could be completed.
CAPITAL RESOURCES
As detailed above, the Company believes that it has sufficient financial resources to pay its ongoing administrative expenses
and to meet its liabilities for the ensuing year.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements in place as of June 30, 2014.
CHANGES IN ACCOUNTING POLICIES
During the year ended June 30, 2014, the Company changed some of its accounting policies as the result of new or revised
accounting standards which became effective for the annual reporting period commencing on July 1, 2013. The affected
policies are IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other
Entities, IFRS 19 Employee Benefits and Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7). The
Company has assessed there to be no material impact arising from these changes.
Another new accounting standard that is applicable for the first time for the year ended June 30, 2014 is IFRS 13 Fair Value
Measurement and IFRS (2009-2011 Project Cycle). This standard has introduced new disclosures for the report but did not
affect the Group’s accounting policies or any of the amounts recognized in the Financial Statements.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Company only invests in cash deposits with large banks that are considered to be low risk.
DIRECTORS AND OFFICERS
As detailed under the heading “Overall Performance”, there were changes to the Board as a result of the acquisition by the
Company of Simavita Holdings. As at the date of this MD&A, the names of the Directors and Officers of the Company are set
out below. Details relating to the Directors and Officers of Simavita and the Company’s corporate governance practices have
been provided in the Statement which follows immediately after the Financial Statements.
?? Peter C. Cook – Chairman and Director
?? Philippa M. Lewis – Director and CEO
?? Ari B. Bergman – Director
?? Damien M. Haakman – Director
?? Thomas G. Howitt – CFO and Secretary
The Company is dependent on a number of key Directors and Officers. Loss of any of those persons could have an adverse
affect on the Company. The Company maintains “key-man” insurance in respect of Ms. Lewis as CEO.
2014? FINANCIAL Report? 35
Management Discussion and Analysis (Form 51-102F1)?
continued
for the year ended June 30, 2014
OTHER INFORMATION
Additional Disclosure for Venture Issuers without Significant Revenue
Details pertaining to the expenses incurred by the Company during the years ended June 30, 2013 and 2014 are provided
above under the heading Results from Operations.
Prior to its acquisition of Simavita Holdings, no significant external investor relations activities were carried out by the
Company. The Company maintains a website at www.simavita.com, which gives shareholders the opportunity to review
published financial reports, news releases, corporate profiles, project details and other information. Other information
relating to the Company may be found on SEDAR at www.sedar.com.
OUTSTANDING SHARE DATA
Summary of shares issued and outstanding
Number
of shares
Balance at July 1, 2012
Issue of ordinary shares by Simavita Holdings for cash
Equity transaction costs
Balance at July 1, 2013
Amount
$
7,945,423
18,914
-
18,764,144
44,570
(206,427)
7,964,337
18,602,287
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
20,928,675
2,000,000
Conversion of borrowings into equity (pre-acquisition)
49,589,520
7,885,514
Share consolidation by Simavita Holdings (1 for 3.543)
(56,331,098)
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
33,902,338
Elimination of shares in legal acquiree (Simavita Holdings)
(56,053,772)
Issue of common shares on acquisition of Simavita Holdings
56,053,772
-
Fair value of common shares held by pre-acquisition shareholders of Gtech
1,722,722
706,316
Issue of common shares by Simavita Limited for cash (post-acquisition)
7,876,832
Equity transaction costs
-
Balance at June 30, 2014
65,653,326
13,899,963
-
3,504,968
(2,663,096)
43,935,952
Summary of options outstanding
As at June 30, 2014, there was a total of 6,876,664 options over common shares in the Company outstanding. A further
1,237,500 options were granted on August 26, 2014. Refer Notes 19 and 31 of the Financial Statements for details.
Summary of warrants outstanding
As at June 30, 2014, there was a total of 2,309,543 common share purchase warrants in the Company outstanding, as well
as commitments to grant further warrants to Medline Industries, Inc. (“Medline”) as part of the Company’s distribution
arrangements with Medline (refer Note 19 of the Financial Statements for details).
36
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FORWARD-LOOKING STATEMENTS
This MD&A contains certain statements that may be deemed “forward-looking statements”. All statements in this release,
other than statements of historical fact, that address future acquisitions and events or developments that the Company
expects to occur, are forward-looking statements. Forward-looking statements are statements that are not historical facts
and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”,
“projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur.
Forward-looking statements in this document include statements regarding possible future acquisitions (including
opportunities in the biotechnology sector), spending plans and possible financing plans. Although the Company believes the
expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results may differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially from those in forward-looking statements include market
conditions, availability of capital and financing, general economic, market or business conditions, and availability of possible
acquisition opportunities on favourable terms. Investors are cautioned that any such statements are not guarantees of
future performance and actual results or developments may differ materially from those projected in the forward-looking
statements. Forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on
the date the statements are made.
Except as required by securities laws, the Company undertakes no obligation to update these forward-looking statements in
the event that management’s beliefs, estimates or opinions, or other factors, should change. These statements are based on
a number of assumptions, including assumptions regarding general business and economic conditions, the state of the legal
and regulatory environment in which the Company operates, the ability of the Company to satisfy regulatory requirements
and the availability of capital and financing for the Company’s operations and contemplated or proposed transactions on
satisfactory terms.
BY ORDER OF THE BOARD
PETER C. COOK
Chairman and Director
PHILIPPA M. LEWIS
Director and Chief Executive Officer
2014? FINANCIAL Report? 37
Consolidated Statement of Comprehensive Loss
for the year ended June 30, 2014
Consolidated
Notes
June 30, 2014
$
June 30, 2013
$
349,895
316,290
? Cost of sales
(95,453)
(204,936)
Gross profit
254,442
111,354
216,392
156,958
Revenue
Other revenue
5
Expenses
? Finance costs
? General and administration
? Occupancy costs
? Loss on acquisition
2
? Research and development
(320,603)
(1,050,369)
(4,472,089)
(3,898,541)
(331,437)
(329,472)
(792,397)
-
(2,021,231)
(1,715,843)
(1,633,163)
? Sales, marketing and distribution
(1,715,764)
? Share-based payments expense
(1,302,333)
? Transaction expenses
(1,221,125)
(64,651)
(11,706,145)
(8,423,727)
1,214,355
1,037,916
(10,491,790)
(7,385,811)
(22,783)
(4,045)
(10,514,573)
(7,389,856)
(0.34)
(3.29)
Loss before income tax
Income tax benefit
8
Loss for the year
-
Other comprehensive income
? Items that may be subsequently reclassified to profit/(loss)
?? Translation of foreign operation
Total comprehensive loss for the year
Basic and diluted loss per common share
7
The accompanying notes form an integral part of these consolidated financial statements.
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Consolidated Statement of Financial Position
as at June 30, 2014
Consolidated
Notes
June 30, 2014
$
June 30, 2013
$
Assets
Current Assets
? Cash and cash equivalents
10
6,844,197
737,978
? Trade and other receivables
11
1,397,009
1,146,806
?Inventories
12
313,809
331,873
? Other assets
13
50,716
12,312
8,605,731
2,228,969
Total Current Assets
Non-Current Assets
? Property, plant and equipment
14
114,436
183,803
? Intangible assets
15
69,757
76,685
184,193
260,488
8,789,924
2,489,457
Total Non-Current Assets
Total Assets
Liabilities and Shareholders’ Equity
Liabilities
Current Liabilities
? Trade and other payables
16
1,022,823
742,777
? Interest-bearing liabilities
17
-
6,777,465
?Provisions
18
236,338
190,199
1,259,161
7,710,441
-
3,369,678
-
3,369,678
1,259,161
11,080,119
43,935,952
18,602,287
Total Current Liabilities
Non-Current Liabilities
? Interest-bearing liabilities
17
Total Non-Current Liabilities
Total Liabilities
Shareholders’ Equity
? Share capital
19
?Reserves
20
2,749,530
1,469,980
? Retained losses
21
(39,154,719)
(28,662,929)
Total Shareholders’ Equity
7,530,763
(8,590,662)
Total Liabilities and Shareholders’ Equity
8,789,924
2,489,457
The accompanying notes form an integral part of these consolidated financial statements.
2014? FINANCIAL Report? 39
Consolidated Statement of Changes in Equity
for the year ended June 30, 2014
Share capital
$
Balance at July 1, 2012
Reserves
$
Retained losses
$
Totals
$
18,764,144
1,474,025
(21,277,118)
(1,038,949)
Net loss for the year
-
-
(7,385,811)
(7,385,811)
Other comprehensive income, net of tax
-
(4,045)
Total comprehensive income for the year
-
(4,045)
(7,385,811)
(4,045)
(7,389,856)
Transactions with owners
? Issue of common shares for cash
44,570
-
-
44,570
? Equity transaction costs
(206,427)
-
-
(206,427)
Total transactions with owners
(161,857)
-
-
(161,857)
Balance at June 30, 2013
18,602,287
1,469,980
(28,662,929)
(8,590,662)
(10,491,790)
(10,491,790)
Net loss for the year
-
-
Movement in share-based payments reserve
-
1,302,333
Other comprehensive income, net of tax
-
Total comprehensive income for the year
-
1,279,550
17,404,931
-
-
-
-
(22,783)
(10,491,790)
1,302,333
(22,783)
(9,212,240)
Transactions with owners
? Issue of common shares for cash
?Issue of common shares to owners
? of Simavita Holdings Limited
? Fair value of shares issued on acquisition
9,885,514
9,885,514
-
-
? Equity transaction costs
(2,663,096)
-
-
(2,663,096)
Total transactions with owners
25,333,665
-
-
25,333,665
43,935,952
2,749,530
Balance at June 30, 2014
706,316
17,404,931
The accompanying notes form an integral part of these consolidated financial statements.
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(39,154,719)
706,316
7,530,763
Consolidated Statement of Cash Flows
for the year ended June 30, 2014
Consolidated
Notes
June 30, 2014
$
June 30, 2013
$
Cash flows from/(used in) operating activities
(10,491,790)
Loss for the year
(7,385,811)
Non-cash items
? Depreciation and amortization
? Accrued interest
? Loss on acquisition
2
? Share-based payments expense
139,899
203,567
-
1,050,369
792,397
-
1,302,333
-
-
? Unrealised foreign exchange movements
(4,045)
Changes in assets and liabilities
? (Increase)/decrease in receivables
(250,203)
78,890
? (Increase)/decrease in inventories
18,064
(7,465)
? (Increase)/decrease in other assets
(38,404)
7,297
? Increase/(decrease) in payables
280,046
35,468
46,139
42,395
? Increase/(decrease) in provisions
? Net liabilities acquired
2
(86,081)
-
(8,287,600)
(5,979,335)
? Purchases of plant and equipment
(97,756)
(75,004)
? Purchases of intangible assets
(17,042)
(8,578)
? Cash received on reverse takeover
162,542
Net cash flows from/(used in) operating activities
Cash flows from/(used in) investing activities
47,744
Net cash flows from/(used in) investing activities
(83,582)
Cash flows from/(used in) financing activities
3,504,968
? Proceeds from the issue of shares by the Company
-
? Proceeds from the issue of shares by Simavita Holdings Limited
15,899,963
44,570
? Equity transaction costs
(2,663,096)
(206,427)
-
? Draw down of borrowings
? Repayment of borrowings
(2,384,161)
Net cash flows from/(used in) financing activities
14,357,674
6,117,818
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of year
737,978
Net foreign exchange differences on cash and cash equivalents
(11,599)
Cash and cash equivalents at the end of year
10
6,844,197
6,178,703
(700,000)
5,316,846
(746,071)
1,484,049
737,978
The accompanying notes form an integral part of these consolidated financial statements.
2014? FINANCIAL Report? 41
Notes to the Consolidated Financial Statements
for the year ended June 30, 2014
1. Nature and continuance of operations
Simavita Limited (formerly Gtech International Resources Limited, the “Company”) was incorporated under the laws
of the Yukon Territory on May 28, 1968 and continued under the laws of the Province of British Columbia, Canada on
December 3, 2013.
These consolidated financial statements of the Company as at and for the year ended June 30, 2014 comprise Simavita
Limited and its subsidiaries (together referred to as the “Group” and individually as “Group Entities”). Simavita Limited is the
ultimate parent entity of the Group.
On December 3, 2013, the Company completed the acquisition of Simavita Holdings Limited (“Simavita Holdings”) (refer Note 27).
The Group’s continuing operations focus on the sale and distribution of an expanding range of innovative products derived from
its proprietary incontinence assessment and management technology, SIMTM, with an initial emphasis on the US marketplace
through an existing distribution arrangement. Simavita Holdings is located in Sydney, Australia.
2. Qualifying transaction and reverse takeover
On December 3, 2013, the Company completed a reverse takeover qualifying transaction (“Reverse Takeover”) in accordance
with TSX Venture Exchange Inc. (“TSX-V”) Policy 2.4 whereby the Company acquired all the issued shares of Simavita
Holdings Limited on the basis of one share in the Company for one share in Simavita Holdings (refer Note 27 for further
details). Under the terms of the Reverse Takeover, the Company issued a total of 56,053,772 common shares as consideration
for the acquisition of 100% of the issued and outstanding shares of Simavita Holdings. Immediately prior to the issue of the
above shares, as part of the Reverse Takeover, the Company consolidated its share capital on the basis of three old shares for
each new share. On December 3, 2013, being the date on which the Reverse Takeover was completed, the fair value of the net
liabilities (cash less accounts payable) of the Company was $86,081.
Legally, the Company is the parent of Simavita Holdings. However, as a result of the above share exchange, control of the
Group passed to the former shareholders of Simavita Holdings which, for accounting purposes, is deemed to be the acquirer.
For financial reporting purposes, these types of transactions are considered to be capital transactions of the acquirer and are
the equivalent to the issuance of shares by Simavita Holdings for the net monetary assets of the Company, accompanied by
a recapitalisation. The Reverse Takeover is assessed to be an asset acquisition and not a business combination under IFRS 3
Business combinations, as the Company has been deemed not to have been operating a business at that time for accounting
purposes. The accounting result is similar to a reverse acquisition but it does not result in the recognition of goodwill. Such
transactions fall within the scope of IFRS 2 Share-based payments, which requires the shares issued by Simavita Holdings
(the consideration) to be recognized at fair value.
The following accounting principles have been employed:
(a) the assets and liabilities of Simavita Holdings were recognized and measured at their pre-acquisition carrying amounts;
(b) the identifiable assets and liabilities of the Company are recognized at fair value at the acquisition date;
(c) the retained losses and other equity balances are the retained losses and other equity balances of Simavita Holdings
immediately prior to the share exchange transaction;
(d) the amount recognized as issued equity instruments in the consolidated financial statements is determined by adding
the fair value of the Company (which is based on the number of equity interests deemed to have been issued by Simavita
Holdings) to the issued equity of Simavita Holdings immediately before the acquisition. However, the equity structure
(that is, the number and type of equity instruments issued) shown in the consolidated financial statements reflects
the Company’s equity structure, including the equity instruments issued by the Company to effect the combination.
The equity structure of Simavita Holdings (accounting acquirer) is restated using the exchange ratio established in the
acquisition agreement to reflect the number of shares issued by the Company (the accounting acquiree) in the reverse
acquisition;
(e) the difference in the fair value of the shares deemed to have been issued by the Simavita Holdings and the fair value
of the Company’s identifiable net assets/(liabilities) represents a service received by Simavita Holdings as a loss on
acquisition. This loss of $792,397 has been recognized as an expense in the statement of comprehensive income; and
(f) the financial statements represent the continuation of Simavita Holdings’ financial information and therefore the
comparative information presented in these financial statements, covering the year ended June 30, 2013, is that of
Simavita Holdings.
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3. Summary of significant accounting policies
(a) Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International
Financial Reporting Interpretations Committee (“IFRIC”).
The preparation of these consolidated financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires Management to make judgements, estimates and assumptions that affect the
application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
During the financial year ended June 30, 2014, the Group incurred a total comprehensive loss after income tax of $10,514,573
(2013: $7,389,856) and net cash outflows from operations of $8,287,600 (2013: $5,979,335). As at June 30, 2014, the Group
held total cash and cash equivalents of $6,844,197.
Subsequent to balance date, the Group raised a total of $3,633,487, prior to the payment of associated costs, from the
completion of private placement (generating $2,925,997) and share purchase plan (generating $707,490). As at July 31, 2014,
the Group held total cash and cash equivalents of $9,210,651.
During the 2015 financial year, the Company plans to increase sales of its SIM™ solution through both direct sales in the
Australian market and sales made via the distribution agreement with Medline in the US market. There is uncertainty around
both the timing of these sales and the rate of growth in both the Australian and US markets and, therefore, uncertainty
around the ability of the Company to continue as a going concern. As a result of this uncertainty, the Directors have
considered alternative strategies which may be available to the Company, if required, including sales in other markets, such
as Europe, and the possible raising of additional equity capital.
The Directors believe that the Company will be successful in these matters and, accordingly, the consolidated financial
statements contained in this Financial Report have been prepared on a going concern basis.
(b) Basis of consolidation
These consolidated financial statements include the accounts of the Company and the entities it controlled, being Simavita
Holdings Limited, Simavita (Aust.) Pty. Ltd., Simavita US, Inc. and Fred Bergman Healthcare Pty. Ltd. A Group controls an
entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. These consolidated financial statements are prepared using the principles
of reverse takeover accounting as described in Note 2. Intracompany balances and transactions, including any unrealised
income and expenses arising from any intracompany transactions, are eliminated in preparing the consolidated financial
statements. The functional and presentation currency of the Company and its subsidiaries is the Australian dollar.
(c) Changes in accounting policies
During the year ended June 30, 2014, the Company changed some of its accounting policies as the result of new or revised
accounting standards which became effective for the annual reporting period commencing on July 1, 2013. The affected
policies are IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other
Entities, IFRS 19 Employee Benefits and Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7). The
Company has assessed there to be no material impact arising from these changes.
Another new standard that is applicable for the first time for the year ended June 30, 2014 is IFRS 13 Fair Value Measurement
and IFRS (2009-2011 Project Cycle). This standard has introduced new disclosures for the report but did not affect the Group’s
accounting policies or any of the amounts recognized in the financial statements.
2014? FINANCIAL Report? 43
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
3. Summary of significant accounting policies? continued
(d) Impact of standards issued but not yet applied by the entity
?? IFRS 9 Financial Instruments (December 2013)
IFRS 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and
financial liabilities. The standard is not applicable until January 1, 2018 but is available for early adoption. The standard
is not expected to have an impact on the Group’s accounting for financial instruments.
The new hedging rules align hedge accounting more closely with the Group’s risk management practices. As a general
rule, it will be easier to apply hedge accounting going forward. The new standard also introduces expanded disclosure
requirements and changes in presentation. The Group has not yet decided when to adopt IFRS 9.
?? Annual Improvements to IFRSs 2010-2012 and 2011-2013 cycle (effective July 1, 2014)
In December 2013, the IASB approved a number of amendments to International Financial Reporting Standards as a
result of the annual improvements project. The Group does not expect that any adjustments will be necessary as the
result of applying the revised rules.
(e) Earnings per share (“EPS”)
Basic EPS is calculated by dividing the profit attributable to owners of the Company, excluding any costs of servicing equity
other than common shares, by the weighted average number of common shares outstanding during the financial year.
Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential common shares and the weighted average number of
common shares that would have been outstanding assuming the conversion of all dilutive potential common shares.
(f) Foreign currency translation
The functional and presentation currency of Simavita Limited and its Australian subsidiaries is the Australian dollar (AUD).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of
the transaction. Monetary assets and liabilities which are denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance sheet date. All differences are taken to the statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate
ruling at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates ruling at the date when the fair value was determined.
As at the reporting date, where appropriate, the assets and liabilities of these subsidiaries are translated into the
presentation currency of Simavita Limited at the rate of exchange ruling at the balance sheet date and the statement of
comprehensive income is translated at the weighted average exchange rates for the period. The exchange differences arising
on the retranslation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred
cumulative amount recognized in equity relating to that particular foreign operation is recognized in the statement of
comprehensive income.
(g) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing the performance of the
operating segments, has been identified as the Chief Executive Officer.
(h) Government grants
Government grants are assistance by the government in the form of transfers of resources to the Group in return for past
or future compliance with certain conditions relating to the operating activities of the Group. Government grants include
government assistance where there are no conditions specifically relating to the operating activities of the Group other than
the requirement to operate in certain regions or industry sectors. Amounts received in respect of such grants are recognized
as revenue when received.
44
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3. Summary of significant accounting policies? continued
(i) Revenue
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer
returns, rebates and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognized when all of the following conditions are satisfied:
?? The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
?? The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
?? The amount of revenue can be measured reliably;
?? It is probable that the economic benefits associated with the transaction will flow to the Group; and
?? The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract. The stage
of completion of the contract is determined as follows:
?? Installation fees are recognized by reference to the stage of completion of the installation, determined as the proportion
of the total time expected to install that has elapsed at the end of the reporting period; and
?? Servicing fees included in the price of products sold are recognized by reference to the proportion of the total cost of
providing the servicing for the product sold, taking into account historical trends in the number of services actually
provided on past goods sold.
Interest revenue
?? Interest revenue is accrued on a time basis, by reference to the principal outstanding using the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
(j) Share-based payments
The Company provides benefits to employees and others in the form of share-based payment transactions, whereby officers
and employees render services and receive rights over shares (“equity-settled transactions”). The cost of these transactions
is measured by reference to the fair value at the date they are granted. The fair value of options granted is determined using
a Black-Scholes option pricing model.
In valuing equity-settled transactions, no account is taken of any non-market performance conditions. The cost of equitysettled transactions is recognized, together with a corresponding increase in equity, over the period in which the relevant
vesting conditions are fulfilled, ending on the date that the relevant employees become fully entitled to the award
(“vesting date”).
The cumulative expense recognized for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired; and (ii) the number of awards that, in the opinion of the Directors of the
Company, will ultimately vest. This opinion is formed based on the most current information available at balance date.
No expense is recognized for any awards that do not ultimately vest. Where the terms of an equity-settled award are
modified, as a minimum an expense is recognized as if the terms had not been modified. In addition, an expense is
recognized for any increase in the value of the transaction as a result of the modification, as measured at the date of
modification. Where appropriate, the dilutive effect of outstanding options is reflected as additional share dilution in the
computation of diluted earnings per share.
The Company’s policy is to treat the share options of terminated employees as forfeitures.
2014? FINANCIAL Report? 45
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
3. Summary of significant accounting policies? continued
(k) Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or taxable loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. Current tax for current and prior periods is recognized as a liability (or asset) to the extent that is it unpaid (or
refundable). The tax rate adopted in the calculation of all tax balances is the tax rate applicable in Australia as that is deemed
to be the most meaningful rate based on the nature of the Group’s activities.
Deferred tax
Deferred tax is accounted for in respect of temporary differences between the tax base of an asset or liability and its carrying
amount in the statement of financial position. The tax base of an asset or liability is the amount attributed to that asset or
liability for tax purposes.
In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized
to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary
differences or unused tax losses and tax offsets can be utilized.
However, deferred tax assets and liabilities are not recognized if the temporary differences giving rise to them arise from
the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither
taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognized in relation to taxable temporary
differences arising from the initial recognition of goodwill.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the
asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the
carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognized as an expense or income in the statement of comprehensive income, except when
it relates to items credited or debited directly to equity, in which case the deferred tax is also recognized directly in equity,
or where it arises from the initial accounting for a business combination, in which case it is taken into account in the
determination of goodwill or excess.
Tax consolidation
Simavita Holdings Limited (the “Head Entity”) and its wholly?owned Australian controlled entities have formed an income
tax consolidated group under the tax consolidation regime. As at June 30, 2014, the Group had not yet generated a profit
from the commercialization of its intellectual property. Accordingly, no deferred tax assets arising from carried forward
losses and temporary differences have yet been recognized.
(l) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits
with an original maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents
consist of cash and cash equivalents as defined above. Cash at bank earns interest at floating rates based on daily bank
deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the
Company’s immediate cash requirements, and earn interest at the respective short-term deposit rates.
46
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3. Summary of significant accounting policies? continued
(m) Trade and other receivables
Trade receivables, which are non-interest bearing and generally have terms of between 30 to 90 days, are recognized and
carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is
made when there is objective evidence that a receivable is impaired. Such evidence includes an assessment of the debtor’s
ability and willingness to pay the amount due. The amount of the allowance/impairment loss is measured as the difference
between the carrying amount of the trade receivables and the estimated future cash flows expected to be received from the
relevant debtors.
Inventories
Inventories principally comprise finished goods and raw materials and are valued at the lower of cost and net realizable
value. Inventory costs are recognized as the purchase price of items from suppliers plus freight inwards and any applicable
landing charges. Costs are assigned on the basis of weighted average cost.
(o) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated
on either a straight-line or diminishing value basis over the estimated useful life of the respective asset as follows:
?? Office equipment – 2.5 years
?? Equipment under lease – 3 years
?? Testing equipment – 3.33 years
?? Motor vehicles – 3.33 years
?? Furniture and fittings – 5 years
Costs relating to day-to-day servicing of any item of property, plant and equipment are recognized in profit or loss as
incurred. The cost of replacing larger parts of some items of property, plant and equipment are capitalized when incurred
and depreciated over the period until their next scheduled replacement, with the replacement parts being subsequently
written off.
(p) Intangible assets
Patents
Patents held by the Group, which are used in the manufacture of its incontinence system and electronic components, are
carried at cost and amortized on a straight-line basis over their useful lives, being from 5 to 10 years. External costs incurred
in filing and protecting patent applications, for which no future benefit is reasonably assured, are expensed as incurred.
Research and development costs
Costs relating to research and development activities are expensed as incurred. An intangible asset arising from
development expenditure on an internal project is recognized only when the Group can demonstrate the technical feasibility
of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to
use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the
development and the ability to measure reliably the expenditure attributable to the intangible asset during its development.
To date, all development costs have been expensed as incurred as their recoverability cannot be regarded as assured.
2014? FINANCIAL Report? 47
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
3. Summary of significant accounting policies? continued
(q) Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the
higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s valuein-use cannot be estimated to be close to its fair value. In such cases, the asset is tested for impairment as part of the cashgenerating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses
relating to operations are recognized in those expense categories consistent with the function of the impaired asset unless
the asset is carried at its revalued amount, in which case the impairment loss is treated as a revaluation decrease.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A
previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognized. If so, the carrying amount of the asset is increased
to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit
or loss unless it reverses a decrement previously charged to equity, in which case the reversal is treated as a revaluation
increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
(r) Trade and other payables
Trade payables and other payables are carried at amortized cost and represent liabilities for goods and services provided to
the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services. Trade payables and other payables generally have terms of
between 30 and 60 days.
(s) Leases
Finance leases which transfer to the Group substantially all the risks and benefits incidental to ownership of the financed
item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of
the minimum lease payments.
Lease and hire purchase payments are apportioned between finance charges and a reduction of the associated liability so as
to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as an expense
in profit or loss. Capitalized leased assets and assets under hire purchase are depreciated over the shorter of the estimated
useful life of the asset or the term of the agreement. Leases where the lessor retains substantially all the risks and benefits
of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the
statement of comprehensive income on a straight-line basis over the lease term.
(t) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave and long service leave. Liabilities arising in respect of wages and
salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are
measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled.
All other employee benefit liabilities are measured at the present value of the estimated future cash outflows to be made in
respect of services provided by employees up to the reporting date using the projected unit credit method. Expenses for nonaccumulating sick leave are recognized when the leave is taken during the year and are measured at rates paid or payable.
In determining the present value of future cash outflows, the market yield as at the reporting date on national government
bonds, which have terms to maturity approximating the terms of the related liability, are used. Employee benefits expenses
and revenues arising in respect of wages and salaries, non-monetary benefits, annual leave, long service leave and other leave
benefits and other types of employee benefits are recognized against profits on a net basis in their respective categories.
48
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3. Summary of significant accounting policies? continued
(u) Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed,
the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
(v) Contributed equity
Issued and paid up capital is recognized at the fair value of the consideration received by the Company. Transaction costs
arising on the issue of common shares are recognized directly in equity as a deduction, net of tax, of the proceeds received.
(w) Mineral properties and deferred costs
The Company has written-off all of its mineral property interests and retains a residual royalty entitlement in respect of its
Aurex exploration property.
4. Critical accounting estimates and judgments
Estimates and judgements are evaluated and based on historical experience and other factors, including expectations
of future events that may have a financial impact on the Company and that are believed to be reasonable under the
circumstances.
(a) Critical accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value
of certain assets and liabilities within the next annual reporting period are set out below.
Reverse Takeover
The Company’s acquisition of Simavita Holdings Limited is assessed to be an asset acquisition and not a business
combination under IFRS 3 Business combinations, as the Company has been deemed not to have been operating a business
at that time for accounting purposes.
Impairment of intangible assets
The Group determines whether intangible assets are impaired on at least an annual basis, in accordance with the accounting
policies stated in Note 3(p). This process requires an estimation to be made of the recoverable amount of the cashgenerating units to which the respective assets are allocated.
Share-based payments transactions
The Group measures the cost of equity-settled transactions with employees by reference to the value of the equity
instruments at the date on which they are granted. The fair value is determined by an independent valuer using a BlackScholes options pricing model.
Useful lives of assets
The estimation of the useful lives of assets has been based on historical experience as well as lease terms (for leased
equipment) and patent terms (for patents). In addition, the condition of the assets is assessed at least annually and
considered against the remaining useful life and adjustments to useful lives are made when considered necessary.
2014? FINANCIAL Report? 49
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
4. Critical accounting estimates and judgments? continued
(b) Critical judgements in applying the Group’s accounting policies
Research and development costs
An intangible asset arising from development expenditure on an internal project is recognized only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention
to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of
resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible
asset during its development.
To date, all development costs have been expensed as incurred as their recoverability cannot be regarded as assured.
In addition to the costs incurred by the Company’s research and development group are also included. The costs of research
and development are expensed in full in the period in which they are incurred. The Group will only capitalize its development
expenses when specific milestones are met and when the Group is able to demonstrate that future economic benefits
are probable.
Consolidated
June 30, 2014
$
June 30, 2013
$
5. Other revenue
Government grant
118,616
113,518
Interest revenue
121,183
46,089
Foreign currency gain/(loss)
(23,407)
(2,649)
Total other revenue
216,392
156,958
23,970
32,859
6. Expenses
Amortization of intangible assets
Depreciation of fixed assets
Employee benefits expenses
Research and development expenses (excluding employee benefits)
115,929
170,708
4,545,658
4,411,213
913,832
756,116
7. Loss per share
The following reflects the income and share data used in the
calculations of basic and diluted loss per share:
Loss for the year attributable to the owners of Simavita Limited
Weighted average number of shares used in calculating loss per share
(10,491,790)
(7,385,811)
30,430,727
2,247,908
Note: None of the 9,186,207 (2013: Nil) options or warrants over the Company’s ordinary shares that were outstanding as at the reporting date
are considered to be dilutive for the purposes of calculating diluted earnings per share.
50
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Consolidated
June 30, 2014
$
June 30, 2013
$
8. Income tax
Reconciliation of income tax expense to prima facie tax payable
Loss before income tax expense
Tax at the Australian tax rate of 30% (2013: 30%)
(11,706,145)
(8,423,727)
(3,511,843)
(2,527,118)
Tax effect of adjustments relating to non-temporary differences
? Loss on acquisition
237,719
-
? Research and development expenses
809,570
691,944
? Share-based payments expense
390,700
-
? Other (deductible)/non-deductible expenses
(6,351)
(2,080,205)
581
(1,834,593)
Tax effect of adjustments relating to temporary differences
? Net non-deductible transaction expenses
? Deductible equity transaction costs
220,287
(158,515)
66,433
-
? Net movements in provisions and payables
14,306
(30,437)
? Non-deductible interest expense
96,181
339,017
? Accrued interest receivable
(5,624)
(1,913,570)
Tax rate differential due to other tax jurisdictions
(35,774)
(1,459,580)
-
(1,949,344)
(1,459,580)
1,949,344
1,459,580
-
-
Research and development tax incentive
1,214,355
1,037,916
Income tax benefit
1,214,355
1,037,916
Transaction expenses
345,724
125,437
Equity transaction costs
634,062
-
Provisions and payables
93,101
80,434
Other liabilities
(5,624)
Tax losses not recognized
Deferred tax assets / (liabilities)
Deferred tax assets on temporary differences not brought to account
Total net deferred tax assets
(844)
1,067,263
205,027
(1,067,263)
(205,027)
-
-
6,386,435
5,852,549
98,156
52,814
6,484,591
5,904,733
Tax losses
Australia
United States of America
Total deferred tax assets on tax losses not recognized
2014? FINANCIAL Report? 51
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
8. Income tax? continued
Subject to the Group continuing to meet the relevant statutory tests, the tax losses are available for offset against future
taxable income.
As at balance date, there are unrecognized tax losses with a benefit of approximately $6,484,591 (2013: $5,904,733) that have
not been recognized as a deferred tax asset to the Group. These unrecognized deferred tax assets will only be obtained if:
(a) The Group companies derive future assessable income of a nature and amount sufficient to enable the benefits to be
realized;
(b) The Group companies continue to comply with the conditions for deductibility imposed by the law; and
(c) No changes in tax legislation adversely affect the Group companies from realizing the benefit.
Tax consolidation legislation
Simavita Holdings Limited (the “Head Entity”) and its wholly?owned Australian controlled entities have formed an income
tax consolidated group under the tax consolidation regime. As at June 30, 2014, the Group had not yet generated a profit
from the commercialization of its intellectual property. Accordingly, no deferred tax assets arising from carried forward
losses and temporary differences have yet been recognized.
The entities have also entered into a Tax Funding Agreement under which the wholly-owned entities compensate Simavita
Holdings Limited for any current tax payable assumed and are compensated by Simavita Holdings Limited for any current
tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Simavita
Holdings Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts
recognized in the financial statements of the respective controlled entities.
The amounts receivable or payable under the Tax Funding Agreement are due upon receipt of the funding advice from the
head entity, which is issued as soon as practicable after the end of each financial year.
9. Dividends and distributions
No dividends have been paid since the end of the previous financial year, nor have the Directors recommended that any
dividend be paid.
Consolidated
June 30, 2014
$
June 30, 2013
$
10. Cash and cash equivalents
Cash at bank and on hand
3,291,355
737,978
Short-term deposits
3,552,842
-
Total cash and cash equivalents
6,844,197
737,978
58,768
19,700
105,141
89,190
18,745
-
Research and development tax concession receivable
1,214,355
1,037,916
Total trade and other receivables
1,397,009
1,146,806
11. Trade and other receivables
Trade receivables
GST receivable
Accrued interest receivable
Note: All trade and other receivables for the Group are due in Australian dollars. Refer Note 30 for details of aging, interest rate and credit risks
applicable to trade and other receivables for which, due to their short-term nature, their carrying value approximates their fair value.
52
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Consolidated
June 30, 2014
$
June 30, 2013
$
12. Inventories
Finished goods and raw materials
313,809
331,873
Total inventories
313,809
331,873
Prepayments
25,582
2,919
Deposits
25,134
9,393
Total other assets
50,716
12,312
168,924
164,970
(151,661)
(134,967)
17,263
30,003
13. Other assets
14. Property, plant and equipment
Office equipment, at cost
Less: accumulated depreciation
Net office equipment
76,030
130,745
(64,806)
(89,179)
Net furniture and fittings
11,224
41,566
Leasehold improvements, at cost
40,961
-
Less: accumulated depreciation
(1,707)
-
Net leasehold improvements
39,254
-
Testing equipment, at cost
42,108
16,888
(19,749)
(12,440)
22,359
4,448
Furniture and fittings, at cost
Less: accumulated depreciation
Less: accumulated depreciation
Net testing equipment
Motor vehicles, at cost
Less: accumulated depreciation
Net motor vehicles
Rental assets, at cost
Less: accumulated depreciation
Net rental assets
Total property, plant and equipment
42,599
43,082
(42,599)
(35,305)
-
7,777
55,288
175,800
(30,952)
(75,791)
24,336
100,009
114,436
183,803
2014? FINANCIAL Report? 53
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
Consolidated
June 30, 2014
$
June 30, 2013
$
14. Property, plant and equipment? continued
Reconciliation of property, plant and equipment
Opening gross carrying amount
Add: additions purchased during the year
531,485
456,481
97,756
75,004
(203,331)
Less: disposals made during the year
Closing gross carrying amount
Opening accumulated depreciation
-
425,910
531,485
(347,682)
(176,974)
Add: disposals made during the year
152,137
Less: depreciation expense charged
(115,929)
(170,708)
Closing accumulated depreciation
(311,474)
(347,682)
114,436
183,803
Total net property, plant and equipment
-
Reconciliation of movements in property, plant and equipment by asset category
Opening
net carrying
amount
$
Asset category
Additions
during year
$
Net disposals
during year
$
Closing
net carrying
amount
$
(32,484)
17,263
(14,340)
11,224
-
(1,707)
39,254
25,220
-
(7,309)
22,359
-
-
(7,777)
-
(35,192)
(52,312)
24,336
(51,194)
(115,929)
114,436
Office equipment
30,003
19,744
Furniture and fittings
41,566
-
-
40,961
Testing equipment
4,448
Motor vehicles
7,777
Rental assets
100,009
11,831
Totals
183,803
97,756
Leasehold improvements
Depreciation
expense
$
-
(16,002)
Consolidated
June 30, 2014
$
June 30, 2013
$
15. Intangible assets
Patents
67,690
67,690
(23,539)
(21,656)
44,151
46,034
94,767
77,725
(69,161)
(47,074)
Total net software
25,606
30,651
Total intangible assets
69,757
76,685
Patents, at cost
Less: accumulated amortization
Total net patents
Software
Software, at cost
Less: accumulated amortization
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Consolidated
June 30, 2014
$
June 30, 2013
$
15. Intangible assets? continued
Reconciliation of software
Opening gross carrying amount
77,725
69,147
Add: additions during the year
17,042
8,578
Closing gross carrying amount
94,767
77,725
Opening accumulated amortization
(47,074)
(21,272)
Add: amortization expense charged
(22,087)
(25,802)
Closing accumulated amortization
(69,161)
(47,074)
25,606
30,651
Total net software
Reconciliation of patents
67,690
67,690
Add: additions during the year
-
-
Closing gross carrying amount
67,690
67,690
Opening accumulated amortization
(21,656)
(14,599)
Add: amortization expense charged
(1,883)
(7,057)
Closing accumulated amortization
(23,539)
(21,656)
44,151
46,034
630,888
447,907
Opening gross carrying amount
Total net patents
16. Trade and other payables
Trade payables
GST payable
Other payables and accruals
Total trade and other payables
10,535
4,317
381,400
290,553
1,022,823
742,777
Note: Trade payables and other payables for the Group include amounts due in Australian dollars of $815,721 (2013: $696,442), US dollars of
USD 23,223 (2013: USD 45,743), Canadian dollars of CAD 67,929 (2013: CAD Nil) and European euros of EUR 76,374 (2013: EUR Nil). Refer
Note 30 for details of contractual maturity and management of interest rate, foreign exchange and liquidity risks applicable to trade and
other payables for which, due to their short-term nature, their carrying value approximates their fair value.
17. Interest-bearing liabilities
Balance at the beginning of the year
Draw down of borrowings
Interest accrued during the year
10,147,143
3,727,436
-
6,178,703
249,885
941,004
Repayment of borrowings
(2,384,161)
Conversion of borrowings into equity
(7,885,514)
-
(127,353)
-
Conversion of Directors’ loans into equity
Balance at the end of the year
-
(700,000)
10,147,143
2014? FINANCIAL Report? 55
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
Consolidated
June 30, 2014
$
June 30, 2013
$
17. Interest-bearing liabilities? continued
Reconciled as follows:
Current interest-bearing liabilities
-
6,777,465
Non-current interest-bearing liabilities
-
3,369,678
Total interest-bearing liabilities
-
10,147,143
193,297
190,199
43,041
-
236,338
190,199
190,199
147,804
18. Provisions
Annual leave
Long service leave
Total provisions
Reconciliation of annual leave provision
Balance at the beginning of the year
Add: obligation accrued during the year
Less: balance utilized during the year
Balance at the end of the year
179,501
109,090
(176,403)
(66,695)
193,297
190,199
Reconciliation of long service leave provision
-
-
Add: obligation accrued during the year
43,041
-
Balance at the end of the year
43,041
-
Balance at the beginning of the year
19. Share capital
Summary of shares issued and outstanding
Number
of shares
Balance at July 1, 2012
Issue of ordinary shares by Simavita Holdings for cash
Equity transaction costs
Balance at July 1, 2013
Amount
$
7,945,423
18,764,144
18,914
44,570
-
(206,427)
7,964,337
18,602,287
20,928,675
2,000,000
Conversion of borrowings into equity (pre-acquisition)
49,589,520
7,885,514
Share consolidation by Simavita Holdings (1 for 3.543)
(56,331,098)
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
-
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
33,902,338
Elimination of shares in legal acquiree (Simavita Holdings)
(56,053,772)
13,899,963
-
Issue of common shares on acquisition of Simavita Holdings
56,053,772
-
Fair value of common shares held by pre-acquisition shareholders of Gtech
1,722,722
706,316
Issue of common shares by Simavita Limited for cash (post-acquisition)
7,876,832
3,504,968
Equity transaction costs
-
Balance at June 30, 2014
65,653,326
56
? gracing life
(2,663,096)
43,935,952
19. Share capital? continued
Summary of warrants outstanding
As at June 30, 2014, the following warrants had been granted as part of the Company’s capital raisings:
Number
Exercise price
Grant date
Expiry date
Fair value / warrant
1,154,245
$0.41
January 31, 2014
December 3, 2016
$0.167
As at the date of this Report, the following warrants had been granted to Medline Industries, Inc. (“Medline”) as part of the
Company’s distribution arrangements with that company (refer notes below the table for further details):
Tranche
Number
Exercise price
Grant date
Expiry date
Fair value / warrant
Tranche One
1,155,298
CAD$0.42
January 31, 2014
December 6, 2018
$0.206
Tranche Two
1,444,412
(refer note 1)
January 1, 2015
January 1, 2018
N/A
Tranche Three
1,444,412
(refer note 2)
January 1, 2016
January 1, 2018
N/A
1. Tranche Two has an exercise price equal to the greater of (i) CAD$0.504, as may be adjusted; or (ii) the volume-weighted
average closing price of the common shares on the Toronto Stock Exchange and each other stock exchange upon which
the Company’s common shares are traded for the 30 days prior to the date of exercise.
2. Tranche Three has an exercise price equal to the greater of: (i) CAD$0.604, as may be adjusted; or (ii) the volumeweighted average closing price of the common shares on the Toronto Stock Exchange and each other stock exchange
upon which the Company’s common shares are traded for the 30 days prior to the date of exercise.
The right to purchase common shares in Tranches Two and Three are subject to the condition precedent that Medline meets
the Extended Sales Volumes for the Contract Year (as defined in the Distribution Agreement). All warrants vested immediately
on the date of grant.
Summary of options outstanding
As at June 30, 2014, the following options were outstanding:
Number
Exercise price
Grant date
Expiry date
Fair value / option
1,469,166
$0.41
January 31, 2014
December 3, 2016
$0.167
2,469,166
$0.52
January 31, 2014
December 3, 2016
$0.137
1,469,166
$0.65
January 31, 2014
December 3, 2016
$0.110
1,469,166
$0.82
January 31, 2014
December 3, 2016
$0.086
Consolidated
June 30, 2014
$
June 30, 2013
$
20. Reserves
2,276,913
974,580
Share capital reserve
499,445
499,445
Foreign currency reserve
(26,828)
Share-based payments reserve
Total reserves
2,749,530
4,045
1,469,980
2014? FINANCIAL Report? 57
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
Consolidated
June 30, 2014
$
June 30, 2013
$
21. Retained losses
Balance at the beginning of the year
(28,662,929)
(21,277,118)
Add: net loss attributable to owners of Simavita Limited
(10,491,790)
(7,385,811)
Balance at the end of the year
(39,154,719)
(28,662,929)
22. Employee benefits
Employee options
On November 20, 2013, the shareholders of the Company approved changes to the Company’s Stock Option Plan (the “Plan”.
Under the terms of the Plan, the Directors may, at their discretion, grant options over the common shares in Simavita Limited
to Directors, executives, consultants and employees.
During the period from the date of acquisition of Simavita Holdings Limited, being December 3, 2013, up to June 30, 2014, a
total of 6,876,664 options over common shares in the Company were granted, at no cost, to three Directors of the Company.
Each option entitles the holder to acquire one common share at a cost of between $0.41 and $0.82 (refer Note 19). The above
options granted during the 2014 financial year vested immediately on the date of grant. The fair value of each option granted
under the Plan is estimated by an external valuer using a Black-Scholes option-pricing model with the following assumptions
used for grants made during the year ended June 30, 2014:
Historic volatility and expected volatility
60%
Option exercises prices
$0.41 to $0.82
Weighted average exercise price
$0.588
Risk-free interest rate
3.03%
Expected life of an option
3 years from date of commitment
Superannuation commitments
The Group does not have any defined benefit funds. In respect of the year ended June 30, 2014, the Group made statutory
contributions to various superannuation funds on behalf of all employees in Australia at a rate of up to 9.25% per annum,
in addition to making other superannuation contributions as part of salary packaging arrangements with staff. All
superannuation contributions are expensed when incurred. Contributions made by the Group of up to 9.25% per annum of
employees’ wages and salaries are legally enforceable in Australia.
23. Related party transactions
Up until December 3, 2013, the Company was a subsidiary of Genetic Technologies Limited (“GTG”), a company listed on
both the Australian Securities Exchange and NASDAQ Capital Market. During the year ended June 30, 2014, there were minor
expenses incurred by GTG on the Company’s behalf that were subsequently reimbursed.
Details of Directors and Key Management Personnel as at balance date
Directors
Executives
Peter C. Cook (Non-Executive Chairman)
Thomas G. Howitt (Chief Financial Officer / Secretary)
Philippa M. Lewis (Chief Executive Officer)
Peter J. Curran (Chief Technology Officer)
Ari B. Bergman (Non-Executive)
Damien M. Haakman (Non-Executive)
58
? gracing life
23. Related party transactions? continued
Remuneration of Key Management Personnel (“KMP”)
Short-term
Name and title of
Directors
Long-term
Post-employment Long service Share-based
Superannuation
leave
Options
$
$
$
Year
Salary/fees
$
Peter C. Cook 1
Non-Executive Chairman
2014
40,139
-
3,713
-
-
43,852
2013
-
-
-
-
-
-
Philippa M. Lewis 2
Chief Executive Officer
2014
315,000
504,776
24,281
14,582
734,583
1,593,222
2013
-
559,657
-
-
-
559,657
Ari B. Bergman
Non-Executive Director
2014
-
44,054
-
-
68,500
112,554
2013
-
144,106
-
-
-
144,106
Damien M. Haakman
Non-Executive Director
2014
37,917
210,000
-
-
-
247,917
3
4
Other
$
Totals
$
2013
17,500
1,253
-
-
-
18,753
5
2014
54,667
-
-
-
-
54,667
2013
67,087
7,016
-
-
-
74,103
Dr. Malcolm R. Brandon 6
Ex-Non-Exec. Chairman
2014
-
-
-
-
-
-
2013
-
-
-
-
-
-
Alison J. Mew 7
Ex-Non-Executive Director
2014
-
-
-
-
-
-
2013
-
-
-
-
-
-
Sub-totals for Directors
2014
447,723
758,830
27,994
14,582
803,083
2,052,212
2013
84,587
712,032
-
-
-
796,619
Maxwell C. Lloyd-Jones
Ex-Non-Exec. Chairman
Short-term
Name and title of
Executives
Long-term
Post-employment Long service Share-based
Superannuation
leave
Options
$
$
$
Year
Salary/fees
$
Thomas G. Howitt 8
Chief Financial Officer
? and Secretary
2014
52,019
-
4,444
-
68,500
124,963
2013
-
-
-
-
-
-
Peter J. Curran 9
Chief Technology Officer
2014
220,000
20,000
22,200
-
-
262,200
2013
220,000
-
19,800
-
-
239,800
Colin Christie
Ex-Chief Financial Officer
2014
210,819
20,000
18,364
-
-
249,183
2013
115,032
-
10,353
-
-
125,385
Robert J. Birrell
Ex-Chief Financial Officer
2014
-
-
-
-
-
-
2013
100,100
-
-
-
-
100,100
Sub-totals for Executives
2014
482,838
40,000
45,008
-
68,500
636,346
2013
435,132
-
30,153
-
-
465,285
2014
930,561
798,830
73,002
14,582
871,583
2,688,558
2013
519,719
712,032
30,153
-
-
1,261,904
10
11
Total remuneration of KMP
Other
$
Totals
$
Note: The heading “Other” includes commissions, bonuses, interest and expenses paid to KMP as detailed in Notes 1 to 11 below.
2014? FINANCIAL Report? 59
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
23. Related party transactions? continued
Remuneration of Key Management Personnel (“KMP”)? continued
The amounts included in the tables above include amounts paid by the Company and its subsidiaries and, prior to the
acquisition of Simavita Holdings Limited on November 20, 2013, by that group as well. The following changes to KMP
occurred during the period from July 1, 2013 up to the date of this Report and the payments noted were made:
1. Mr. Cook was appointed as a Director of the Company on November 20, 2013 and subsequently as Non-Executive
Chairman of the Board on January 31, 2014.
2. Ms. Lewis was appointed as a Director of the Company and its Chief Executive Officer on November 20, 2013, having
formerly held the position of Chief Executive Officer of Simavita Holdings Limited. Payments made to Ms. Lewis during
the year ended June 30, 2014 totalling $504,776 (as disclosed above under the heading “Other”) comprise fees and
bonuses paid to Dumur Asia Pacific Pty. Ltd., a company associated with Ms. Lewis, of $264,695 (2013: $488,750);
commission payments made in respect of the Company’s capital raising in November 2013 of $208,500 (2013: $61,770);
certain expense payment fringe benefits totalling $31,581 (2013: $Nil) and interest paid in respect of loans made by
Dumur Asia Pacific Pty. Ltd. to the Company of $Nil (2013: $9,137).
3. Mr. Bergman was appointed as a Director of the Company on November 20, 2013. He also served as a Director of Simavita
Holdings Limited from July 1, 2013. Payments made to Mr. Bergman during the year ended June 30, 2014 totalling
$44,054 (as disclosed above under the heading “Other”) comprise fees paid to Estley Pty. Ltd., a company associated with
Mr. Bergman of $44,054 (2013: $127,913), and interest paid in respect of loans made by Estley Pty. Ltd. to the Company of
$Nil (2013: $16,193).
4. Mr. Haakman was appointed as a Director of the Company on November 20, 2013. He also served as a Director of
Simavita Holdings Limited from July 1, 2013. Payments made to Mr. Haakman during the year ended June 30, 2014
totalling $210,000 (as disclosed above under the heading “Other”) comprise commission payments made paid to
Dussman Pty. Ltd., a company associated with Mr. Haakman, in respect of the Company’s capital raising in November
2013 of $90,000 (2013: $Nil) and interest and related fees paid in respect of loans made by Dussman Pty. Ltd. to the
Company of $120,000 (2013: $1,253).
5. Mr. Lloyd-Jones was appointed as a Director of the Company and as Non-Executive Chairman of the Board on November
20, 2013. He subsequently resigned as a Director of the Company on January 31, 2014. He was formerly a Director of
Simavita Holdings Limited and Non-Executive Chairman of its Board from July 1, 2013 until January 31, 2014. Payments
made to Mr. Lloyd-Jones during the year ended June 30, 2013 totalling $7,016 (as disclosed above under the heading
“Other”) comprise interest paid in respect of loans made by Wolsey Pty. Ltd., a company associated with Mr. Lloyd-Jones,
to the Company.
6. Dr. Brandon served as a Director of the Company and as Non-Executive Chairman of the Board from July 1, 2013 until
November 20, 2013 when he was not re-elected as a Director.
7. Ms. Mew served as a Director of the Company from July 1, 2013 until November 20, 2013 when she was not re-elected
as a Director.
8. Mr. Howitt served as a Director of the Company from July 1, 2013 until April 14, 2014 when he resigned from the Board to
take up the executive position of Chief Financial Officer of the Group. He also served as Secretary of the Company for the
entire year ended June 30, 2014.
9. Mr. Curran was appointed as Executive Vice President – Operations of Simavita (Aust.) Pty. Ltd. on May 28, 2009 and
subsequently as Chief Technology Officer of the Group on May 1, 2014. Payments made to Mr. Curran during the
year ended June 30, 2014 totalling $20,000 (as disclosed above under the heading “Other”) comprise bonuses paid
(2013: $Nil).
10. Mr. Christie served as Chief Financial Officer of the Group from November 19, 2012 until March 4, 2014. Payments made
to Mr. Christie during the year ended June 30, 2014 totalling $20,000 (as disclosed above under the heading “Other”)
comprise bonuses paid (2013: $Nil).
11. Mr. Birrell served as Chief Financial Officer of the Group from July 1, 2012 until December 14, 2012.
60
? gracing life
23. Related party transactions? continued
Other related party transactions
During the year ended June 30, 2014, the following transactions with related parties took place:
1. Loans totalling $120,491 that were previously made to the Company by Dumur Asia Pacific Pty. Ltd., a company
associated with Ms. Lewis, were repaid by the Company.
2. Loans totalling $205,234 that were previously made to the Company by Mirest Pty. Ltd. and Estley Pty. Ltd., both
companies associated with Mr. Bergman, were repaid by the Company.
3. Loans totalling $2,172,556 that were previously made to the Company by Dussman Pty. Ltd., a company associated
with Mr. Haakman, were repaid by the Company.
4. Loans totalling $74,103 that were previously made to the Company by Wolsey Pty. Ltd., a company associated with
Mr. Lloyd-Jones, were repaid by the Company.
The loans that were repaid during the year ended June 30, 2014 had been advanced to the Company to provide it with
sufficient working capital to fund its continuing operations until such time as the transaction with the former Gtech
International Resources Limited and the accompanying major fundraising could be completed.
Shares and CHESS Depositary Interests (“CDIs”) held by members of Key Management Personnel
(or parties related to them)
Shares/CDIs held
in Simavita Group
Balance
July 1, 2012
Acquired
Balance
June 30, 2013
Sold
Acquired
Balance
June 30, 2014
Sold
Director
N/A
N/A
N/A
N/A
120,000
-
120,000
Philippa M. Lewis
Peter C. Cook
644,582
-
-
644,582
(218,747)
-
425,835
Ari B. Bergman
259,134
-
-
259,134
417,176
-
676,310
1,424,126
-
-
1,424,126
23,514,701
-
24,938,827
-
-
-
-
15,000
-
15,000
Damien M. Haakman
Executive
Thomas G. Howitt
Peter J. Curran
-
-
-
-
-
-
-
Colin Christie
-
-
-
-
N/A
N/A
N/A
7,700
N/A
N/A
N/A
N/A
N/A
N/A
2,335,542
-
-
2,327,842
23,848,130
-
26,175,972
Robert J. Birrell
Totals
Note: Common shares and CDIs disclosed in the above table comprise securities held in Simavita Limited and, prior to the acquisition of
Simavita Holdings Limited, securities in that company as well. The securities listed also include those held by associates of the parties
named. Adjustments have been made to reflect various conversions of debt into equity and the consolidations of equity made the Group
during the financial year ended June 30, 2014. The net reduction in securities held by Ms. Lewis arose from such consolidations.
Mr. Cook became a member of Key Management Personnel (“KMP”) upon becoming a Director of the Company on November 20, 2013.
Mr. Haakman became a member of KMP upon becoming a Director of Simavita Holdings Limited on December 10, 2012. Mr. Christie
ceased to be a member of KMP upon his resignation on March 4, 2014. Mr. Birrell ceased to be a member of KMP upon his resignation
on December 14, 2012.
2014? FINANCIAL Report? 61
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
23. Related party transactions? continued
Options held by members of Key Management Personnel
As at June 30, 2014, the following options had been granted to members of Key Management Personnel:
Philippa M. Lewis – Chief Executive Officer
Number
Exercise price
Grant date
Expiry date
Fair value / option
1,469,166
$0.41
January 31, 2014
December 3, 2016
$0.167
1,469,166
$0.52
January 31, 2014
December 3, 2016
$0.137
1,469,166
$0.65
January 31, 2014
December 3, 2016
$0.110
1,469,166
$0.82
January 31, 2014
December 3, 2016
$0.086
Ari B. Bergman – Non-Executive Director
Number
Exercise price
Grant date
Expiry date
Fair value / option
500,000
$0.52
January 31, 2014
December 3, 2016
$0.137
Thomas G. Howitt – Chief Financial Officer and Secretary
Number
Exercise price
Grant date
Expiry date
Fair value / option
500,000
$0.52
January 31, 2014
December 3, 2016
$0.137
Consolidated
June 30, 2014
$
June 30, 2013
$
24. Commitments and contingencies
Operating lease expenditure commitments
Minimum operating lease payments
- not later than one year
172,786
59,454
- later than one year but not later than five years
475,848
-
-
-
648,634
59,454
- later than five years
Total minimum operating lease payments
As at June 30, 2014, the Group had entered into two operating leases relating to the following premises:
Location
Landlord
Use
Date of expiry
of lease
Level 13, 54 Miller Street
North Sydney, NSW 2060 Australia
54 Miller Street Pty. Ltd.
Office
June 30, 2018
616,914
Level 40, 140 William Street
Melbourne, Victoria 3000 Australia
ServCorp Pty. Ltd.
Office
May 11, 2015
31,720
Total
62
? gracing life
Minimum
payments ($)
648,634
25. Segment information
As at June 30, 2014, the Group had one reportable business segment being the sale of products and services associated
with the assessment and management of urinary incontinence. As at balance date, the Group’s only geographic segment
was Australia.
26. Auditors’ remuneration
Other assurance
services
$
Audit services
$
Other services
$
Totals
$
Name of Auditor
Year
PricewaterhouseCoopers
2014
2013
-
-
-
-
BDO East Coast Partnership
2014
10,000
61,095
34,431
105,526
2013
34,000
-
19,750
53,750
2014
-
-
12,620
12,620
2013
8,233
-
-
8,233
2014
104,000
61,095
47,051
212,146
2013
42,233
-
19,750
61,983
De Visser Gray LLP
Total auditors’ remuneration
94,000
-
-
94,000
27. Acquisition of Simavita Holdings Limited
On July 29, 2013, the Company announced that it had executed a Scheme Merger Agreement (the “Agreement”) with
Simavita Holdings Limited (“Simavita Holdings”). Pursuant to the Agreement, a meeting of the shareholders of the Company
(the “Meeting”) was held on November 20, 2013 to approve the issue of new shares by the Company to the shareholders of
Simavita Holdings to acquire 100% of the issued capital of Simavita Holdings (the “Merger”). The Merger was implemented
by way of a scheme of arrangement under the Australian Corporations Act.
At the Meeting held on November 20, 2013, various resolutions were passed by the shareholders pursuant to which:
1. A consolidation of the Company’s share capital took place on the basis on one post-consolidation share for every three
pre-consolidation shares such that the number of shares on issue was reduced from 5,168,167 to 1,722,722.
2. The Company changed its business as a result of it issuing a total of 56,053,772 post-consolidation shares to the
shareholders of Simavita, following which Simavita became a wholly-owned subsidiary of the Company. The transaction
was accounted for as an asset acquisition.
3. The Company changed its name from Gtech International Resources Limited to Simavita Limited.
4. The Company continued into British Columbia, Canada under the Business Corporations Act (British Columbia)
(“BCBCA”) and adopted constating documents that comply with the BCBCA.
5. The Company adopted changes to its Stock Option Plan and subsequently issued certain options and warrants.
6. Dr. Malcolm R. Brandon and Alison J. Mew were not re-elected as Directors of the Company.
7. Maxwell C. Lloyd-Jones, Philippa M. Lewis, Ari B. Bergman, Peter C. Cook and Damien M. Haakman were all appointed
as Directors of the Company, with Mr. Lloyd-Jones being appointed as Chairman and Ms. Lewis being appointed as CEO.
Subsequently, Mr. Lloyd-Jones resigned and Mr. Cook was appointed as Chairman.
8. The Company resumed trading on the TSX Venture Exchange under the symbol “SV”.
A total of $14,305,928 was raised by the Group from the issue of common and ordinary shares as part of the acquisition of
Simavita Holdings. These funds were used to repay existing debts of the Company, expand the Group’s operations in the US
market, meet the costs of the transaction and provide on-going working capital.
2014? FINANCIAL Report? 63
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
28. Exploration agreements
Canada; Yukon Territory
Aurex Property – Mayo Mining District
The Company previously had a 100% interest in this property, which consisted of 155 mineral claims. On August 16, 2001,
the Company agreed with Yukon Zinc Corp. (“Yukon Zinc”) to accept CAD 84,000, to be paid by the issue of 600,000 common
shares in Yukon Zinc, as final settlement for the sale of the property. The property was subsequently sold to StrataGold
Corporation which was purchased by Victorian Gold Corp. in June 2009. Simavita retains a 1.5% royalty on the project which
Victorian Gold Corp. may purchase from the Company for CAD$1,000,000.
Revenue Creek Area – Whitehorse Mining District
The Company previously owned 69 mineral claims which it sold to ATAC Resources Limited (“ATAC”), a Canadian public
company, on January 16, 2002. The Company agreed to accept 200,000 common shares in ATAC and a cash payment of
CAD$5,000 in final settlement for the transfer of the project. Simavita retains a 1.5% net smelter royalty which ATAC may
purchase from the Company for CAD$600,000.
29. Group structure
The following diagram is a depiction of the Group structure as at June 30, 2014.
Simavita Limited
(ARBN 165 831 309)
100%
Simavita Holdings Limited
(ACN 071 409 179)
100%
100%
Simavita (Aust.)
Pty. Ltd.
(ACN 134 938 435)
Simavita US, Inc.
100%
Fred Bergman
Healthcare Pty. Ltd.
(ACN 004 864 466)
Group interest (%)
Name of Group company
Incorporation details
2014
2013
Simavita Limited
May 28, 1968; Yukon, Canada
(continued into British Columbia, Canada
on December 3, 2013)
N/A
N/A
Simavita Holdings Limited
October 11, 1995; Victoria, Australia
100%
N/A
Simavita (Aust.) Pty. Ltd.
January 15, 2009; NSW, Australia
100%
100%
Simavita US, Inc.
August 11, 2012; Delaware, USA
100%
100%
Fred Bergman Healthcare Pty. Ltd.
January 28, 1971; Victoria, Australia
100%
100%
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30. Financial risk management
The Group’s activities expose it to a variety of financial risks such as credit risk, market risk (including foreign currency risk
and interest rate risk) and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses
different methods to measure the different types of risk to which it is exposed. These methods include sensitivity analysis in
the case of foreign exchange, interest rate and aging analysis for credit risk.
Risk management is managed by the Group’s Audit and Risk Committee (the “Committee”) under guidance provided by the
Board of Directors. The Committee identifies and evaluates financial risks in close cooperation with the Group’s operating
units. The Board, via the Committee, provides guidance for overall risk management, as well as policies covering specific
areas, such as credit risk, foreign exchange risk and interest rate risk.
The Group’s principal financial instruments comprise cash and cash equivalents. The Group also has other financial assets
and liabilities, such as trade receivables and payables, which arise directly from its operations.
The Group does not typically enter into derivative transactions, such as interest rate swaps or forward currency contracts.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be
undertaken. The main risks arising from the Group’s financial instruments are credit risk exposures, foreign currency risk,
interest rate risk and liquidity risk. The policies and procedures for managing these risks are summarized below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in Note 2.
The Group holds the following financial instruments:
Consolidated
June 30, 2014
$
June 30, 2013
$
Financial assets
Cash and cash equivalents
6,844,197
737,978
Trade and other receivables
1,397,009
1,146,806
50,716
12,312
8,291,922
1,897,096
Performance bond and deposits
Total financial assets
Financial liabilities
Trade and other payables
1,022,823
742,777
Interest-bearing liabilities
-
10,147,143
1,022,823
10,889,920
Total financial liabilities
2014? FINANCIAL Report? 65
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
30. Financial risk management? continued
Credit risk
The Group’s credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with
banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed
transactions. If there is no independent rating, the Group assesses the credit quality of the customer, taking into account its
financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings. The
compliance with credit limits by customers is regularly monitored by Management. The maximum exposures to credit risk as
at June 30, 2014 in relation to each class of recognized financial assets is the carrying amount of those assets, as indicated in
the balance sheet.
Financial assets included on the balance sheet that potentially subject the Group to concentration of credit risk consist
principally of cash and cash equivalents and trade receivables. In accordance with the guidelines of the Group’s Short Term
Investment Policy, the Group minimizes this concentration of risk by placing its cash and cash equivalents with financial
institutions that maintain superior credit ratings in order to limit the degree of credit exposure. For banks and financial
institutions, only independently-rated parties with a minimum rating of “A-1” are accepted. The Group has also established
guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. The Group does
not require collateral to provide credit to its customers, however, the majority of the Group’s customers to whom credit is
provided are substantial, reputable organisations and, as such, the risk of credit exposure is relatively limited. The Group has
not entered into any transactions that qualify as a financial derivative instrument.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is
not significant. As at June 30, 2014, the Group had raised no provision for doubtful debts. In certain circumstances, the Group
may also obtain security in the form of guarantees, deeds of undertaking or letters of credit from customers which can be
called upon if the counterparty is in default under the terms of the agreement.
Credit risk further arises in relation to financial guarantees given by the Group to certain parties in respect of any obligations
of its subsidiaries. Such guarantees are only provided in exceptional circumstances. An analysis of the aging of trade and
other receivables and trade and other payables is provided below:
Consolidated
June 30, 2014
$
June 30, 2013
$
Trade and other receivables
1,373,973
1,135,081
31 days to 60 days
13,421
1,485
61 days to 90 days
2,420
805
Greater than 90 days
7,195
9,435
1,397,009
1,146,806
987,352
683,600
35,471
21,803
61 days to 90 days
-
27,516
Greater than 90 days
-
9,858
1,022,823
742,777
Current (less than 30 days)
Total trade and other receivables (Note 11)
Trade and other payables
Current (less than 30 days)
31 days to 60 days
Total trade and other payables (Note 16)
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30. Financial risk management? continued
Market risk
Foreign currency risk
The Group operates internationally and is exposed to foreign currency exchange risk, primarily as at balance date with
respect to the US dollar and Canadian dollar, through financial assets and liabilities. It is the Group’s policy not to hedge
these transactions as the exposure is considered to be minimal from a consolidated operations perspective. Further, as the
Group incurs expenses which are payable in US dollars, the financial assets that are held in US dollars provide a natural
hedge for the Group.
Foreign exchange risk arises from planned future commercial transactions and recognized assets and liabilities denominated
in a currency that is not the entity’s functional currency and net investments in foreign operations. The risk is measured using
sensitivity analysis and cash flow forecasting.
The Group has a Foreign Exchange Management Policy which was developed to establish a formal framework and
procedures for the efficient management of the financial risks that impact on Simavita Limited through its activities outside
of Australia, predominantly in the United States. The policy governs the way in which the financial assets and liabilities of
the Group that are denominated in foreign currencies are managed and any risks associated with that management are
identified and addressed. Under the policy, which is updated as circumstances dictate, the Group generally retains in foreign
currency only sufficient funds to meet the expected expenditures in that currency. Surplus funds, if any, are converted into
Australian dollars as soon as practicable after receipt.
As at June 30, 2014, the Group held the following financial assets and liabilities that were denominated in the various
currencies stated:
Year
AUD
USD
CAD
EUR
Totals (AUD)
Financial assets
Cash and cash equivalents
2014
Trade and other receivables
Performance bond and deposits
Total financial assets
6,554,970
21,933
267,908
-
6,844,197
2013
729,999
8,079
-
-
737,978
2014
1,397,009
-
-
-
1,397,009
2013
1,146,806
-
-
-
1,146,806
2014
50,716
-
-
-
50,716
2013
12,312
-
-
-
12,312
2014
8,002,695
21,933
267,908
-
8,291,922
2013
1,889,117
8,079
-
-
1,897,096
2014
815,721
23,223
67,929
76,374
1,022,823
2013
696,442
45,743
-
-
742,777
2014
815,721
23,223
67,929
76,374
1,022,823
2013
696,442
45,743
-
-
742,777
Financial liabilities
Trade and other payables
Total financial liabilities
Notes:? AUD – Australian dollars? USD – United States dollars?
CAD – Canadian dollars?
EUR – European euros
2014? FINANCIAL Report? 67
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
30. Financial risk management? continued
Market risk? continued
During the year ended June 30, 2014, the Australian dollar / US dollar exchange rate increased by 2.5%, from 0.9194 at the
beginning of the year to 0.9420 at the end of the year.
During the same period, the Australian dollar / Canadian dollar exchange rate increased by 4.2%, from 0.9654 at the
beginning of the year to 1.0057 at the end of the year.
Also, during the same period, the Australian dollar / Euro exchange rate decreased by 1.7%, from 0.7019 at the beginning of
the year to 0.6902 at the end of the year.
Based on the financial instruments held at June 30, 2014, had the Australian dollar weakened / strengthened by 10% against
the US dollar with all other variables held constant, the Group’s consolidated loss for the year would not have changed
materially.
Based on the financial instruments held at June 30, 2014, had the Australian dollar weakened / strengthened by 10% against
the Canadian dollar with all other variables held constant, the Group’s equity, relating solely to the movement in profit and
loss for the year, would have been $22,000 lower / $18,000 higher (2013: loss $Nil / loss $Nil), due to changes in the values of
cash and cash equivalents which are denominated in Canadian dollars, as detailed in the above tables.
Based on the financial instruments held at June 30, 2014, had the Australian dollar weakened / strengthened by 10% against
the Euro with all other variables held constant, the Group’s loss for the year would have been $12,000 higher / $10,000 lower
(2013: loss $Nil / loss $Nil), due to changes in the values of cash and cash equivalents which are denominated in Canadian
dollars, as detailed in the above tables.
Interest rate risk
The Group’s main interest rate risk arises in relation to its short-term deposits with various financial institutions. If rates were
to decrease, the Group may generate less interest revenue from such deposits. However, given the relatively short duration
of such deposits, the associate risk is relatively minimal. As at balance date, the Group has no debt or hire purchase liabilities
on which interest expense is charged.
The Group has a Short Term Investment Policy which was developed to manage the Group’s surplus cash and cash
equivalents. In this context, the Group adopts a prudent approach that is tailored to cash forecasts rather than seeking the
highest rates of return that may compromise access to funds as and when they are required. Under the policy, the Group
deposits its surplus cash in a range of deposits over different time frames and with different institutions in order to diversify
its portfolio and minimise overall risk.
On a monthly basis, Management provides the Board with a detailed list of all cash and cash equivalents, showing the
periods over which the cash has been deposited, the name and credit rating of the institution holding the deposit and the
interest rate at which the funds have been deposited. A comparison of interest rate movements from month to month and a
variance to an 11am deposit rate is also provided.
At June 30, 2014, if interest rates had changed by +/- 50 basis points from the year-end rates, with all other variables held
constant, the Group’s equity, relating solely to the movement in profit and loss for the year, would not have changed
materially. The Group’s main interest rate risk during the years ended June 30, 2013 and 2014 arose in respect of fixed rate
borrowings with interest rates that did not fluctuate.
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30. Financial risk management? continued
Interest rate risk? continued
The exposure to interest rate risks and the effective interest rates of financial assets and liabilities, both recognized and
unrealised, for the Group is as follows:
Consolidated
Year
Floating
rate
$
Fixed
rate
$
Carrying
amount
$
Weightedaverage rate
%
Maturity
period
days
2014
3,291,355
3,552,842
6,884,197
3.24%
At call
2013
737,978
-
737,978
2.15%
At call
2014
-
50,716
50,716
-
At call
2013
-
12,312
12,312
-
At call
2014
3,291,355
3,603,558
6,894,913
2013
737,978
12,312
750,290
2014
-
-
-
-
-
2013
-
10,147,143
10,147,143
18.82%
58
2014
-
-
-
2013
-
10,147,143
10,147,143
Financial assets
Cash and cash equivalents
Performance bond / deposits
Totals
Financial liabilities
Interest-bearing liabilities
Totals
Notes: All periods in respect of financial assets are for less than one year.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and the availability of funding
through an adequate amount of committed credit facilities, such as its hire purchase and credit card facilities. The Group
manages liquidity risk by continuously monitoring forecast and actual cash flows and, wherever possible, matching the
maturity profiles of financial assets and liabilities. Due to the dynamic nature of the underlying business, Management aims
to maintain flexibility in funding by keeping committed credit lines available. Surplus funds are generally only invested in
instruments that are tradable in highly liquid markets.
A balanced view of cash inflows and outflows affecting the Group is summarized in the table below:
Consolidated
6 to 12
months
$
Year
< 6 months
$
1 to 5 years
$
> 5 years
$
Totals
$
2014
1,022,823
-
-
-
1,022,823
2013
742,777
-
-
-
742,777
2014
-
-
-
-
-
2013
10,147,143
-
-
-
10,147,143
2014
1,022,823
-
-
-
1,022,823
2013
10,889,920
-
-
-
10,889,920
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Total financial liabilities
2014? FINANCIAL Report? 69
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
30. Financial risk management? continued
Classification of financial instruments
IFRS 13 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value,
as follows:
Level 1:? quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2:?inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3:? inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair values of the Company’s financial assets and liabilities as at June 30, 2014 (as set out above) approximate their
carrying values due to the short term nature of these instruments.
Borrowing facilities
The Group had access to the following borrowing facility as at June 30, 2014:
Nature of facility
Credit card facility
Facility limit
$
Amount used
$
Amount available
$
25,000
(7,024)
17,976
31. Subsequent events
On June 23, 2014, the Company announced that it had closed an initial tranche (the “First Tranche”) of a private placement
(the “Private Placement”) to sophisticated and institutional investors. Pursuant to the First Tranche, Simavita raised a total
of $3,099,003 (before the payment of associated costs) by issuing 6,886,673 common shares and CHESS Depositary Interests
(“CDIs”) in the Company at an issue price of $0.45 per Share and CDI. The shares and CDIs were issued on June 30, 2014.
Each CDI issued in Australia represents one common share of Simavita and ranks equally with existing CDIs.
The above Private Placement also consisted of a subsequent tranche (the “Second Tranche”) which was subject to
shareholder approval. Such approval was sought and received at a Special Meeting of the Company’s shareholders held
on July 23, 2014. As a result, a total of 6,502,216 common shares as CDIs were issued on July 30, 2014 at an issue price of
$0.45 per share/CDI, raising a total of $2,925,997, before the payment of associated costs.
In addition to the above capital raising, the Company conducted a capital raise only in Australia via a CDI purchase plan (the
“SPP”) to raise up to an additional $1,080,000 at an issue price of $0.45 per CDI. The SPP offer opened on June 26, 2014 and
closed on July 25, 2014. Pursuant to the terms of the SPP, the Company issued a total of 1,572,201 common shares as CDIs to
those who subscribed under the SPP. The shares/CDIs were issued on July 30, 2014 at an issue price of $0.45 per share/CDI,
raising a total of $707,490, before the payment of associated costs.
The proceeds from the Private Placements and the SPP will be used to: (i) accelerate the roll-out of Simavita’s current
technologies in the US and European markets; (ii) accelerate the development of the Company’s SIMTM Generation 5 (cloud
compatible) product and SIMTM Community Care (home-based) product; (iii) appoint distributors to roll-out SIMTM Generation
4 in Europe; (iv) acquire and develop complimentary intellectual property; and (v) for general working capital purposes.
All CDIs issued pursuant to the Private Placement and SPP are fully tradeable and listed on the Australian Securities
Exchange. The Shares issued pursuant to the Private Placement that are listed on the TSX Venture Exchange are subject to
a statutory four month hold plus one day commencing from the date of issuance.
On August 26, 2014, the Company granted a total of 1,237,500 options over the Company’s common shares to various
employees of the Company. Each option, which entitles the holder to acquire one common share at a price of $0.70 per
share, was granted at no cost. The options, which vested immediately upon the date of grant, have an expiry date of
August 31, 2018.
Apart from these transactions, there were no events that have occurred subsequent to balance date that have not been
disclosed elsewhere in these financial statements.
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PricewaterhouseCoopers Audit Opinion
2014? FINANCIAL Report? 71
Corporate Governance Statement
for the year ended June 30, 2014
INTRODUCTION
Simavita Limited (“Simavita” and the “Company”) and its Board are committed to achieving and demonstrating the highest
standards of corporate governance. The Board continues to review and improve its corporate governance framework and
practices to ensure they meet the interests of shareholders. In this statement, the Company and its controlled entities
together are referred to as the “Group”.
A description of the Group’s main corporate governance practices is set out below. Unless otherwise stated, these practices
were in place from February 20, 2014, being the date on which the Company was admitted to the Official List of the
Australian Securities Exchange (“ASX”).
On the whole, the Company complies with the Corporate Governance Principles and Recommendations (including relevant
amendments) of the ASX. While in most respects, Simavita complies with the Recommendations, in several areas, policies
and practices are being further developed and introduced to bring them more closely into line. As new policies are produced,
or as the existing ones are amended, they are published on the Company’s website.
As at the date of this Statement, the following Corporate Governance documents had either been adopted by the Board
or were in the final stages of development, in addition to the Company’s Articles which were revised and subsequently
approved by the Company’s shareholders in November 2013. All significant policies, once approved, are published on the
Company’s website (www.simavita.com).
?? Board Charter, which defines the role of the Board and that of Management;
?? Audit and Risk Sub-Committee Charter;
?? Nomination and Remuneration Sub-Committee Charter;
?? Board Protocol, which clarifies the responsibilities of Directors and the Company’s expectations of them;
?? Code of Conduct, including a Document Retention Policy;
?? Board Performance Evaluation Policy;
?? Risk and Compliance Policy;
?? Continuous Disclosure Policy;
?? Securities Trading Policy;
?? Diversity Policy;
?? Shareholder Communications Policy; and
?? Whistleblower Policy.
ASX PRINCIPLES AND RECOMMENDATIONS
Principle 1: Lay solid foundations for management and oversight
The relationship between the Board and Management is critical to the Group’s success. The Directors are responsible to the
shareholders for the performance of the Group in both the short and longer terms and seek to balance sometimes competing
objectives in the best interests of the Group as a whole. Their focus is to enhance the interests of shareholders and other key
stakeholders and to ensure the Group is properly managed.
The responsibilities of the Board include:
?? providing strategic guidance to the Group, including contributing to the development of and approving the Group’s
corporate strategy;
?? reviewing and approving business plans, the Group’s annual budget and other financial plans, including available
resources and major capital expenditure initiatives;
?? overseeing and monitoring:
–– organizational performance and the achievement of the Group’s strategic goals and objectives;
–– compliance with the Company’s future Code of Conduct; and
–– progress of major capital expenditures and other significant projects, including any acquisitions or divestments;
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Principle 1: Lay solid foundations for management and oversight? continued
?? monitoring the Group’s financial performance, including approval of the annual and half-year financial reports and
regular liaison with the Company’s external auditors;
?? appointment, performance assessment and, if necessary, removal of the Chief Executive Officer;
?? ratifying the appointment and/or removal and contributing to the performance assessment for the members of the
Senior Leadership Team;
?? ensuring there are effective management processes in place for approving major corporate initiatives;
?? overseeing the operation of the Group’s system for compliance and risk management reporting to shareholders; and
?? ensuring appropriate resources are available to senior Management to enable them to implement the strategies
approved by the Board.
Day-to-day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives
are formally delegated by the Board to the Chief Executive Officer and the Senior Leadership Team. These delegations are
reviewed by the Board on an annual basis. Performance appraisals for all members of the Senior Leadership Team last took
place in July/August 2014.
Principle 2: Structure the Board to add value
The Board operates in accordance with the broad principles which are being documented in a formal Board Charter that,
once approved, will be uploaded to the corporate governance information section of the Company’s website (www.simavita.
com). The Charter will document details of the Board’s composition and responsibilities.
Board composition
The principles to be documented in the Charter state that:
?? the Board is to be comprised of both executive and non-executive Directors with ideally a majority of non-executive
Directors. Non-executive Directors bring with them a fresh perspective to the Board’s consideration of strategic, risk and
performance matters;
?? in recognition of the importance of independent views and the Board’s role in supervising the activities of Management,
the Chairman must be an independent non-executive Director, the majority of the Board should ideally be independent
of Management and all Directors are required to exercise independent judgement and review and constructively
challenge the performance of the Senior Leadership Team;
?? the Chairman is elected by the full Board and is encouraged to meet regularly with the Chief Executive Officer;
?? the Company should, where possible, maintain a mix of Directors on the Board from different genders, age groups,
ethnicity and cultural and professional backgrounds who have complementary skills and experience;
?? the Board should establish measurable Board gender diversity objectives and assess annually the objectives and
progress made in achieving them; and
?? the Board should undertake an annual Board performance review and consider the appropriate mix of skills required by
the Board to maximize its effectiveness and its contribution to the Group.
The Board seeks to ensure that:
?? at any point in time, its membership represents an appropriate balance between directors with experience and
knowledge of the Group and its activities and directors with an external or fresh perspective; and
?? the size of the Board is conducive to effective discussion and efficient decision-making.
2014? FINANCIAL Report? 73
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 2: Structure the Board to add value? continued
Directors’ independence
The Board has adopted principles in relation to the independence of its Directors. These principles state that, when
determining independence, a Director must be a non-executive and the Board should consider whether the Director:
?? is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial
shareholder of the Company;
?? is, or has been, employed in an executive capacity by the Company or any other Group member within three years before
commencing his or her service on the Board;
?? within the last three years has been a principal of a material professional adviser or a material consultant to the
Company or any other Group member, or an employee materially associated with the service provided;
?? is a material supplier or customer of the Company or any other Group member, or an officer of or otherwise associated
directly or indirectly with a material supplier or customer;
?? has a material contractual relationship with the Company or a controlled entity other than as a Director of the Group;
and
?? is free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with
the Director’s independent exercise of his or her judgement.
Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over five percent of
annual turnover of the Group or five percent of the individual Directors’ net worth is considered material for these purposes.
In addition, a transaction of any amount or a relationship is deemed material if knowledge of it may impact the shareholders’
understanding of the Director’s performance.
Recent thinking on corporate governance has introduced the view that a Director’s independence may be perceived to be
impacted by lengthy service on the Board. To avoid any potential concerns, the Board has determined that, as a guide, a
Director may not be deemed independent if he or she has served on the Board of the Company for more than ten years. The
Board will continue to monitor developments on this issue as they arise.
The Board assesses Director independence each year. To enable this process to occur efficiently, the Directors must provide
all information that may be relevant to the assessment.
Board members
As at the date of this Financial Report, three of the Company’s four Directors served as non-executive Directors and only
one of them (Mr. Damien Haakman) had a relationship (being a major shareholder) which may adversely affect his or her
independence. The Company is currently seeking to recruit a further independent Director to join the Board.
Term of office
The Company’s Articles specifies that all Directors must retire from office each year. Where eligible, a Director may stand for reelection.
Chairman and Chief Executive Officer (“CEO”)
The Chairman is responsible for leading the Board, ensuring that Directors are briefed in all matters relevant to their role
and responsibilities, facilitating Board discussions and managing the Board’s relationship with the Company’s Senior
Leadership Team. The Chairman is encouraged to meet regularly with the CEO. In accepting the position, the Chairman had
acknowledged that his role will require a significant time commitment and has confirmed that other positions will not hinder
his effective performance in that role.
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Principle 2: Structure the Board to add value? continued
Commitment
The Board held nine meetings and passed six circular resolutions during the year ended June 30, 2014. Non-executive
Directors are expected to spend adequate time preparing for and attending Board and Sub-Committee meetings and
associated activities. The number of meetings of the Company’s Board of Directors and of each Sub-Committee held during
the year ended June 30, 2014, and the number of such meetings attended by each Director, are disclosed in the table
below. From the date of the Company’s listing on the ASX to the date of this Report, the full Board met to discuss all matters
normally covered by the Nomination and Remuneration Sub-Committee. It is envisaged that this Sub-Committee will meet
independently in future years, as required.
Sub-Committees of the Board
Directors’ meetings
Name of Director
Peter C. Cook 1
Audit and Risk
Nomination and Rem.
Eligible
Attended
Eligible
Attended
Eligible
Attended
7
7
-
-
-
-
7
7
-
-
-
-
7
7
-
-
-
-
Damien M. Haakman 1
7
7
-
-
-
-
Thomas G. Howitt
Philippa M. Lewis
1
Ari B. Bergman 1
6
6
2
2
-
-
Maxwell C. Lloyd-Jones 3
1
1
-
-
-
-
Dr. Malcolm R. Brandon 4
2
2
2
2
-
-
Alison J. Mew
2
2
2
2
-
-
2
4
Notes:
1. Messrs. Cook, Lewis, Bergman and Haakman served as Directors of the Company from November 20, 2013 to June 30, 2014.
2. Mr. Howitt served as served as a Director of the Company from July 1, 2013 to April 14, 2014.
3. Mr. Lloyd-Jones served as a Director of the Company from November 20, 2013 to January 31, 2014.
4. Dr. Brandon and Ms. Mew served as Directors of the Company from July 1, 2013 to November 20, 2013.
As at the date of this Report, the Company had two Sub-Committees of the Board of Directors: an Audit and Risk Committee
and a Nomination and Remuneration Committee. The various individuals who served as members of the two SubCommittees during the year ended June 30, 2014 were:
Name of Member
Audit and Risk-Period served
Nomination and Rem.-Period served
Peter C. Cook
January 31, 2014 to June 30, 2014
April 15, 2014 to June 30, 2014
Philippa M. Lewis
Not applicable
Not applicable
Ari B. Bergman
April 15, 2014 to June 30, 2014
January 31, 2014 to June 30, 2014
Damien M. Haakman
January 31, 2014 to June 30, 2014
January 31, 2014 to June 30, 2014
Thomas G. Howitt
July 1, 2013 to April 14, 2014
January 31, 2014 to April 14, 2014
Maxwell C. Lloyd-Jones
Not applicable
Not applicable
Dr. Malcolm R. Brandon
July 1, 2013 to December 3, 2013
Not applicable
Alison J. Mew
July 1, 2013 to December 3, 2013
Not applicable
Notes:
1. Dr. Brandon served as the Chairman of the Audit and Risk Sub-Committee from July 1, 2013 to December 3, 2013.
2. Mr. Howitt served as the Chairman of the Audit and Risk Sub-Committee from December 4, 2013 to April 14, 2014.
3. Mr. Haakman served as the Chairman of the Audit and Risk Sub-Committee from April 15, 2014 to June 30, 2014.
4. Mr. Bergman served as the Chairman of the Nomination and Remuneration Sub-Committee from the date of its establishment on January 31,
2014 to June 30, 2014.
2014? FINANCIAL Report? 75
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 2: Structure the Board to add value? continued
The commitments of all non-executive Directors are considered by the Nomination and Remuneration Sub-Committee prior
to the respective Director’s appointment to the Board and are reviewed each year as part of the annual Board performance
assessment.
Prior to appointment or being submitted for re-election, each non-executive Director is required to acknowledge that they
have, and will continue to have, the time available to discharge their responsibilities to the Company.
Induction
The induction provided to new Directors enables them to actively participate in Board decision-making as soon as possible.
It ensures that they have a full understanding of the Company’s financial position, strategies, operations, culture, values and
risk management policies. It also explains the respective rights, duties, responsibilities, interaction and roles of the Board
and the Senior Leadership Team and the Company’s meeting arrangements.
Conflict of interests
In accordance with the principles to be laid out in the Company’s Board Charter, all Directors are required to declare all
interests in dealings with the Company and are required to take no part in decisions relating to them. In addition, those
Directors are not entitled to receive any papers from the Group pertaining to those dealings. Apart from Mr. Haakman’s
association with the Company’s major shareholder, no such declarations were received from any Director during the
financial year.
Independent professional advice
All Directors and members of the Board’s two Sub-Committees have the right, in connection with their duties and
responsibilities, to seek independent professional advice at the Company’s expense. Prior written approval of the Chairman
is required, but such approval is not to be unreasonably withheld.
Performance assessment
The Board undertakes an ongoing self-assessment of its collective performance, the performance of the Chairman and of its
two Sub-Committees. The assessment also considers the adequacy of the Company’s induction and continuing education
processes, access to information and the support provided by the Secretary.
Members of the Senior Leadership Team are invited to contribute to this appraisal process. The results and any action plans
are documented together with specific performance goals which are agreed for the coming year. The Chairman undertakes
an assessment of the performance of Directors and meets with each Director to discuss this assessment.
Board Sub-Committees
The Board has established two Sub-Committees to assist in the execution of its duties and to allow detailed consideration of
complex issues. The current Sub-Committees of the Board are the Audit and Risk and Nomination and Remuneration SubCommittees. Each Sub-Committee is comprised entirely of non-executive Directors and their structures and membership are
reviewed on an annual basis.
Each of the Board’s two Sub-Committees is in the final stages of documenting its own written Charter setting out its role and
responsibilities and that of its members, its composition, structure, membership requirements and the manner in which
the Sub-Committee is to operate. Once complete, both of these Charters will be reviewed on an annual basis and be made
available on the Company’s website. All matters determined by the Sub-Committees are submitted to the full Board as
recommendations for Board decisions.
Minutes of Sub-Committee meetings are tabled for review at the subsequent Board meeting. Additional requirements for
reporting by the Sub-Committees to the Board will be addressed in the Charter of the respective Sub-Committee.
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Principle 2: Structure the Board to add value? continued
Nomination and Remuneration Sub-Committee
The Group’s Nomination and Remuneration Sub-Committee consists of Ari Bergman (Chairman), Peter Cook and Damien
Haakman. Details of their attendance at meetings of the Sub-Committee are set out in the table above. The Sub-Committee
operates in accordance with principles which are to be documented in a formal Charter which, once approved, will be
available on the Company’s website. The main responsibilities of the members of the Nomination and Remuneration SubCommittee are to:
?? conduct an annual review of the membership of the Board, having regard to present and future needs of the Company
and to make recommendations on Board composition and appointments;
?? conduct an annual review of, and conclude on the independence of, each Director;
?? propose candidates for Board vacancies;
?? oversee the annual performance assessment program;
?? oversee Board succession, including the succession of the Chairman, and review whether succession plans are in place to
maintain an appropriately balanced mix of skills, experience and diversity on the Board; and
?? assess the effectiveness of the induction process.
When a new Director is to be appointed, the Sub-Committee prepares a Board skills matrix to review the range of skills,
experience and expertise on the Board, and to identify its needs. From this, the Sub-Committee prepares a short-list of
candidates with appropriate skills and experience. A number of channels are used to source candidates to ensure the
Company benefits from a diverse range of individuals in the selection process. Where necessary, advice is sought from
independent search consultants.
The full Board then appoints the most suitable candidate who must stand for election at the Company’s next AGM. The
Sub-Committee’s nomination of existing Directors for reappointment is not automatic and is partly contingent on their past
performance, contribution to the effective operation of the Board and the current and future needs of both the Board and
Company. The Board and the Sub-Committee are also aware of the advantages of Board renewal and succession planning.
Notices of meetings for the election of Directors comply with the ASX Corporate Governance Council’s best practice
recommendations.
New Directors are advised of the Company’s expectations, their responsibilities, rights and the terms and conditions of their
employment. All new Directors participate in a formal induction program which covers the operation of the Board and its
Sub-Committees and financial, strategic, operations and risk management issues.
Principle 3: Promote ethical and responsible decision making
Code of conduct
The Company is developing a statement of values and a Code of Conduct (the “Code”) which will be endorsed by the Board
and which will apply to all Directors. The Code will be regularly reviewed and updated as necessary to ensure it reflects
the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the Group’s
integrity and to take into account the legal obligations and reasonable expectations of the Company’s stakeholders.
In summary, the Code will require that at all times Directors and employees act with the utmost integrity, objectivity and in
compliance with the letter and the spirit of the law and Company policies.
The purchase and sale of Company securities by Directors and employees is governed by the Securities Trading Policy. Such
trading is not permitted during the two-month periods immediately following the end of the Company’s two financial halfyears, i.e. after December 31 and June 30 of each year. Any transactions undertaken by Directors outside of these periods
must be notified to the Secretary in advance.
The Code will require employees who are aware of unethical practices within the Group or breaches of the Company’s
Securities Trading Policy to report such breaches in compliance with the principles to be documented in the Company’s
whistleblower program which can be done anonymously.
2014? FINANCIAL Report? 77
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 3: Promote ethical and responsible decision making? continued
The Directors are satisfied that the Group has complied with its policies on ethical standards, including trading in the
Company’s securities.
Diversity policy
The Company values diversity and recognizes the benefits it can bring to the organisation’s ability to achieve its goals.
Accordingly, the Company has developed and introduced a series of guidelines that are to be documented in a formal
diversity policy which outlines its diversity objectives in relation to gender, age, cultural background, ethnicity and other
factors. These include requirements for the Board to establish measurable objectives for achieving diversity, and for the
Board to assess annually both the objectives, and the Company’s progress made in achieving them.
In accordance with the Company’s guidelines and ASX Corporate Governance principles, the Board has established various
objectives in relation to gender diversity. The Company’s aim is to achieve these objectives over the coming two to three
years as relevant positions become vacant and appropriately-skilled candidates are available.
The objectives set by the Board in relation to gender diversity are set out in the following table.
Objective
Category
Actual
Number
Percentage
Number
Percentage
Number of women in whole organization
16
50%
16
50%
Number of women in senior executive positions
2
33%
1
17%
Number of women on the Board
1
20%
1
25%
Responsibility for diversity falls on the Nomination and Remuneration Sub-Committee.
Principle 4: Safeguard integrity in financial reporting
Audit and Risk Committee
The Audit and Risk Sub-Committee consists of Damien Haakman (Chairman), Ari Bergman and Peter Cook. Details of their
attendance at meetings of the Sub-Committee are set out in the table above. The Sub-Committee operates in accordance
with principles which are to be documented in a formal Charter which, once approved, will be available on the Company’s
website. The main responsibilities of the members of the Sub-Committee are to:
?? review, assess and approve the annual and half-year financial reports and all other financial information published by
the Company or released to the Market;
?? assist the Board in reviewing the effectiveness of the organization’s internal control environment covering:
–– effectiveness and efficiency of operations;
–– reliability of financial reporting; and
–– compliance with applicable laws and regulations;
?? oversee the effective operation of the Company’s risk management framework;
?? recommend to the Board the appointment, removal and remuneration of the external auditors, and review the terms of
their engagement, the scope and quality of the audit and assess their performance;
?? consider the independence and competence of the external auditor on an ongoing basis;
?? review and approve the level of non-audit services provided by the Group’s external auditors and ensure that it does not
adversely impact on the auditors’ independence;
?? review and monitor all related party transactions and assess their propriety; and
?? report to the Board on matters relevant to the Sub-Committee’s role and responsibilities.
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Principle 4: Safeguard integrity in financial reporting? continued
In fulfilling its responsibilities, the Audit and Risk Sub-Committee:
?? receives regular reports from both Management and the Company’s external auditors;
?? meets with the external auditors at least twice a year, or more frequently if necessary;
?? reviews the processes the CEO and CFO have in place to support their annual certifications to the Board;
?? reviews any significant disagreements between the auditors and Management, irrespective of whether they have been
resolved; and
?? provides the external auditors with a clear line of direct communication at any time to either the Chairman of the Audit
and Risk Sub-Committee or, if necessary, the Chairman of the Board.
The Audit and Risk Sub-Committee has authority, within the scope of its responsibilities, to seek any information it requires
from any employee or external party.
External auditors
The Company and Audit and Risk Sub-Committee policy is to appoint external auditors who clearly demonstrate both quality
of service and independence. The performance of the external auditor is reviewed annually and applications for tender of
external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing
value and tender costs. PricewaterhouseCoopers (“PwC”) was appointed as the Company’s external auditor during the year
ended June 30, 2014. It is PwC’s policy to rotate audit lead engagement partners on listed companies at least every five years.
An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in Note 26
to the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence to
the Audit and Risk Sub-Committee which is reproduced in the Company’s Annual Report.
The external auditor attends the Company’s AGM and is available to answer shareholder questions about the conduct of the
audit and the preparation and content of the audit opinion.
Principles 5 and 6: Make timely and balanced disclosures and respect the rights of shareholders
Continuous disclosure and shareholder communication
The Company has principles which are being written into policies and procedures on information disclosure that focus on
continuous disclosure of any information concerning the Group that a reasonable person would expect to have a material
effect on the price of the Company’s securities. Once complete, these policies and procedures will include the arrangements
the Company has in place to promote communication with shareholders and encourage effective participation at general
meetings. These policies and procedures will be made available on the Company’s website.
The Secretary has been nominated as the person responsible for communications with the TSX Venture Exchange (“TSX-V”)
and the Australian Securities Exchange (“ASX”). This role includes responsibility for ensuring compliance with the continuous
disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating information disclosure to the TSX-V, ASX,
analysts, brokers, shareholders, the media and the public.
All information disclosed to the TSX-V and the ASX is uploaded to the Company’s website as soon as it is disclosed to them.
When analysts are briefed on aspects of the Group’s operations, the material used in the presentation is released to the
TSX-V and the ASX and uploaded to the Company’s website. Procedures have also been established for reviewing whether
any price sensitive information has been inadvertently disclosed and, if so, this information is also immediately released to
the Markets.
The Company’s website also enables users to provide feedback and has an option for shareholders to register their email
address for direct email updates on Company matters.
All shareholders are entitled to receive a hard copy of the Company’s Annual and Half-Year Reports which are also available
for download on its website.
2014? FINANCIAL Report? 79
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 7: Recognize and manage risk
The Board is responsible for satisfying itself annually, or more frequently as required, that Management has developed and
implemented a sound system of risk management and internal control. Detailed work on this task is delegated to the Audit
and Risk Sub-Committee and reviewed by the full Board.
The Audit and Risk Sub-Committee is responsible for ensuring there are adequate policies in relation to risk management,
compliance and internal control systems. They monitor the Company’s risk management by overseeing Management’s
actions in the evaluation, management, monitoring and reporting of material operational, financial, compliance and
strategic risks. In providing this oversight, the Sub-Committee:
?? reviews the framework and methodology for risk identification, the degree of risk the Company is willing to accept, the
management of risk and the processes for auditing and evaluating the Company’s risk management system;
?? reviews Group-wide objectives in the context of the above mentioned categories of corporate risk;
?? reviews and, where necessary, approves guidelines and policies governing the identification, assessment and
management of the Company’s exposure to risk;
?? reviews and approves the delegations of financial authorities and addresses any need to update these authorities on an
annual basis; and
?? reviews compliance with agreed policies.
The Sub-Committee recommends any actions it deems appropriate to the Board for its consideration.
Management is responsible for designing, implementing and reporting on the adequacy of the Company’s risk management
and internal control system and has to report to the Audit and Risk Sub-Committee on the effectiveness of:
?? the risk management and internal control system during the year; and
?? the Company’s management of its material business risks.
Risk management group
The Company’s risk management policies and the operation of the risk management and compliance system are managed
by the Company’s risk management group which consists of selected senior executives and is chaired by the CFO. The Board
receives reports from this group as to the effectiveness of the Company’s management of material risks that may impede or
impact on the Company’s ability to meet its business objectives.
Each of the Company’s business units report to the risk management group on the key business risks applicable to their
respective areas. The review is undertaken by business unit management. The risk management group then consolidates the
business unit reports and recommends any actions to the Board for its consideration.
Corporate reporting
In complying with recommendation 7.3, the CEO and CFO make the following annual certifications to the Board:
?? that the Company’s financial reports are complete and present a true and fair view, in all material respects, of the
financial condition and operational results of the Company and the Group and are in accordance with relevant
accounting standards; and
?? that the above statement is founded on a sound system of risk management and internal compliance and control which
implements the policies adopted by the Board and that the Company’s risk management and internal compliance and
control is operating efficiently and effectively in all material respects in relation to financial reporting risks.
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Principle 8: Remunerate fairly and responsibly
All matters pertaining to the remuneration of Company Directors and employees are overseen and managed by the
Nomination and Remuneration Sub-Committee (refer above). Sub-Committee members may receive briefings from external
remuneration experts on recent developments on remuneration and related matters.
Each member of the Senior Leadership Team signs a formal employment contract at the time of their appointment
covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. The standard
contract refers to a specific formal job description. This job description is reviewed by the Nomination and Remuneration
Sub-Committee on a regular basis and, where necessary, is revised in consultation with the relevant employee.
Further information on Directors’ and Executives’ remuneration is set out in Note 23 to the financial statements for the year
ended June 30, 2014. In accordance with Group policy, participants in equity-based remuneration plans are not permitted to
enter into any transactions that would limit the economic risk of options or other unvested entitlements.
The Sub-Committee also assumes responsibility for overseeing management succession planning, including the
implementation of appropriate executive development programs and ensuring adequate arrangements are in place, so that
appropriate candidates are recruited for later promotion to senior positions.
2014? FINANCIAL Report? 81
ASX Additional Information
The following additional information is required by the Listing Rules of the Australian Securities Exchange and is not disclosed
elsewhere in this Annual Report. The information provided is current as at September 16, 2014.
The Company’s common shares are quoted on the TSX Venture Exchange in Canada. The ticker symbol for the common shares
is SV. The Company also has a listing of CHESS Depositary Instruments (“CDIs”) on the Australian Securities Exchange. The ASX
Home Exchange is Melbourne, Victoria. The ASX code for the Company’s CDIs is SVA. Each CDI comprises one common share.
DISTRIBUTION OF EQUITY SECURITIES
The numbers of security holders as at September 16, 2014, ranked by size of holding in each range of securities, are as follows:
Common shares
Ranges
Holders
1 – 1,000
CDIs
Units
Holders
Combined
Units
Holders
Units
%
193
6,543
3
18
196
6,561
0.01%
1,001 – 5,000
57
15,078
31
25,694
88
40,772
0.06%
5,001 – 10,000
73
322,452
197
1,080,610
270
1,403,062
1.90%
10,001 – 100,000
62
2,053,555
159
5,474,750
221
7,528,305
10.21%
100,001 – 1,000,000
18
4,186,117
27
7,243,747
45
11,429,864
15.50%
1,000,001 and over
8
31,616,953
8
21,702,226
16
53,319,179
72.32%
411
38,200,698
425
35,527,045
836
73,727,743
100.00%
Totals
The number of CDI holders holding less than a “marketable parcel” of CDIs (being 878 CDIs) on September 16, 2014 was 19.
The total number of CDIs held by these holders on that date was 11,032.
As disclosed above, as at September 16, 2014, the Company had a total of 73,727,743 common shares on issue, of which
a total of 35,527,045 common shares were held in CDI form, representing approximately 48.19% of the Company’s total
number of issued securities.
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TWENTY LARGEST SECURITY HOLDERS
The names of the twenty largest registered security holders, as at September 16, 2014, are:
Rank
Name of registered security holder
Shares
CDIs
1
Dussman Pty. Ltd. <Devonia Investment A/C>
14,024,295
2
Dussman Pty. Ltd. <Charolais Super Fund A/C>
3
HSBC Custody Nominees (Australia) Limited
4
Sim Finance Pty. Ltd.
5
6
Totals
%
6,079,547
20,103,842
27.27%
6,445,010
-
6,445,010
8.74%
-
4,065,472
4,065,472
5.51%
3,519,617
-
3,519,617
4.77%
BNP Paribas Nominees Pty. Ltd. <DRP A/C>
-
3,111,112
3,111,112
4.22%
Thorney Holdings Pty. Ltd.
-
2,439,000
2,439,000
3.31%
7
Citicorp Nominees Pty. Ltd.
-
2,213,334
2,213,334
3.00%
8
Robert James Hutchison and Maryann McKenzie
? <Inspiration Super Fund A/C>
2,000,085
-
2,000,085
2.71%
9
Dussman Pty. Ltd. <Devonia Investment No. 2 A/C>
1,799,049
-
1,799,049
2.44%
10
Jolimont Lodge Pty. Ltd. <Powell Family Super Fund A/C>
1,572,752
-
1,572,752
2.13%
11
HSBC Custody Nominees (Australia) Limited <No. 2 A/C>
12
Dussman Pty. Ltd.
13
National Nominees Limited
14
Denzil and Sarah Sheldon <Sheldon Family Super Fund A/C>
15
Dyspo Pty. Ltd. <Super Fund A/C>
-
1,567,857
1,567,857
2.13%
1,256,145
-
1,256,145
1.70%
-
1,200,000
1,200,000
1.63%
-
1,025,904
1,025,904
1.39%
1,000,000
-
1,000,000
1.36%
16
UBS Nominees Pty. Ltd.
-
890,686
890,686
1.21%
17
J.P. Morgan Nominees Australia Limited
-
720,556
720,556
0.98%
18
Carluke Pastoral Co. Pty. Ltd. <Carluke Super Fund A/C>
-
552,922
552,922
0.75%
19
Aggregated Capital Pty. Ltd. <Super Fund No. 2 A/C>
-
500,000
500,000
0.68%
20
Ephpheta Foundation Inc.
-
500,000
500,000
0.68%
Totals – Top 20
31,616,953
24,866,390
56,483,343
76.61%
Remainder
6,583,745
10,660,655
17,244,400
23.39%
Totals
38,200,698
35,527,045
73,727,743
100.00%
SUBSTANTIAL SECURITY HOLDERS
As at September 16, 2014, the names of the only substantial shareholder holding shares representing more than 5% of the
Company’s total issued capital, who have notified the Company in accordance with section 671B of the Corporations Act
2001, is:
Name of substantial shareholder
Number of
securities
% held
Damien M. Haakman
31,107,707
42.19%
2014? FINANCIAL Report? 83
ASX Additional Information?
continued
RESTRICTED SECURITIES
As at September 16, 2014, a total of 12,512,867 common shares were subject to escrow. As a result of the merger transaction
involving the Company and Gtech International Resources Limited that closed on December 3, 2013, certain shareholders
of the Company holding a total of 25,025,733 common shares were required to enter into value escrow agreements with the
TSX Venture Exchange. Pursuant to the value escrow agreement, the securities were released from escrow on a timed release
schedule, whereby 25% of the total number of securities are released every six months.
VOTING RIGHTS
The Company is governed by the Business Corporations Act (British Columbia). Pursuant to Article 12 of the Company’s
articles, subject to any special rights and restrictions attached to any shares and to the restrictions imposed on joint
shareholders:
(a) On a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the
matter, has one vote; and
(b) On a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on
the matter and held by that shareholder and may exercise that vote either in person or by proxy.
A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may
appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors,
that the person is a personal or other legal personal representative or a trustee in bankruptcy for a shareholder who is
entitled to vote at the meeting.
If there are joint shareholders registered in respect of any share:
(a) Any one of the joint shareholders may vote at any meeting of shareholders, personally or by proxy, in respect of the share
as if that joint shareholder were solely entitled to it; or
(b) If more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them
votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central
securities register in respect of the share will be counted.
Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company,
entitled to vote at a meeting of shareholders may, by proxy, appoint one or more proxy holders to attend and act at the
meeting in the manner, to the extent and with the powers conferred by the proxy.
BUSINESS OBJECTIVES
The Company was admitted to the official list of the ASX on 20 February 2014. In accordance with ASX Listing Rule 4.10.19,
the Company confirms that its cash assets as at that date have been used in a way consistent with its business objectives.
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Corporate Information
Directors
Auditor
Peter C. Cook (Non-Executive Chairman)
Philippa M. Lewis (Chief Executive Officer)
Ari B. Bergman (Non-Executive)
Damien M. Haakman (Non-Executive)
PricewaterhouseCoopers
Chartered Accountants
Freshwater Place
2 Southbank Boulevard
Southbank VIC 3006
Australia
Secretary
Thomas G. Howitt
Banker (Canada)
Registered Office
Bank of Montreal
595 Burrard Street
Vancouver BC V7X 1L7
Canada
26th Floor, 700 West Georgia Street
Vancouver BC V7Y 1B3
Canada
HEAD OFFICE
Level 13, 54 Miller Street
North Sydney NSW 2060
Australia
Telephone: +61 2 8405 6300
Facsimile:
+61 2 8088 1301
Email: [email protected]
Company website
www.simavita.com
Australian Registered Business Number
165 831 309
Common Share Register
Computershare Investor Services Inc.
Level 2, 510 Burrard Street
Vancouver BC V6C 3B9
Canada
Telephone: +1 604 661 9400
Facsimile:
+1 604 661 9549
Website: www.computershare.com
CDI Register
Computershare Investor Services Pty. Ltd.
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
Australia
Telephone: +61 3 9415 5000
Facsimile:
+61 3 9473 2500
Website: www.computershare.com.au
Banker (Australia)
Westpac Banking Corporation
694-696 Pittwater Road
Brookvale NSW 2100
Australia
Banker (USA)
J.P. Morgan Chase Bank
3700 Wiseman Boulevard
San Antonio TX 78251
USA
Stock Exchanges
TSX Venture Exchange
? Symbol: SV (common shares)
650 West Georgia Street
Vancouver BC V6B 4N9
Canada
Australian Securities Exchange
? Code: SVA (CDIs)
Level 4, Rialto North Tower
525 Collins Street
Melbourne VIC 3000
Australia
Simavita Limited? 2014 Annual Report
doc_122468517.pdf
Simavita is part of the exciting and expanding digital healthcare sector and has developed an innovative, wearable platform which is a patented, worldfirst solution for the assessment and management of urinary incontinence.
Digitizing aged care
2014 Annual Report
Contents
1
About Simavita
2
Letter from the CEO
4
Board of Directors and Senior Management
6
Industry overview
9
Simavita’s business and product
14 Sales model and strategy
16 Marketing
22 New product roadmap and strategy
24 Product registration, marketing approvals and standards
25 Intellectual property
29 Financial report
IBC Corporate Information
Unless otherwise noted, all currency amounts contained in this Annual Report are stated in Australian dollars.
About Simavita
Simavita is part of the exciting and expanding digital healthcare sector and
has developed an innovative, wearable platform which is a patented, worldfirst solution for the assessment and management of urinary incontinence.
The Company’s flagship product is the Smart Incontinence Management
(SIM™) platform technology. The first application of SIMTM is a software
enabled instrumented incontinence assessment which provides evidencebased care plans. The first market for SIMTM is the elderly living in long-term
care facilities. This reduces the cost of the care of elderly people while
providing significant clinical benefits.
The SIM™ technology developed and commercialised by Simavita provides a
cost effective solution to the growing global problem of urinary incontinence
assessment and management, the global market for which exceeds
USD 6 billion per annum.
The first application of the Company's SIM™ product
has taken many years of hard work, customer interface,
and more than $40 million of private investor funds
and Australian government grants to develop and
commercialise. Simavita has been recognised for its
aged-care technology innovation and leadership and
has received a number of prestigious industry awards.
Dual listed on both the TSX Venture Exchange in Canada
(TSX-V: SV) and the Australian Securities Exchange
(ASX: SVA), the Company’s first platform application,
for which there are currently no known commerciallyavailable competitors, is protected by a valuable and
expanding portfolio of intellectual property assets.
With its registered office in Vancouver, Canada and its
head office in North Sydney, Australia, the Company
currently employs approximately 30 staff in Australia
together with a small, but growing, team of sales and
marketing professionals in the USA to support the
Company’s exclusive distributor in that market, Medline
Industries, Inc.
Significant milestones achieved by the Company during
the 2014 financial year include:
?? The successful development and commercialisation
of the fourth (Wi-Fi enabled) generation of SIM™.
?? The receipt of further clearances, approvals and
accreditations from all regulatory agencies,
including FDA, CE and TGA.
?? The expansion of sales of SIM™ in the Company’s
local (Australian) market.
?? The appointment of a large and successful
distributor in the US and the commencement of
sales in that market.
?? The expansion of an extensive patent family in all
target markets.
?? The commencement of negotiations with
distributors in both Europe and Canada.
?? The successful dual listing of the Company and the
raising of more than $20 million in new capital.
2014? ANNUAL Report?
1
Letter from the CEO
Dear Shareholders,
I am delighted to report to you as CEO of Simavita Limited
(“Simavita”), following the conclusion of Simavita’s first
financial year as a listed public company. The 2014 financial
year has been an extremely busy and productive one.
Our first product is the Smart Incontinence Management
(“SIM™”) technology. This application is currently marketed
to the aged care sector and is dedicated to providing an
instrumented care planning solution for incontinence sufferers,
particularly elderly people throughout the world.
We have worked hard to build a solid foundation for the
expansion of sales of Simavita’s SIM™ technology. The fourth
generation of the technology, the Wi-Fi enabled SIM™ product,
was completed in early 2014.
Simavita's vision is to ensure that its
technology platform provides a foundation
for the horizontal integration of other digital
applications in the growing market of aged
care monitoring.
The technical development of SIM™ occurred largely in
Australia and we are pleased to report the execution of supply
agreements with a number of Australian aged care providers,
including some leading chains. We anticipate that domestic
sales will continue to grow as we promote the many benefits of
SIM™ through a variety of means, including direct marketing,
attendance at trade shows, the use of key opinion leaders and
peer reviewed research.
Simavita has also executed an important exclusive distribution
agreement with Chicago-based Medline Industries, Inc.
(“Medline”) for the distribution of SIM™ in the United States.
Medline is a Forbes top 100 private company with a turnover
in excess of USD 5 billion. We are pleased to report that sales
of SIM™ have already commenced in the United States and
we anticipate that these will continue to expand through our
distributor, Medline.
There are currently no known commercially available
competing products with similar benefits to SIM™. Simavita
has the “first mover” advantage and part of its core strategy is
focussed on exploiting this important advantage in as many
major markets as possible.
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A showcase site has been established in Copenhagen, Denmark.
This is a collaboration with the Municipality of Copenhagen and
Abena A/S, a global manufacturer of incontinence products.
Simavita has advanced discussions with several other parties
regarding potential distribution agreements for specific
territories in Europe and Canada and we expect further
showcase sites to be established in Sweden and Canada in 2015.
Simavita is also poised to maximise its future in the digital
healthcare space. Our SIM™ technology will provide a platform
that will allow for connectivity, data analysis and integration.
The collection, interpretation and management of health data
forms a major part of our global growth strategy. Software as
an enabler is a growing phenomenon and Simavita’s vision is to
capitalise on the growing opportunities in this sector.
The Company’s technology provides a strategically important
platform to integrate smart monitoring technology and “big
data” collection. Relationships with strong partners who have
established routes to market or a core competency in respect of
expanding the platform application underpins the Company’s
overall strategy.
We are pleased with what has been achieved by Simavita during
2014. Our product is now well validated and protected, and
distribution rights have been granted or are being sought by
well-credentialed parties in a number of large markets. As we
continue to develop improvements to our unique and costeffective product offering, we are confident that the expansion
of Simavita’s global footprint will continue, delivering benefits
for all stakeholders.
Simavita has been successful in attracting a number of key
executives during the year. Tom Howitt, our CFO and Company
Secretary, has had considerable listed public company
and international experience; Paul Won, Global Head of
Manufacturing and Supply Chain, has broad experience in
manufacturing and supply chain, including procurement and
demand planning, customer service, tenders and contracts,
and warehousing and logistics; and Dr. Mehdi Azimi, who will
manage Simavita’s expanding intellectual property portfolio.
The 2014 financial year also included a number of important
achievements in respect of corporate and financing matters.
A successful capital raising of $14.3 million and a dual listing
on the Canadian TSX Venture Exchange and the Australian
Securities Exchange was followed prior to the end of the
financial year by an additional capital raising of $6 million.
Proceeds from Simavita’s various capital raisings have been
used to fund the development of new global markets for
Simavita’s proprietary SIM™ technology, support product
improvements, establish an inventory pipeline and provide
working capital for the expansion of the business.
In what has been an exciting year, I would like to thank
Simavita’s Board and our staff for their dedication and hard
work. I would also like to thank our shareholders for their
patience and loyalty and I look forward to working with you all
as Simavita takes its next major steps forward.
The Company’s vision holds great promise for Simavita and
I believe we have a clear plan to achieve our goals.
Yours sincerely,
Philippa M. Lewis
Chief Executive Officer
2014? ANNUAL Report?
3
Board of Directors and Senior Management
Directors
Ari B. Bergman? (Acting Chairman and Non-Executive Director)
Ari was appointed as a Director of Simavita Holdings Limited in 2007 and, following its acquisition by the
Company, of Simavita in November 2013. He is currently a Non-Executive Director of the Company and
Acting Chairman. Ari worked with his late father, Dr. Fred Bergman, in the early stages of development
of the SIM™ technology.
Ari worked as a commercial lawyer in private practice at one of Australia’s most prestigious law firms;
co-founded Nutech Health, a medical technology distribution business, and currently acts as General
Manager and General Counsel of the Spotlight family office which controls one of Australia’s largest
and most diverse private groups which includes the Spotlight and Anaconda retail chains, and a large
property portfolio, in addition to a variety of other businesses.
Ari is completing a doctorate in law at Monash University and is a member of the Australian Institute of Company Directors.
Philippa M. Lewis? (Chief Executive Officer and Executive Director)
Philippa was appointed as a Director of Simavita Holdings in 2007 and of Simavita in November 2013.
She is the Chief Executive Officer of the Group and an Executive Director of the Company.
Philippa has over 30 years of local and international business experience across multiple industry
sectors including retail, healthcare, construction, international technology transfer, franchising, patent
management, import, distribution and manufacturing. In 2002, Philippa was recognised as one of the
Zurich Business Leaders of the Year.
Prior to joining Simavita, Philippa was the Chief Executive Officer and founder of Sanicare, an Australasian
import and distribution business for textile based and non-woven adult incontinence products. Under her
guidance, Sanicare grew to be a market leader with over $20 million in turnover. In 2005, she sold the Sanicare business to a FTSE-listed
entity, staying on as Chief Executive Officer and Director.
Philippa’s academic qualifications span Business and Law. She is a member of the Australian Institute of Company Directors and the
Institute of Arbitration and Mediation. Philippa has recently joined the Board of the Medical Technology Association of Australia (MTAA).
Damien M. Haakman? (Non-Executive Director)
Damien was appointed as a Director of Simavita Holdings in 2012 and of Simavita in November 2013.
Damien is the Managing Director of a private family office. He manages and invests in a portfolio including
commercial property, property development joint ventures, and mezzanine finance and bridging loans
as well as investments in start-up and pre-listed companies. Damien’s background includes; due diligence
work, forecasting, market assumptions and trends. He has a keen interest in the technology sector
including the impacts of new disruptive technologies and their effects on their market. Damien is
a member of the Australian Institute of Company Directors.
Senior Management
Thomas G. Howitt? (Chief Financial Officer and Company Secretary)
Tom was appointed as a Director of the Company in June 2005. He subsequently resigned as a Director
to assume the role of CFO and Company Secretary in April 2014. He is a Chartered Accountant, member
of the Taxation Institute of Australia and Institute of Chartered Secretaries.
During a career spanning more than 20 years, he has served as CFO (and Company Secretary) for a
number of public companies, listed on the ASX and foreign stock exchanges (NASDAQ, TSX, NZSE). His
experience covers all facets of financial management and control across a variety of industries, including
resources and technology. Tom has played key roles in the successful raising of significant bank debt and
equity capital and the management of complex due diligence programs. He has also worked as a Taxation
Consultant for international accountants Ernst & Young and in the investment banking industry. Tom is an
International Associate of the American Institute of Certified Public Accountants (AICPA), a member of the US Society of Corporate
Secretaries & Governance Professionals and a current member of the Victorian Branch Committee of AusBiotech Ltd.
4
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Senior Management? continued
Peter J. Curran? (Chief Technology Officer)
Peter was appointed as Executive VP of Operations at Simavita Holdings in 2009, responsible for R&D and
Operations. He was appointed Chief Technology Officer in 2014 to ensure close executive focus on R&D
and related IP activities. He has nearly 30 years’ experience in engineering, operations, and commercial
management and has been active in consumer, industrial and defence markets across power,
telecommunications, computer technology, gaming, and medical device products and services. Peter
spent his early working career as an electronics design engineer of industrial power equipment for
Lincoln Electric before moving into senior and principal engineering roles in defence with GEC Marconi
Systems and Stanilite and then into executive management positions in manufacturing and commercial
management within the electronics industry. Peter holds qualifications in electrical engineering, business
administration and has accreditations in business improvement.
Paul Won? (Vice President - Manufacturing and Supply Chain)
Paul was recently appointed as Manufacturing and Supply Chain VP, based in Australia. He has held senior
management positions in manufacturing and supply chain at a number of companies including Baxter
Healthcare, Bard Australia, and Hill-Rom. Paul is responsible for managing the implementation of the
Company's manufacturing and supply chain function and has degrees in electrical engineering and a
masters degree in management.
Veronica E. Travierso-Mitchell? (General Counsel)
Veronica joined Simavita Holdings in 2010 and is responsible for the provision of legal advice on a range of
matters to the Simavita Group. She has over 15 years’ experience in commercial and corporate law gained
both in Sydney, Australia and London, England. Her experience includes general commercial law,
intellectual law and corporate finance and mergers and acquisitions, working with private, public and
listed companies. Veronica is admitted to practice as a solicitor in Australia and England and Wales.
Dr. Mehdi Azimi? (Research Manager - Intellectual Property)
Dr. Mehdi Azimi has a proven track record in leading and managing the development of high technology
products, taking them from product inception to commercialisation. His areas of expertise include
electronics, computing systems, microelectronics, biomicroelectromechanical systems, and medical
devices. He has held senior technical and managerial positions at companies that include NIR Technology
Systems Pty. Ltd. (now Next Instruments), Miva Corporation, Silverbrook Research Pty. Ltd., Geneasys Pty.
Ltd., and Kimiya Pty. Ltd. and he was a faculty member at the University of Tehran. Dr. Azimi has a PhD in
electrical engineering from Auburn University in Alabama, USA.
Dr. Peter H. Aigner? (Vice President - Engineering)
Peter is responsible for the day-to-day research and development engineering activities of the Company.
He has over ten years’ experience in engineering, project management and business development in
Australia and overseas with Invetech and Corbett Robotics. He has primarily been involved with the
development of instrumentation for human diagnostics and life science applications including DNA
analysis. Peter holds qualifications in electrical engineering and holds a Ph.D. in Robotic Engineering.
Dr. Hadi Mashinchi? (Research Project Manager)
Dr. Hadi Mashinchi (PhD, Macquarie University, IEEE member) is an inventor and an expert in data mining.
Hadi has experience in sensor data analysis, statistical analysis, mathematical modelling and
optimisation including the publication of a number of inventions and scientific papers. At Simavita,
he has been involved in research and development activities such as algorithm prototyping and
development, mathematical modelling and also intellectual property related matters.
Hadi has served on the review boards of scientific journals and international conferences. He is currently
serving as member of international review board of International Journal of Energy Optimization and
Engineering (IJEOE) and the program committee member of International Symposium on MapReduce
and Big Data Infrastructure to be held in December 2014 in Sydney, Australia.
2014? ANNUAL Report?
5
Industry overview
THE RAPIDLY EXPANDING DIGITAL
HEALTHCARE SECTOR
"Smart, connected products raise
a new set of strategic choices about
how value is created and captured,
how companies work with traditional
and new partners, and how they
secure competitive advantage as
the new capabilities reshape industry
boundaries. For many firms, smart,
connected products will force the
fundamental question, 'What business
am I in?'"
(M. Porter et.al., Harvard Business Review, November 2014)
Simavita is in the "business" of digitizing aged care.
Wearable technology is a growing technology category that
broadly defines sensor-based devices worn by consumers,
typically providing convenient mobile monitoring for health
and fitness purposes. Digitizing and monitoring the care of the
elderly is an important solution for a sustainable future.
Sensors used in wearable electronic devices are forecast to rise
by a factor of seven from 2013 through 2019, as illustrated in
Figure 1 on page 7.
The wearable electronics market is forecast to increase from
over USD 14 billion in 2014 to over USD 70 billion in 2024
(IDTechEx 2014), with the dominant sector remaining healthcare
which merges medical, fitness and wellness.
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The inclusion of low power communications protocols in
smart devices, such as phones, tablets and most recently
watches, combined with smaller, more energy efficient sensor
designs and increased applied research into smart textiles, will
accelerate opportunities in the wearables space, including in
the aged care market.
Simavita is well positioned to actively participate in the
wearables space given its:
?? Real world, in-market experience of a medical device worn
by patients (SIM™);
?? Real world, in-market experience embedding sensors in
incontinence products (SIM™);
?? Extensive partner network in global centres of excellence
for sensor design;
?? Extensive IP and in-house expertise in algorithms;
?? Acquisition of applied communication IP; and
?? A natural market fit with convenient, unobtrusive
assessment and monitoring for independent living.
The predicted increase in the size of the digital healthcare
market has resulted in an increase in investment in this
expanding sector. US investment in the sector has already
exceeded USD 3 billion in 2014 with further transactions in
the pipeline.
The rising tide in the digital health space is supported by
healthcare and payment reform, and federal incentives.
The clear objective is “costs out” of the system. Simavita is
well placed to not only reduce healthcare costs but to provide
enhanced clinical outcomes at the same time in a rapidly
expanding market.
Simavita is also well positioned across the main subsectors
of digital health, being “big data” healthcare analytics, where
companies offer predictive and prescriptive data and analytics
for the healthcare sector, and the quantified self where
companies use sensor and data technologies to track health
and wellness, which strongly intersects the “wearables” space,
and real time healthcare.
THE GROWING AGED CARE MARKET
At the forefront of the aged care provision deficit is the inability
to effectively assess and manage diseases and disabilities such
as dementia and incontinence, cut costs and labour while at the
same time improve clinical outcomes.
“The world stands on the threshold
of a stunning demographic
transformation. It is called global
aging, and it promises to reshape
virtually every dimension of the
economy and society over the next
few decades.”
Urinary incontinence (UI) is defined as the involuntary leakage
of urine. UI is not a disease, but rather a symptom associated
with a wide range of patho-physiological factors. Although it is
not an inevitable part of aging, it is more common among the
older population than in the general population.
As life expectancy increases, so too does the number of people
affected by incontinence. These percentages are especially high
in long-term care facilities.
(The Global Aging Preparedness Index, 2013)
During the past 70 years, improvements in health care and
nutrition have brought about dramatic increases in life
expectancy, in both the developed and developing world.
The next 20 years will see an explosion in the percentage of the
developed world’s population who will be over 65 years of age.
In developed economies, aged care expenditure as a percentage
of GDP is growing dramatically.
Directly linked to the accelerating increase in the size of the
elderly population will be a growing demand on industry and
governments to establish the workforce and infrastructure
required to service the aged care industry, in all of its forms. This
challenge of sourcing, securing, training and retaining a work
force large enough to fulfil the demands of the emerging aging
population is unfeasible without a dramatic change in the current
approach. There are already indications of an emerging deficit.
In the US, in long-term care, the prevalence of urinary
incontinence is estimated to be above 70% of residents.
These figures are similar in other developed countries.
Technology is seen as having a vital role in the quality and
range of care available to older citizens, reducing the strain on
care workers.
There is a need to harness new cost effective assistive
and information technologies that offer opportunities for
productivity gains and higher quality care. Due to expected
labour shortages in the aged care sector, it is expected that
productivity gains would need to be in the order of 20% to
30% per annum.
Figure 1: Global forecast of micro electro mechanical systems and sensor shipment for wearable devices
Source: IHS Technology, 2014
500
450
mILLIOnS OF unITS
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
2017
2018
2019
2014? ANNUAL Report?
7
"The Company’s flagship product
is the Smart Incontinence
Management (SIM™) platform
technology. The first application
of SIMTM is a software enabled
instrumented incontinence
assessment which provides
evidence-based care plans."
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Simavita’s business and product
An exciting and growing sector
What is SIM™ technology?
Simavita is part of the digital healthcare sector and has
developed an innovative, patented, world-first solution for the
assessment and management of urinary incontinence, with
an initial focus on the elderly. SIM™ is a platform technology
and the first product is a software enabled instrumented
incontinence assessment which provides evidence-based
incontinence management care plans to the residential aged
care market. This product reduces the cost of the care of elderly
people while providing major clinical benefits.
The Company’s Smart Incontinence Management (SIM™)
technology is a unique digital sensor technology that collects
and interprets information needed in the formation of the care
plan for the elderly person. It takes assessments from being
manual to being instrumented while providing a digitised
evidence-based care incontinence profile which is integral
for controlling costs and delivering improved health care
outcomes. Conducting incontinence assessments is accepted
practice in all target countries and is an important element of
the care of each individual resident/patient.
Critical issues for success
In the US, Simavita has appointed Medline Industries, Inc., a
leading distributor to the Long Term Care (LTC) market and, in
mid-2014, commenced a national roll-out targeted across the
US which has already generated sales of SIM™. To support a
successful roll-out in the US, the Company has established its
own small sales force.
A number of advancing negotiations with European companies
are underway regarding potential distribution arrangements
in those markets. The Company will need to negotiate supply
agreements with these parties and provide the support necessary
in order for them to be successful in their respective markets.
Simavita’s SIM™ platform technology places the Company in a
strong position to exploit new product applications, markets
and geographies. These new markets are substantial and
offer both mainstream and niche segments for further SIM™
applications. By leveraging off the current technology quickly
and effectively, product development will lead to lower cost of
goods and revenue commencement can be accelerated. Human
and financial resources will need to be deployed to ensure these
developments occur in a timely fashion.
Simavita’s business model is evolving quickly from the early
manufacturing and sales model originally established in
Australia to a distribution model for its core LTC product. In
the future, Simavita will use its platform technology to drive
a business model which also recognises a potentially large
contribution from royalty and licensing revenue streams.
It is estimated that at least 15 million manual assessments
are currently performed annually around the world. SIM™
instruments this existing manual activity. SIM™ replaces the
current, inaccurate, process of manual assessments which are
highly labour intensive during the incontinence assessment
process for staff and disruptive to residents.
A SIM™ assessment delivers information that supports
subsequent integrated care planning activities:
?? an evidence-based incontinence report that creates an
individualised toileting program for residents;
?? support for appropriate urinary incontinence product
allocation;
?? a protocol to validate the newly-created toileting program
and incontinence product usage; and
?? information to assist the validation of aged care funding
around Activities of Daily Living (“ADLs”).
How does SIM™ address the incontinence problem?
SIM™ technology is addressing the impact of incontinence on
patients in Residential Aged Care Facilities (RACFs) globally.
The impact of urinary incontinence (UI) on residents of long
term care has a range of associated medical problems with
both physical and psychological consequences, including
damage to skin, urinary tract infections, increased risk of falls
and incontinence-associated dermatitis (IAD) that can lead to
pressure ulcers.
The prevalence of UI in RACFs in Australia is 71% or almost
129,000 residents and is set to climb with an accelerating
ageing population. A review of client records from aged care
assessment teams (41,000) and nursing homes (128,900) in
Australia found that 87% of registered nurses recorded UI as
a “very significant” or “significant” reason for relocating into
a nursing home. Management of UI is also a challenge for
family carers.
2014? ANNUAL Report?
9
Simavita’s business and product?
continued
In Australia, aged care services at a Federal level are provided
in accordance with a set of accreditation standards (Aged
Care Standards and Accreditation Agency Ltd, 1997). The
Continence Management Standard is a subset of Standard 2:
‘Health and Personal Care’. The primary goal of the continence
standard is to identify residents who are incontinent or at risk
of becoming incontinent, and then to assess them with a view
to formulating individualised treatment and management care
plans. RACFs rely on a manual urinary incontinence assessment
practice to establish individualised care. This typically involves
care workers asking residents about their voiding patterns or
manually checking their clothes/continence product every
one to three hours over a 72-hour period to profile their
physiological bladder control and to determine their frequency
and pattern of incontinence.
The accuracy of the data collected during manual assessments
is often questionable. If assessment data is inaccurate the
whole care plan process will be ineffective, and will not deliver
optimal outcomes for the residents. As a result, staff may lose
confidence in the current continence management process and
their ability to improve continence for the resident. The use of
evidence-based plans prepared using SIM™, however, can lead
to patients regaining independence, improved socialisation and
overcoming depression which increases the patients’ quality of
life in an RACF.
Product development history
The original concept for the SIM™ technology was developed
by an Australian medical doctor, the late Dr. Fred Bergman,
while working with residential aged care facilities in Melbourne.
Dr. Bergman’s observations of the inadequacy of existing
incontinence management processes led him to file his first
patent application in 1996 for the development of a technology
to effectively assess and manage incontinence.
In 2004, the technology had reached a point where it was
appropriate for field testing and the Company applied for and
was provided with a grant from the Australian Government
to conduct the first field trial. Preliminary findings confirmed
significant efficiencies and improvements in quality of care as a
result of the use of early stage SIM™ technology.
From 2008, under the leadership of current CEO, Philippa Lewis,
commercialisation of the SIM™ technology began and has been
refined over a number of product generations of in-market
testing in Australia and is now in its fourth generation.
With the maturing of the SIM™ technology, including significant
cost reductions delivered with successive generations,
the Company’s business has evolved through different
commercialisation models, all in the Australian market. Sales
of the latest Generation 4 SIM™ product have commenced
in Australia with more than 40 facilities having adopted the
technology. Internationally, the Company has appointed an
exclusive distributor in the United States, Medline Industries,
Inc., where sales of SIM™ have now also commenced. The
Company is planning expansion into Canada, Europe and Japan
and into different aged care sectors.
Figure 2 below outlines the history of the Company and its
potential technology evolution.
Figure 2: Overview of Simavita’s history and SIM™ technology evolution
2004
Australian
Commonwealth
Government grant
to conduct a clinical
trial of the concept
10
2008
Philippa Lewis
joins as CEO and
drives SIM™ to
commercialisation
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2010
Soft product
launch on the
eastern seaboard of
Australia to prove
commerciality and
refine product/
service offer
2011
Commercial team
developed to drive a
direct entry into the
Australian market
2012
Signed major
distribution deal
with Medline (US)
Overview of the SIM™ technology process
Typically, SIM™ is used by carers in residential aged care
facilities during an incontinence assessment to gather relevant
information and record events which are automatically plotted
as a bladder diary. This process helps create an accurate
incontinence record of bladder control and related nursing
interactions with the individual.
The data is collected by carers providing care to residents as
they conduct their normal daily activities. Direct physiological
urinary incontinence data is gathered by a sensor contained in
an absorbent incontinence product worn by the resident during
the assessment period. Incontinence events are detected and
transmitted by a small pod (“SIM™ pod”) attached to the sensor
that is worn by the resident during the assessment.
The SIM™ pod has been designed to operate continuously
over the entire assessment period and uses Wi-Fi to transmit
event data back to a server based software application
(“SIM™ manager”) for processing into useful information
for clinicians to review. In addition to the direct urinary
incontinence data feedback, carers collect related observational
data using an intuitive point of care application called
“SIM™ assist”.
SIM™ assist operates on smart devices (phones and tablets)
using Google’s Android and Apple’s iOS operating systems.
The portability of the devices containing the SIM™ assist allows
the carer to record relevant data about the resident under
assessment at the time of each data event including food
and fluid intake, successful and unsuccessful toileting, sensor
changes, behaviours and other therapy activity related to
urinary incontinence care.
potential product roadmap
2013
2014
Food & Drug
Authority clearance
(US), GEN 4 Product
Launch (AU & US)
GEN 4 Rollout
(AU & US),
GEN 4 Launch (EU)
2015
Community
Care Rollout
(AU, US & EU),
Data Management/
EMRs Product
(AU, US & EU)
2016
Everyday Smart
Pod Launch Aged
and Community
Care, Aged Care
Launch Japan
retail Everyday
product and
four categories
of Smart Sensor
technology
applications
2014? ANNUAL Report? 11
Simavita’s business and product?
continued
When a SIM™ assessment has been completed and the collected
data can be viewed in a comprehensive bladder (continence)
diary, the SIM™ manager software provides a structured
decision support process to guide the development of effective
individualised care plans for each assessed resident. This
assessment process can be depicted as a cycle, as illustrated in
Figure 3 below.
The components of the SIM™ technology
SIM™ operates over a Wi-Fi network, but does not require
continuous connection. The SIM™ pod is capable of completing
an entire assessment without connection to a network via Wi-Fi,
but requires such a connection in order to upload all collected
information. Figure 5 on page 13 illustrates the operation of the
SIM™ network.
The SIM™ manager software produces real time bladder
information combined with a carer’s observations, a sample of
which is shown in Figure 4 below.
Figure 3: Overview of SIM™ assessment process
1
2
3
4
SIM™ SENSOR
WI-F
I NEtWORk
SIM™ ASSISt
SIM
RE
™M
ANAgER SOFtWA
Events and observations
are recorded in real time
Mobile SIM™ assist device
to record observations
and monitor assessments
Profiling used to develop
a person centred care
plan
SIM™ sensor captures
incontinence data
(worn for 72 hours)
cycle
Figure 4: Sample of bladder and assessment chart
12
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Manufacturing and logistics
All raw material and manufacturing inputs for SIM™ are
currently outsourced. Figure 6 provides an overview of the
manufacturing arrangements for the key components of the
SIM™ technology.
The Customer Service team manages orders from the
Company’s customers for SIM™ consumables. Customer Service
places orders with the Company’s third party logistics partner
for pick up and dispatch of products directly to the customer’s
site. In the United States, this activity is managed by Simavita’s
US exclusive distributor, Medline.
The Company currently carries out all raw material
procurement. It does this to ensure that it has a high level of
awareness and control of material costs designed into the
product. The Company qualifies and monitors critical suppliers
and undertakes quality checks and performance feedback.
The Company manages site support activities through the
Customer Service group. Helpdesk support is in place, with all
calls logged, ticketed, and triaged for resolution. In the United
States, the Company’s distribution partner carries out similar
support activities.
As sales of SIM™ expand globally, the Company will transition to
in-region outsourcing solutions for its new markets, particularly
in the United States and Europe.
The Company has recently appointed a dedicated Vice
President, Manufacturing and Supply Chain to lead the strategy
and manage the implementation of the manufacturing and
supply chain function.
The Company purchases all materials and components required
for product assembly and carries out final assembly and testing
of all hardware and software in-house.
Figure 6: Key components of the SIM™ technology
Figure 5: SIM™ network
CONSUMABLES
Internet
Customer Service/
Remote Support
Server runs SIM™
(optional offsite with VPN)
SIm™ sensors
For SIM
assessments
Light (6015)
Moderate (6016)
Heavy (6017)
Assembled in Australia for Simavita
Main components
Light: 30 x SIM™ sensor, 9 x SIM™ pants
Moderate: 20 x SIM™ sensor, 6 x SIM™ pants
Heavy: 20 x SIM™ sensor, 9 x SIM™ pants
SIm™ sensor
Pad with
integrated sensor
Light (01505)
Moderate (01508)
Heavy (01511)
Assembled in Australia for Simavita
Main components
Incontinence pad: Light, Moderate, Heavy
SIM™ sensor strip: Light, Moderate, Heavy
Plastic clip: Light, Moderate, Heavy
SIm™ pod kit
Model 601
contains SIM™ pod
and charging dock
Assembled in Australia by Simavita
Main components
1 x SIM™ pod
1 x SIM™ dock
1 x power adaptor
1 x USB cable
SIm™ pod
Sensor data
acquisition
Assembled and tested in Australia
by Simavita
Main components
SIM™ pod printed circuit assembly battery
Plastic housing (top and bottom)
SIm™ dock
Charges SIM™ pod
PC connectivity
via USB
Assembled and tested in Australia
by Simavita
Main components
Plastic housing (top and base)
SIM™ dock printed circuit assembly
SIm™ assist app
Point of care
application for
the collection of
observational data
and for messaging
Available through Simavita
Application file available for installation
onto Android and iOS devices
SIm™ manager
Processes SIM™
sensor data
and hosts SIM™
manager web
interface
Available through Simavita
Server based software, including integrated
web based assessment and care planning
tools
DATA ACQUISITION
SIM™ Manager Web Software
SIM™ assist
SIM™ sensor with SIM™ pod
network
Wi-Fi network
Facility network
SOFTWARE
WAN/Internet
2014? ANNUAL Report? 13
Sales model and strategy
The first target market for SIM™
The first target market for Simavita’s SIM™ technology is the
residential aged care market where the customers are the
providers of institutionalised care to the elderly, including
private, government and not for profit entities. As an extension
of this group, the Company anticipates that SIM™ could in future
also be marketed to the community care sector, initially through
care providers.
The potential customers of SIM™ in the community are persons
suffering from incontinence who still live at home (and their
families) demanding SIM™ related services, especially in relation
to maintaining a normal functional life at home for as long as
possible. While this would be a user pays business model, the
Company is also exploring reimbursement opportunities in the
home care space as there are a number of government bodies
that provide reimbursement for incontinence management
for those living at home. The Company has also targeted
opportunities for the use of SIM™ in hospitals, geriatric wards,
rehabilitation wards and palliative care wards.
Benefits of SIM™ for the Residential Aged Care Facility
The decision for a residential aged care facility to purchase
SIM™ and conduct assessments on residents is based on both
the clinical benefits it provides in this important area of care for
the elderly, as well as the financial benefits for the operator of
the facility.
The financial benefits available fall into a number of areas
depending on market funding models and dynamics, including:
?? direct product cost savings from the more efficient use of
incontinence products and better selection of products
according to the resident’s needs;
?? workplace cost efficiencies/labour savings from reduced
toileting activity;
?? certification/accreditation costs from the provision of a
comprehensive incontinence management application
documenting quality incontinence care;
?? there is reputational enhancement and increased
occupancy for facilities that have deployed SIM™ at their
site/s; and
?? cleaning and waste savings linked directly to the better
allocation of products supported by effective toileting
activity.
SIM™ Business Model
Earlier generations of the SIM™ technology were trialled in the
Australian market. Expansion in this market has leveraged off the
well-established customer base where there is already growing
market awareness leading to repeat sales of the product.
Simavita’s business is a software enabled “razor/razor blade”
model. The razors are the SIM pods™ and software subscriptions
which provide revenue to the Company, and the assessments
(the sensor diapers and special pants) the “razor blades” – sold at
margins that produce recurring gross profit at attractive margins.
In addition to the upfront revenue generated from facilities
purchasing the enabling software and hardware, and the
on-going revenue from the sale of consumables, there is
additional revenue generated by the Company through the
provision of associated services, such as clinical assessment
services, or training and support services. The market dynamics
determine where this is feasible and/or demanded.
Product offering
Simavita’s SIM™ solution goes beyond a simple offering:
Core product
?? instrumented assessment tool: assessment provides
evidence-based care plans to deliver an effective toileting
program and continence aid selection;
?? SIM™ sensor detects multiple incontinence episodes in
real time;
?? structured process for assessing, treating and managing
people with incontinence; and
?? reduction of risk of sanction by regulators arising from poor
quality health care outcomes;
?? ability to develop and validate individualised toileting
assistance programs.
?? potential revenue uplift based on a more accurate
assessment. Funding is based on a per diem payment
according to the level of disability of the resident and
the requisite care required. Examples of reimbursement
opportunities can be identified in the Australian Aged
Care Funding Instrument. Currently there is no specific
reimbursement code for SIM™ in the US however per
diem payments flow to the provider from the US Medicare
Prospective Payments System;
Core benefit
?? support for Rehabilitation and Occupational Therapy
programs which, in many cases, attract additional
government funding;
14
? gracing life
?? better health outcomes for older people with reductions
in the number of falls, improvements in skin integrity and
better quality of life;
?? optimising care staff labour resources during an assessment
and with productive toileting;
?? provides savings in continence aid selection, laundry costs
and government funding; and
?? reduced risk by embracing evidence-based nursing.
Compelling need
Ineffective manual process provides a compelling need for SIM™:
Financial
?? reduced time and effort in undertaking assessments;
Manual, paper-based practice
?? reduced time and effort in the on-going continence care
process based on patient centred toileting program;
?? inaccurate process of recording timed information on
incontinence events;
?? reduced direct cost on over-capacity continence aids and
reduced need for aids from effective toileting;
?? time consuming requiring one to three hourly checks to
identify bladder pattern; and
?? reduced costs from associated health issues (skin integrity
issues, falls);
?? lacks dignity and respect for residents, requiring a visual
inspection of continence aids.
?? reduced waste costs;
SIM™ continence management practice
?? reduced compliance and accreditation risk.
?? positive continence management leads to a patient
regaining his/her independence, improved socialisation and
overcomes depression associated with incontinence; and
Organisational
?? effective continence management can significantly improve
a patient’s health outcome through the early detection and
management of urinary incontinence, reducing a range of
associated problems including reduced risk of urinary tract
infections, reduced risk of skin breakdown, and reduced risk
of falls and adverse or aggressive behaviours.
Savings potential for governments, Care Providers / patients
in a Community Care environment
?? >20% incontinence product cost reduction in RACFs;
?? >20% reduced waste disposal and landfill costs;
?? >20% less toileting provides a significant opportunity for
staff redeployment;
?? reduction in labour costs associated with continence
assessment and treatment;
?? reduction in wound care product costs; and
?? reduced laundering costs.
?? evidence-based support for funding claims; and
?? improved staffing availability from optimising continence
care time; and
?? improved staff engagement to provide valuable, caring
activity.
Environmental
?? reduced waste from lower capacity pads and reduced
pad usage.
Revenue drivers for the Long Term Care customer
Benefits delivered by the use of SIM™ leading to potential
increases in revenue include:
?? Enhanced reputation by using SIM™;
?? Increases in occupancy rates driven by reputation, leading
to increased profits;
?? Government Funding is validated and secured by use of
SIM™ reports; and
?? Risks are mitigated by evidence-based care.
Value proposition
Cost benefits to customer
Value of using SIM is centered firmly around clinical and cost
benefits and has several aspects:
Benefits delivered by the use of SIM™ leading to potential
reductions in cost include:
Clinical
?? Labour – head count ratio reduction from 1:8 carers per
patient to 1:12 carers per patient;
TM
?? improved care around continence aid usage and toileting
based on accurate assessment;
?? less functional incontinence; and
?? fewer continence related health impacts.
?? Consumables – reduced by up to 30%;
?? Time management – daily toileting average 8 to 10 times
reduced by up to 50%; and
?? Waste – 23% reduction in both volume and cost.
Simavita has estimated that the operator of a 100-bed aged
care facility in the US could expect to generate annual net
cost savings of approximately $128,000 from the deployment
of SIM™. This assumes that the cost of SIM™ to the facility
is around $28,000 to $35,000 (higher in year one than in
subsequent years).
2014? ANNUAL Report? 15
Marketing
Overview
SIM™ is a disruptive technology and, as such, the approach
to establishing it as the standard for continence care, and for
developing adoption broadly, is different to traditional product
marketing approaches.
Simavita has employed a “customer engagement” method to
define all aspects of its commercialisation approach. The basis
of this approach is to ensure that customer problems are well
understood and addressed by validating marketing elements
starting from the product itself, but also including branding,
positioning, and the market offer. This has involved establishing
hypotheses which have then been tested and refined in an
interactive and iterative engagement with early adopting
customers and the market more broadly. This has resulted in the
SIM™ Generation 4 product, a related branding and positioning
approach, and an in-market offering which has seen the product
adopted more broadly. This approach will be replicated in new
markets as SIM™ is globalised, as well as for potential product
variations in the future (such as the assisted living market).
Incontinence is a significant challenge for residential aged
care facilities around the world and is set to become more so as
the total market rapidly expands (in line with developing countries
globally). To manage the challenge of a shortage in labour supply
and funding, technology will be required and SIM™ is one such
technology which addresses both clinical shortcomings as well as
the macroeconomic challenge facing the aged care industry.
The Simavita marketing plan addresses a number of necessary
elements for successful communication and adoption in the
market including product positioning, product development,
sales model, customer targeting, promotional mix, commercial
model and clinical research. A critical part of the Company’s
marketing communication involves outcomes from a clinical
research program designed to position SIM™ as the benchmark
by addressing current practice shortfalls as well as the
significant positive outcomes from using SIM™.
Global market trends
There is a perfect storm brewing in aged care, as illustrated
in Figure 7 below and Figures 8, 9 and 10 on page 17. While
the number of people aged over 65 as a percentage of the
population increases, the number of skilled staff available to
care for them is falling. At the same time, the associated cost
burden on the community continues to rise.
The Australian incontinence market
Incontinence has a major impact on care service expenditure
and is a significant reason for older people moving into a
Residential Aged Care Facility (RACF):
?? 71% of residents living in RACFs experience incontinence;
?? incontinence has the third largest impact on the quality of
life of older people after dementia and stroke;
?? 25% of a carer’s staff time is spent on continence care;
?? incontinence is not a disease, but rather a symptom which
relates to various patho-physiological factors;
?? incontinence is not an inevitable part of ageing, it is
sometimes curable, and always manageable;
?? current manual incontinence assessment and management
processes often lead to institutionalised incontinence; and
?? current accepted practice requires a 72 hour (3 day)
assessment to determine continence status and
recommend appropriate care plans – but this is a manual
process and is largely ineffective.
Figure 7: Growth in the number of people over 65 years of age as a percentage of the population
? JApAn ? Eu (4) ? AVErAgE
? AuSTrALIA ? uSA
40
35
pErCEnTAgE (%)
30
25
20
15
10
5
0
1950
1980
2010
Source: Population division of the UN Department of Economics and Social Affairs
16
? gracing life
2040
Figure 8: Australian aged care expenditure and a percentage of Gross Domestic Product
? 1969-70 ? 2009-10 ? 2049-50
2.5
2.0
1.5
1.0
0.5
0
AuSTrALIA
uSA
EurOpE
JApAn
Source: European Centre for Social Welfare Policy and Research – Facts and Figures on Long Term Care Europe and North America;
Australian Government – The Intergenerational Report 2010;? World Bank – GDP by country;? CIA – World Fact Books
Figure 9: The pending crisis in Australian skilled care staff
? LICEnCEd rEgISTErEd nurSES (rns)
? pOpuLATIOn AgEd OVEr 65 (OVEr 65s)
3.5
THE TECHnOLOgy ImpErATIVE
3.0
50
rns (mILLIOnS)
40
2.0
30
1.5
20
1.0
OVEr 65s (mILLIOnS)
2.5
10
0.5
0
60
1980
1984
1988
1992
1996
2000
2004
2010
2015
2020
0
Source: Health Resources and Administration 2008
Figure 10: The cost of continence care is significant and driven by direct labour costs
56
CONTINENCE
ASSESSMENTS
90
CONTINENCE AIDS
?? Labour costs account for 92% of continence
management costs – and so represent a
significant opportunity for efficiency gains
CONTINENCE
MANAGEMENT
(LABOUR)
?? $56 million is spent in Australia on continence
assessments per year, primarily with the view to
satisfy funding requirements without delivering
any material benefit in care
1,061
Cost of continence in Australian
aged care facilities ($millions)
?? Continence care is a significant cost to
Australian aged care facilities – estimated to be
$1.2 billion per annum in labour and materials
Source: Deloitte Access Economics – The Impact of Incontinence
in Australia, CFA 2011
1,207
2014? ANNUAL Report? 17
Marketing?
continued
The global incontinence market
Currently, in excess of 240 million people in the western world
are incontinent and more than 15 million manual incontinence
assessments are conducted every year. The aggregate cost of
incontinence assessments in nursing homes has been estimated
at over USD 6 billion dollars per annum globally. When the
total costs of labour and consumables are considered, the
assessment and management of incontinence could be seen
as the biggest single cost area in the operation of long-term
residential aged care facilities.
To address this growing problem, the Company has developed
and commercialised SIM™, the world’s first instrumented and
integrated incontinence assessment and management system.
SIM™ offers dignity to an aging population and a practical and
cost-effective solution for carers and aged-care providers.
Sales of the SIM™ product for incontinence assessment and
management have commenced in Australia and the USA.
The size of the global incontinence market is significant and
the opportunities it presents for the Company are in turn
considerable.
Some key facts and figures include:
240 million
people in the western world are
incontinent
15+ million
incontinence assessments are performed
per annum
USD 6 billion
assessment labour costs per annum
(nursing homes only)
USD 9 billion
continence products sold per annum,
increasing to USD 30 billion by 2030
Number 2
nursing home cost (after labour)
25%+
of labour attributed to incontinence
management in aged care facilities
70%+
of residents in aged care are incontinent
5.4 million
assessments (approximate) per annum –
US addressable market
Figure 11 below summarises details of the global incontinence
market.
Figure 11: The global incontinence market
LEGEND
18
uSA
CAnAdA
uK
nETHErLAndS
EurOpE
JApAn
AuSTrALIA
FACILITIES
47,200
2,600
14,500
2,900
60,000
14,800
2,800
TOTAL BEDS (ROUNDED)
2,700,000
250,000
510,000
150,000
3,300,000
740,000
180,000
TARGET MARKET (BY 2017/18)
10%
14%
8%
13%
6%
2%
28%
? gracing life
Addressable markets for SIM™
Competitors
The addressable target market for SIM™ in long term care is
7,170,000 beds, as represented in Figure 11 on page 18, by the
Company’s key markets:
Simavita is the first company to market an instrumented
alternative to the manual process of incontinence assessment.
There are currently no commercially-available competitors to
the Company’s SIM™ technology which is protected by a strong
and expanding portfolio of intellectual property.
Europe
3,300,000
USA
2,700,000
Japan
740,000
Canada
250,000
Australia
180,000
The residential aged care sector accounts for less than 20%
of elderly people in the community. The larger cohort of
elderly people are in assisted living environments within the
community and this represents a natural extension market for
the SIM™ application.
In the future, further products all leveraging off the Company’s
underlying core technology could open up new and potentially
larger markets around the world for Simavita.
In conjunction with its exclusive US distribution partner,
Medline, the Company launched SIM™ in the US market in July
2014. Since then, sales have commenced in that market, with a
number of additional aged care groups now actively assessing
the technology. Key drivers for the deployment of SIM™ in the
US market include:
?? Long Term Care facilities in the US total 2,700,000 beds
(as above);
?? Urinary incontinence costs USD 7,300 per bed per annum
in labour alone (or USD 19.9 billion in total);
?? SIM™ reduces labour and other costs and improves
occupancy; and
?? Importantly, SIM™ results in a net savings estimated to be
approximately USD 1,580 per bed per annum.
Competitive advantages of SIM™
Improvements over existing manual methods
Performing an incontinence assessment is a necessary step
before an incontinence management plan can be created.
Such incontinence assessments are usually mandatory and are
manually performed in residential aged care facilities across the
USA, Canada, parts of Europe, Japan and Australia.
There have been attempts by others to provide a solution
for improved incontinence management, however, most of
the products operating in the incontinence space could be
characterised as “saturation monitors”, which may be useful
for informing care staff when a pad needs to be changed,
but not useful for collecting more detailed information
relating to the volume and frequency of events. Unlike simple
saturation monitors, SIM™ technology is designed to collect the
information needed for detailed incontinence care planning.
Some of the important features of SIM™ include:
?? sensitivity to multiple individual micturition (urination)
events, enabling a pattern of the incontinence condition to
be established;
?? algorithms that help to provide robust incontinence data
under live field conditions;
?? a sensor data transceiver (“SIM™ pod”) that is waterproof
for easy cleaning and maintenance and uses industry
standard Wi-Fi;
?? point of care smart apps to facilitate the collection of
observational information by care givers; and
?? a process driven software front end GUI that supports care
givers through the steps of assessment, care planning and
reporting.
Barriers to entry
The technology associated with SIM™ is currently protected by
a number of patent families. There are other significant barriers
to entry which the Company believes makes Simavita’s position
robust in the short to medium term. These include the cost of
development (the Company’s development of the SIM™ product
has taken over six years and has cost more than $40 million),
obtaining know how from testing the product in the field and
the time, expense and knowledge required to obtain regulatory
clearance from government authorities including the FDA in the
United States.
The SIM™ technology offers a detailed and instrumented
alternative to the manual process of incontinence assessment
that can often lead to inaccurate and unreliable results. The
manual process is laborious for care staff and causes significant
disruption to residents.
2014? ANNUAL Report? 19
Marketing?
continued
Exclusive US Distribution Agreement
Expansion into Canada
In late 2012, Simavita executed an exclusive Distribution
Agreement with Chicago-based Medline Industries, Inc.
(“Medline”) for the distribution of the first SIM™ application
in the United States. Under this Agreement, training of the
extensive Medline sales force and preliminary marketing
of SIM™ has commenced and first sales are now being
generated. Simavita has now employed a small team in the
US of professionals operating in the areas of technical, clinical
training and business development to assist the Medline teams.
The Canadian market is targeted for appointment of
distributors in early 2015. Market research has identified several
potential distributors and discussions have commenced. The
market place in Canada is assessment driven, much the same
as the United States, European Union and Australia. Initial sales
of SIM™ in the United States have already created interest and
market awareness of the Company’s products in Canada.
Medline Industries, Inc., is the largest privately held
manufacturer and distributor of quality medical supplies and
clinical solutions in the United States. Based in Mundelein,
Illinois, the company has 1,200 direct sales representatives
who are dedicated points of contact for customers across the
continuum of care.
Medline offers a comprehensive array of consulting and
management services encompassing supply chain and logistics.
One of its key product lines is incontinence products. It has
invested heavily in incontinence product manufacturing
including a custom built production facility in Atlanta, Georgia.
It is also a major supplier of other associated products and
services in healthcare. Medline has a fully integrated learning
platform, the “Medline University”, where staff are provided
with training across a range of products and protocols.
The exclusive Distribution Agreement between Simavita and
Medline remains in force for an initial term of five years from
January 2014, after which time the Agreement may be renewed
for further three-year terms automatically or with Simavita’s
approval. Medline is required to meet agreed performance
criteria under the Agreement and, if it fails to do so, Simavita
may remove Medline’s exclusivity rights.
POTENTIAL Future roll-out of SIM™
Distribution in Europe
Europe is a collection of heterogeneous markets and the
incontinence market there is mature and sophisticated.
There are a variety of models of funding and care including
reimbursement, insurance and “user pays”. Simavita has
completed a preliminary assessment of key markets including
Germany, France, Switzerland, Austria, Denmark, Netherlands,
Sweden, Spain and the UK, all of which are potential first
entry points.
The Company has now established a show-case site for SIM™ in
Copenhagen, Denmark in collaboration with the municipality of
Copenhagen and local manufacturer Abena A/S.
The Company is in active discussions with European distributors
who are eager to see the SIM™ technology in operation and to
discuss potential distribution arrangements for the product in
their respective countries.
20
? gracing life
The Japanese market
Japan is at the forefront of the global ageing phenomenon. It
already has an extremely old population and the trend is set to
continue for at least the next 20 years. As such, Japan is viewed
by the Company as an important additional market of interest.
The Company will further explore the potential of entry into the
Japanese market where a preliminary investigation has already
been undertaken. Whilst there are cultural differences, the basic
principles of aged care, including incontinence assessments are
similar. For example, the assessment includes rigorous manual
hourly checking and changing during a 72 hour period where an
instrumented alternative, such as SIM™, could be very desirable.
Brand elements
?? Fit:? SIM™ provides a position in the customers’ minds that
technology can enhance their existing manual incontinence
assessment process and care plan practice with an
instrumented process.
?? Essence:? SIM™ enriches the lives of residents and care staff in
nursing homes by providing a new culture of continence care.
?? Value:? SIM™ provides value to the customer through
improved clinical outcomes, ease of use (leading to better
staff compliance), evidence-based continence care plans
that are patient centred, reduction in costs - labour,
continence aids and environmental waste, and assistance
with government funding.
?? Uniqueness:? SIM™ is the first instrumented urinary
continence tool that can detect multiple incontinence
episodes during an assessment period.
?? Sustainability:? SIM™ is using evidence-based research
to support product claims, and continuing product
development from direct market interaction to enhance
product features and benefits.
?? Credibility:? SIM™ is building its reputation from flagship
sites, thought leader endorsement, global expansion and
continued research to prove the integrity and reliability of
its product attributes.
SIM™ Case Study?
Based on results observed by Simavita at a facility in Victoria, Australia in 2012 and updated in February 2014.
Resident benefits from habit training
Outcome
Situation
Mr. X benefited from a habit training program that resulted
in more successful toileting with less toileting times per day
(4 times per day, as depicted in Figure 13 below):
A male resident (Mr. X) is 70 years of age and lives in an
Aged Care Facility in Melbourne, Australia. His general
condition has changed since he was placed in the care
facility and he now requires full assistance with his
Activities Daily of Living (ADL’s).
Mr. X was continent during the day. Urinary voids into the pad
were reduced by 90% enabling a smaller pad capacity to be
used during the day. His behaviour was also resolved which was
linked more to incontinence episodes rather than his level of
cognitive impairment.
Mr. X has frequent behaviour issues (he is often agitated
and verbalises) in the early morning and late afternoon.
Staff assume it is part of his dementia and ignore this
behaviour. This situation has led to staff being reluctant
to toilet Mr. X during these behaviour episodes.
Testimonials
“The wellbeing of our residents has improved in many areas of care
since we introduced SIM™. This includes effective toileting times,
correct pad allocation (in most cases reducing cost), and reduced
anxiety for residents around continence management can all be
attributed to the introduction of SIM™ over the past 12 months”.
SIM™ insights
Ms. Fiona Kelman, Facility Manager - Twilight, Horton House
The SIM™ assessment in Figure 12 below shows Mr. X’s bladder
patterns and voided volumes; regular toileting prescribed
was 12 times over 3 days, but the carer actually did more than
17 toileting times, with 13 unsuccessful toileting events. The
total voids in pads: 1,317 ml over the 3 day period, as depicted
in the figure below. SIM™ assessment also documented that
behaviours occurred just prior to a voiding event into the sensor.
“SIM™ is less time consuming compared to the old manual
continence assessment practice. The system provides
supporting documentation to assist in generating extra funding
or ACFI uplift, especially for residents who are difficult to
diagnose as being incontinent or in denial of being incontinent.
We have never looked back”.
Ms. Dianne Licastro, ACFI Coordinator - Arcare Greenhill
Figure 12:? SIM™ assessment
Figure 13:? SIM™ training program
2014? ANNUAL Report? 21
New product roadmap and strategy
Application focus
New products, exploiting SIM™ technology
Simavita’s technology is aimed at maximising the independence
of individuals, supported by two paths:
The SIM™ technology currently used in residential aged
care facilities is a first to market instrumented incontinence
assessment solution and is covered by a broad patent and
know-how portfolio. Simavita is in a strong position to
potentially exploit a raft of new product applications in new
markets associated with the global aging challenge and with
incontinence more broadly, all of which leverage the Company’s
existing SIM™ technology.
Assessment/Care Planning
Accurately assessing a condition (in the case of SIM™ it is
incontinence), and following through with integrated care
planning to deliver person-centred care.
Continuous Monitoring
In future, the Company could potentially leverage its existing
technology to develop intelligent active alert technology for
every day, continuous monitoring and management.
Maximising independence is a key objective for all stakeholders,
including the individual in question, their loved ones and
caregivers, insurance groups and governments. Maximising
independence minimises the economic burden on society and
promotes dignity and wellness for the individual. The term
Activities of Daily Living (ADLs) is recognised by governments
and health organisations and is used to refer to those daily
self-care activities that an individual should be able to perform
to live independently. The ability or inability to perform ADLs is
used as a measurement of the functional status of an individual;
toileting hygiene, or the ability to manage the act of urinating
and defecating, is a basic ADL.
Existing products
SIM™: Smart Incontinence Management system, used in
institutional settings, including Nursing Homes
SIM™ is a combination of sensor, algorithm and software
technologies that addresses the assessment and management
of functional issues associated with a lack of control of bladder
and/or bowel (i.e. the toilet hygiene ADL) and can be applied
to any individual where such a functional issue exists, whether
at home or in an institutional setting (e.g. nursing home,
assisted living or hospital). SIM™ is commercially available for
institutional settings in Australia and the US, with plans to enter
markets in Canada, Europe and Japan.
22
? gracing life
Potential new products scheduled for development in the next
12 months to 36 months may include:
?? SIM™ assessment technology for the elderly in community
care or in the home;
?? Everyday SIM™ in residential aged care facilities in Australia,
United States, Canada, the EU and Japan;
?? Everyday SIM™ for in the home or community settings; and
?? Retail Everyday Sensor.
These new markets are substantial and, if suitable products
could be developed, may offer both mainstream and niche
segments for SIM™ applications.
The key features of the SIM™ technology are also now
Wi-Fi enabled and the possibility exists for the software to be
integrated into other data management technologies such as
electronic medical records (“EMRs”).
potential Future areas of focus outside
of core technology
Diagnostics
The Company anticipates that trends in the size, functionality
and cost of sensors could enable it to collaborate with
development partners to embed diagnostic capabilities in SIM™
disposable products, effectively leveraging the SIM™ brand and
footprint in aged care.
An example of this diagnostic capability could include
hydration. Scientists warn that the ability to be aware of and
respond to thirst is slowly blunted as we age. As a result,
older people do not feel thirst as readily as younger people,
increasing the likelihood of them consuming less water and
consequently suffering dehydration. If dehydration is not
identified and treated, the potential consequences to health
are significant, including reduced or even loss of consciousness
(with associated likelihood of a falls risk), rapid but weak pulse,
and lowered blood pressure. If rehydration is not started, the
situation can become life-threatening.
Smart Falls Management
Falls in older adults can result in serious injury, including
death, and is a significant economic cost to health systems.
For example, in 2012, the direct medical cost of older adult
falls in the US was USD30 billion; with the population
aging, both the number of falls and the costs incurred to
treat fall injuries are likely to increase (http://www.cdc.gov/
homeandrecreationalsafety/falls/fallcost.html).
Although there are plenty of Falls Alert products in the market
that provide an alarm when an individual has a fall, Simavita’s
interest is in the area of assessment and care planning to
maximise independent living. Smart Falls Management could
potentially integrate existing third-party sensor technology and
associated algorithms into the Simavita products to assess an
individual’s stability while undertaking their daily activities and
follow through with integrated care planning to mitigate the risk
of falling.
Business strategy to develop additional
product applications
The Company’s business strategy includes the possible strategic
development of additional product applications through joint
development agreements with relevant partners. This could
result in two potential revenue streams:
?? license and product development fees (from the joint
development activities); and
?? royalties from sale of products by the joint development partner.
Each potential new SIM™ application has a possible fit in
market segments containing multinational, often dominant,
corporations. These corporations have expertise and core
products in categories that are large, well penetrated and
mature. They are often looking to add value for their customers,
protect and defend their market shares and minimise margin
decline. They are all seeking to differentiate their brands and
expand their categories.
In this case, Simavita could provide product development
expertise, patents, trade secrets and know-how and may take
the lead in some cases in the development of the product
application. The joint development partner could potentially
provide Simavita with an up-front license payment/royalty
advance as well as a contribution, financially and technically,
to product development. In such cases, the partners would
also most likely take on responsibility for market research,
commercialisation plans, sales and distribution.
Research studies supporting
product benefits
The foundational clinical study conducted on the SIM™ technology’s
predecessor, AEGIS, was undertaken in 2005 as part of the
Australian Government’s Department of Health and Ageing's Clinical
IT in Aged Care Project. The aim of this project was to test the ability
of the predecessor technology to provide an accurate pattern of
urinary voiding in order to tailor a care plan for individuals.
The outcome of the project was significantly positive for
the resident, carers and staff and was the basis for the
commercialisation of SIM™. Key outcomes included:
?? fewer unnecessary attendances;
?? fewer instances of attendance to residents with soaked pads;
?? improvement in labour efficiency around incontinence
management; and
?? improved quality of life and health outcomes for residents
(as perceived by staff), including reductions in skin issues
and better toileting plans.
Two clinical research projects were conducted in 2011 in
association with the University of Wollongong in New South
Wales, Australia. The first study was a review and evaluation
of current incontinence assessment practices in residential
aged care facilities in Australia. The second was a study of
the effectiveness of SIM™ in providing a predictive toileting
schedule that would improve incontinence care outcomes,
benchmarked against existing practice. Both research projects
have been completed and papers written, including a peerreviewed publication. Key outcomes of the research included:
Study 1 – Survey of current practice
?? current incontinence assessment process and information
collection is inconsistent and unreliable;
?? effective incontinence care plan preparation from
assessments conducted was virtually impossible; and
?? resulting care is based on a “one size fits all” toileting
approach – known as “toilet rounds” – but this is rarely
practiced due to staffing constraints.
Study 2 – SIM™ based care improvements
?? it was found that existing care plans resulting from the
manual incontinence assessment approach were not
adhered to in practice; and
?? while not directly investigated in this research project, the
likely reason implied from Study 1 is that there is little belief
in the effectiveness of care plans resulting from inaccurate
manual assessments.
With SIM™ based care planning, based on accurate Bladder
Charts and incontinence records, there was a statistically
significant increase in care plan adherence and more effective
toileting, indicating that staff were confident in the value of the
recommendation. The resulting incontinence outcomes were
increased successful toileting events and reduced urine output
in incontinence products.
2014? ANNUAL Report? 23
Product registration, marketing approvals and standards
Australia
SIM™ is a registered Class I device (Registration: ARTG ID
140328) with the Australian Therapeutic Goods Administration
(“TGA”).
United States
SIM™ is a Class II medical device in the United States. The
Company filed a 510(k) submission for SIM™ and was cleared
by the US Food and Drug Administration (“FDA”), with an
exemption finding, on August 22, 2013.
The FDA has advised that the Company can market SIM™
in accordance with its intended use, as indicated for use by
healthcare professionals to remotely monitor wetness events,
and collect, transmit and report wetness events and other
medical information from multiple patients within a clinical
setting (i.e., hospitals, skilled nursing facilities, residential care
facilities) to establish effective management care plans for
incontinence events.
European Union
SIM™ is a Class 1 medical device in the EU. SIM™ is CE marked
for launch within the European Union.
Quality management systems
The Company is accredited to ISO 9001:2008 Quality
Management Standard (since June 2010). The Company is
also accredited to ISO 13485:2003 Medical Device - Quality
Management Systems – Requirements for Regulatory Purposes
(since April 2013).
24
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Intellectual property
Introduction
Simavita relies on patents, trademarks, know-how and trade
secrets, in combination with non-disclosure, confidentiality and
non-compete agreements to establish, promote and protect
the intellectual property rights surrounding its technology
and business.
Simavita’s technology has been in development for a number of
years and is protected by a substantial portfolio of intellectual
property, including 10 filed patent families and an exclusive
licence to two CSIRO patent families. Details of these patent
families are set out on the following pages.
Simavita has followed a strategy of filing international patent
applications under the Patent Cooperation Treaty 1978
(PCT) administered under the World Intellectual Property
Organization. The benefit of the PCT is that it facilitates
the filing of a patent application in a number of countries
simultaneously, although it is important to note that a PCT
patent application will need to be “nationalised” in countries
where patent protection is required.
A further point of particular value in the Simavita intellectual
property position is the considerable amount of know-how that
has been developed by the research and development team
and generated from putting the technology into practice in the
market. While much of this information is captured in patent
applications, there is also a substantial amount of know-how
and trade secrets.
Simavita expects to continue to invest in the expansion of
its intellectual property portfolio and in further building and
strengthening that portfolio, including its know-how and
trade secrets.
Simavita has recently recruited an in-house patent manager
which should improve the management of the Company's
intellectual property portfolio and lead to the reduction of
external patent attorney fees.
2014? ANNUAL Report? 25
Intellectual property?
continued
Patent details
The Company’s patent portfolio has been summarised below:
Patent family 1a – Incontinence management system and diaper
Application no. /
National Phase
Granted patent
Australia
(expires on 28 October 2025)
US (expires on 2 August 2029)
United States
(13/158,136)
Status
Description
In progress
Whereas the Generation 1 patent (which expired on
27 May 2014) was directed to remote detection of
incontinence, these Generation 2 families (1a and
1b) are directed toward systems for diagnosis and
treatment of incontinence.
Status
Description
In progress in
Europe, India
and Canada
The main independent claim pursued in this Family 1b
application is as set out below.
A moisture monitoring system for monitoring wetness
in one or more absorbent articles, the system
including: (1) An input for receiving one or more
sensor signals indicative of a presence of wetness in
an absorbent article; (2) A processor for processing
the one or more sensor signals and for performing
an analysis of the signals to characterize wetness
events occurring in an absorbent article; and (3) User
interface for communicating with a user of the system.
Patent family 1b – Moisture monitoring system
Application no. /
National Phase
Granted patent
Japan (expires on 2 May 2027)
China (expires on 2 May 2027)
Europe (07718814.2)
India (4591/
KOLNP/2008)
Canada (2,685,889)
Patent family 2 – Improvements in incontinence monitoring and assessment
Application no. /
National Phase
Granted patent
Status
Australia (2010314813) In progress
New Zealand (599423)
Canada (2,776,785)
Europe (10827718.7)
Japan (2012. 537266)
United States
13/508,071
None yet granted
Description
This invention covers technical improvements to
the SIM system. Claims are directed to a system for
monitoring incontinence using a processor, display
device, remote transmitter units transmitting
signals containing continence-related data to the
processor via a receiver. A visual representation of the
continence related information in an absorbent article
worn by the subject being monitored is provided on
the display.
Patent family 3 – A system for managing patient assessment (ACFI calculator)
Application no. /
National Phase
Granted patent
In progress
United States
(13/115,490)
Australia (2011202419)
None yet granted
26
Status
? gracing life
Description
This invention relates to the system and computer
program for analysing patient data by allocating a
value to a patient based on patient assessment data,
comparing the allocated value with a limit value and
identifying patients who are candidates for further
assessment according to proximity of patient value to
a limit of a predetermined value range.
Patent family 4 – Apparatus and method for analysing events from sensor data by optimisation
Granted patent
None yet granted
Application no. /
National Phase
Status
Australia (2011267839) In progress
Canada (2,802,503)
Europe (11794955.2)
United States
(13/704,153)
New Zealand (603953)
Description
This invention claims mathematical methodology
for analysing wetness events based on sensor data.
The method includes a learning phase to determine
a relationship between sensor signal data and
characteristics of the incontinence events, such as
void volume.
Patent family 5 – A capacitive wetness sensor and method for manufacturing the same
Granted patent
None yet granted
Application no. /
National Phase
Status
Australia (2012289823) In progress
United States
(14/236,255)
Europe (128202030.6)
Description
This invention relates to sensing wetness events
such as urinary and faecal events as occur from
time to time in a pad or diaper or similar absorbent
article worn by a subject. Also relates to a system for
coupling such sensors to a receiver and to methods
for manufacturing sensors and/or absorbent articles
incorporating sensors.
Patent family 6 – Improvements relating to event detection algorithms (moving window)
Granted patent
None yet granted
Application no. /
National Phase
Status
Australia (2012278931) In progress
United States
(14/130,833)
Europe (12808152.8)
Canada (2,839,943)
Description
This invention relates to processing sensor signals
from wetness sensors that may be employed to detect
wetness in incontinence pad, nappies, would dressings
and the like. Relates to algorithms for processing
sensor using a moving window.
Patent family 7 – Methods and systems for scheduling procedures such as toileting
Granted patent
Application no. /
National Phase
Status
Description
None yet granted
PCT/AU2014/000768
In progress
This inventions relates to a method for determining
points in time for taking an action, such as toileting a
patient, e.g. for use in care planning.
Patent family 8 – A system for detecting the presence of moisture
Granted patent
Germany (No. 69928949.1)
(expires 10 Sept. 2019)
France (No. 1114313)
(expires 10 Sept. 2019)
United Kingdom (No. 1114313)
(expires 10 Sept. 2019)
United States (No. 6,832,507)
(expires 10 Sept. 2019)
Application no. /
National Phase
Status
Description
N/A
N/A
The invention comprises at least one reading device
for obtaining information from the sensor about the
presence of moisture.
2014? ANNUAL Report? 27
Intellectual property?
continued
Patent family 9 – A moisture detecting module and a receiving unit
Application no. /
National Phase
Granted patent
Status
Australia (2010269226) In progress
Canada (2,767,525)
China
(201080040041.3
Netherlands
(No. 2003163)
(expires 9 July 2029)
Description
The invention aims at providing a moisture detecting
module that indicates the need for a napkin
replacement more reliably. The moisture detecting
module also comprises a moisture non-permeable
layer covering the sensor, the moisture non-permeable
layer being arranged for attachment to a napkin
surface that, during use of the napkin, is facing
towards the person’s skin such that the moisture
sensitive sensor contacts the napkin surface.
Patent family 10 – A moisture sensing module and a napkin
Granted patent
Application no. /
National Phase
Status
Netherlands (NL2010569)
Filed 4 April 2013
In progress
Description
CSIRO in-licensed family 1 – Moisture monitor system for diapers and alike
Application no. /
National Phase
Granted patent
Australia
(expires on 31 January 2027)
Status
Europe (07701419.9) In progress
Japan (JP2009252080)
United States
(12/278,058)
Description
The invention relates to a moisture monitoring system
that can be used to monitor wetting of garments,
diapers, nappies, incontinence pads and alike sanitary
products.
CSIRO in-licensed family 2 – Flexible electronic device
Application no. /
National Phase
Granted patent
Australia (No. 2006218256)
(expires on 28 February 2026)
United States (No. 11/816,795)
(expires on 28 February 2026)
28
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Status
In progress
China
(200680006339.6)
Europe (06704928.9)
Japan (JP2008531137)
Eurasian Patent
(201290019)
EU Patent App.
(10734361.8)
India (10734361.8)
Japan
(2012-519491)
United States
(13/382,830)
Description
This invention is directed toward an electronic device
that may comprise a flexible display, a flexible circuit
substrate and a power source.
Financial Report
for the year ended June 30, 2014
30? Management Discussion and Analysis (Form 51-102F1)
38? Consolidated Statement of Comprehensive Loss
39? Consolidated Statement of Financial Position
40? Consolidated Statement of Changes in Equity
41? Consolidated Statement of Cash Flows
42? Notes to the Consolidated Financial Statements
71? PricewaterhouseCoopers Audit Opinion
72? Corporate Governance Statement
82? ASX Additional Information
2014? FINANCIAL Report? 29
Management Discussion and Analysis (Form 51-102F1)
for the year ended June 30, 2014
The following Management Discussion and Analysis (“MD&A”) of the results and financial position of the Company for the
year ended June 30, 2014 should be read in conjunction with the information provided in the Company’s consolidated
financial statements for the same period (“Financial Statements”) and the material contained herein.
Unless otherwise noted, all currency amounts contained in this MD&A and in the Financial Statements are stated in
Australian dollars. The information presented in the Financial Statements is prepared in accordance with International
Financial Reporting Standards (“IFRS”).
DATE
This MD&A is dated August 28, 2014.
OVERALL PERFORMANCE
Acquisition of Simavita Holdings
On July 29, 2013, the Company announced that it had executed a Scheme Merger Agreement (“Agreement”) with Sydneybased company Simavita Holdings Limited (“Simavita Holdings”). Pursuant to the Agreement, an annual and special meeting
of the Company’s shareholders (the “Meeting”) was held on November 20, 2013 to approve the issue of new shares by the
Company to the Simavita Holdings shareholders to acquire 100% of the issued capital of Simavita Holdings (the “Merger”).
The Merger was subsequently implemented by way of a scheme of arrangement under the Australian Corporations Act.
At the Meeting held on November 20, 2013, a number of resolutions were passed by the Company’s shareholders pursuant
to which:
1. The Company undertook a consolidation of its share capital on the basis of one post-consolidation common share for
every three pre-consolidation common shares such that the number of common shares on issue was reduced from
5,168,167 to 1,722,722.
2. The Company changed its business as a result of it issuing a total of 56,053,772 post-consolidation common shares to
the shareholders of Simavita Holdings, following which Simavita Holdings became a wholly-owned subsidiary of the
Company. The transaction was accounted for as an asset acquisition.
3. The Company changed its name from Gtech International Resources Limited to Simavita Limited.
4. The Company continued into British Columbia, Canada under the Business Corporations Act (British Columbia)
(“BCBCA”) and adopted constating documents that comply with the BCBCA.
5. The Company adopted certain changes to its Stock Option Plan and subsequently issued options and warrants.
6. Dr. Malcolm R. Brandon and Alison J. Mew were not re-elected as Directors of the Company.
7. Maxwell C. Lloyd-Jones, Philippa M. Lewis, Ari B. Bergman, Peter C. Cook and Damien M. Haakman were appointed as
Directors of the Company, with Mr. Lloyd-Jones being appointed as Chairman and Ms. Lewis being appointed as CEO.
Thomas G. Howitt was re-elected as a Director of the Company and continued in his role as Secretary.
8. The Company resumed trading on the TSX Venture Exchange (“TSX-V”) under the symbol “SV”.
30
? gracing life
OVERALL PERFORMANCE? continued
Acquisition of Simavita Holdings? continued
Subsequent to the Company’s resumption of trading on the TSX-V, the following events occurred:
1. On January 31, 2014, the Company granted a total of 6,876,664 stock options to certain Directors under its Stock Option
Plan. Each option vested immediately and is exercisable at any time up to, and including, December 3, 2016. The exercise
prices of the options that were granted are as follows: 1,469,166 options have an exercise price of $0.41 each; 2,469,166
options have an exercise price of $0.52 each; 1,469,166 options have an exercise price of $0.65 each; and 1,469,166
options have an exercise price of $0.82 each.
2. Also on January 31, 2014, the Company issued a total of 634,835 common share purchase warrants (the “Broker
Warrants”) to a party associated with Lodge Corporate Pty. Ltd. and 519,410 Broker Warrants to Integrated Equity Pty.
Ltd., all of which are exercisable at a price of $0.41 each up until December 3, 2016. These Broker Warrants were issued in
connection with: (a) the completion of the prospectus offering by Simavita Holdings (the company that was acquired by
the Company) pursuant to which a total of $13,899,963 was raised; and (b) the completion of the prospectus offering by
Simavita Limited pursuant to which a total of $405,965 was raised.
3. The Company also issued on January 31, 2014 a total of 1,155,298 non-transferable common share purchase warrants
(the “Medline Warrants”) to Medline Industries, Inc. (“Medline”) in connection with a US exclusive distribution agreement
between Simavita Holdings and Medline dated October 10, 2012. The first tranche of 1,155,298 Medline Warrants, which
vested immediately, had an exercise price of CAD$0.42 per share. The Company also agreed to grant two further tranches
of options to Medline. A second tranche comprises 1,444,412 Medline Warrants which will be granted, subject to the
satisfaction of certain performance requirements, on January 1, 2015. These Medline Warrants will have an exercise price
of the greater of CAD$0.504 per share or the 30-day volume weighted average price (“VWAP”). A third tranche comprises
1,444,412 Medline Warrants which will be granted, subject to the satisfaction of certain performance requirements,
on January 1, 2016. These Medline Warrants will have an exercise price of the greater of CAD$0.604 per share or the
30-day VWAP.
4. On January 31, 2014, Maxwell Lloyd-Jones resigned as Chairman and a Director of the Company. In his place, Peter Cook
was appointed as the Company’s new Chairman. As previously announced, Mr. Cook was elected to the Board of the
Company at the Meeting held on November 20, 2013.
5. On February 11, 2014, the Company received conditional approval from the Australian Securities Exchange (“ASX”)
for quotation of its CHESS Depositary Instruments (“CDIs”) on the Official List of the ASX. The Company received final
approval from ASX for admission to the Official List on February 18, 2014, with trading of its CDIs commencing under the
code “SVA” at 10:30 am (Sydney time) on February 20, 2014.
6. On February 19, 2014, the Company issued a total of 990,159 common shares at an issue price of $0.41 per share which
raised a total of $405,965, before the payment of associated costs.
7. On February 28, 2014, the Company announced that Thomas Howitt had resigned as a Director of the Company (effective
as from April 14, 2014) and that he would take up the executive position of Chief Financial Officer. Mr. Howitt continued in
his role as Secretary.
Previous activities
Previously, the Company was a junior resource company engaged in the acquisition and exploration of mineral properties in
British Columbia and the Yukon Territory. The Company still retains a 1.5% net smelter royalty on the Aurex Property which
Stratagold Corporation may purchase at any time for CAD$1,000,000. The Company also owned 69 mineral claims, which
it sold on January 16, 2002 to ATAC Resources Limited (“ATAC”). The Company agreed to accept 200,000 common shares in
ATAC and a cash payment of $5,000 in final settlement for the transfer of the project. These shares were then subsequently
sold by the Company during the fiscal year ended April 30, 2004. The Company retains a 1.5% net smelter royalty which ATAC
may purchase from the Company for CAD$600,000.
2014? FINANCIAL Report? 31
Management Discussion and Analysis (Form 51-102F1)?
continued
for the year ended June 30, 2014
OVERALL PERFORMANCE? continued
Group overview
The Simavita Group of companies (the “Group”) has developed an innovative world-first solution for the management of
urinary incontinence, with a focus on the elderly. The Group’s first product is the SIM™ platform technology which is an
instrumented incontinence assessment application that provides evidence-based incontinence management care plans to
the residential aged care market.
The original concept for the Company’s SIM™ technology was developed by an Australian medical doctor, the late Dr.
Fred Bergman, while working with residential aged care facilities in Melbourne, Australia. Dr. Bergman’s observations of
the inadequacy of existing incontinence management practices led him to file his first patent application in 1996 for the
development of a technology to effectively assess and manage urinary incontinence.
By 2004, the technology had reached a point where it was appropriate for field testing and the Group applied for, and was
awarded, a grant from the Australian Government to conduct the first field trial. Preliminary findings confirmed significant
efficiencies and improvements in quality of care as a result of the use of the early stage SIM™ technology.
From 2008, and under the leadership of the current CEO, Philippa Lewis, SIM™ has been refined over a number of product
generations and is now in its fourth generation. The current SIM™ technology has evolved from many years of development,
customer interface, extensive long-term field trials and the expenditure of significant funds from both private investors and
the Australian Government.
With the maturing of the SIM™ technology, including significant cost reductions delivered with each successive generation,
the Group’s business has evolved through different commercialisation models, all historically servicing the Australian
market. Sales of SIM™ in Australia are increasing and, during the 2014 calendar year, the Company expanded its operations
internationally, initially into the United States, via an exclusive agreement with a large US-based distribution partner. The
Company also has plans to expand its sales activities into Canada, Europe and Japan and into different markets and sectors,
with products leveraging off its underlying core technology.
Results from operations
The Simavita Group received clearance from the US Food and Drug Administration in August 2013, enabling it to market its
urinary incontinence assessment and management product, SIM™, in the US market. The Company has subsequently carried
out successful trials of the product at a number of sites in the US and distribution of the product has now commenced in
collaboration with the Company’s exclusive US distribution partner, Medline Industries, Inc.
During the year ended June 30, 2014, the Company successfully completed the development of its fourth generation
platform, including regulatory testing, and released it for live site trials. This latest version eliminates costly bespoke network
infrastructure and embraces a rapid deployment approach leveraging WiFi technology. Based on the positive results of
the live trials, the Company rolled out its fourth generation SIM™ technology to its existing customers in Australian market
and to new customers globally. Completion of this rollout to existing customers occurred shortly after the end of the 2014
financial year.
The Group reported a net consolidated loss after tax for the year ended June 30, 2014 of $10,491,790. This loss represented
an increase of $3,105,979, or 42%, over the net loss for the previous corresponding period. The loss for the current period,
however, included significant one-off expenses including a non-cash, share-based payments expense in respect of warrants
and options granted as part of the Company’s recent listing ($1,302,333), transaction expenses associated with the
Company’s acquisition by Gtech International Resources Limited and subsequent dual stock exchange listings ($1,221,125)
and a non-cash loss arising on acquisition of $792,397. After deducting these three amounts, the adjusted loss for the
year ended June 30, 2014 would have fallen to $7,175,935, or $209,876 (approximately 3%), less than the loss for previous
corresponding period.
Revenues generated by the Group from the sale of its SIM™ solution increased by $33,605, or 11%, during the year ended
June 30, 2014 from $316,290 in 2013 to $349,895 in 2014. This rate of sales growth, however, was reduced due to a focus by
the Company on the completion of its Generation 4 SIM™ product for launch in the US market rather than securing further
sales of earlier Generation 3 products in Australia.
32
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OVERALL PERFORMANCE? continued
Results from operations? continued
In addition, as existing customers transitioned from the earlier Generation 3 product to the more advanced Generation 4
product, the number of incontinence assessments performed fell resulting in a temporary decline in both sales and revenue.
With the rollout of the Generation 4 product now complete and the addition of new customers in both the US and Australian
marketplaces, the rate of sales growth has already increased and is anticipated to increase further in the 2015 financial year.
The Company’s cost of sales decreased markedly during the 2014 year by $109,483, or 53%, from the previous year. The
transition by existing customers to the Company’s new Generation 4 product was accompanied by a revenue model more
heavily focussed on the sale of consumable products which is less impacted by the sale of the more expensive hardware
associated with the now-superseded Generation 3 product. It is envisaged that additional product developments now
underway will result in further reductions in costs, delivering benefits for the Company and its customers alike.
The Company’s total employee benefits expense for year ended June 30, 2014 was $4,545,658, representing a modest
increase of $134,445, or only 3%, over the figure for the previous year of $4,411,213. In the consolidated statement of
comprehensive loss, the total employee benefits expense is allocated across the respective functions of general and
administration, research and development and sales, marketing and distribution.
Finance costs incurred by the Company fell by a significant $729,766, or 69%, during the year under review, from $1,050,369
in 2013 to only $320,603 in 2014. This fall arose as a result of the extinguishment during the year of outstanding interestbearing liabilities via the conversion of certain debt instruments into equity and the repayment in cash of other loans from
the proceeds of the Company’s various capital raisings. It is anticipated that, in the coming year, finance costs will be nominal
following the complete repayment by the Company of all interest-bearing liabilities by June 30, 2014.
General and administration expenses incurred by the Company increased during the year by $573,548, or 15%, from
$3,898,541 in 2013 to $4,472,089 in 2014. This increase is primarily due to additional expenses incurred in relation to the
scrapping of obsolete inventories as a result of the transition from the Generation 3 to the Generation 4 product ($202,186)
and management and consulting fees associated indirectly with the acquisition of Simavita Holdings. The Company also
incurred expenses associated with the recruitment of employees in anticipation of future growth.
Occupancy costs incurred by the Group during the year ended June 30, 2014 of $331,437 were in line with those incurred
during the previous year. During the 2014 financial year, the Company entered into leases in respect of new premises in
Sydney, New South Wales and Melbourne, Victoria. Notwithstanding this, the Group’s total occupancy costs for the 2015
financial year are not expected to increase significantly from those incurred in 2014.
As part of the acquisition of Simavita Holdings Limited by the Company in late 2013, a loss of $792,397 was incurred by
the consolidated Group. In essence, this loss represented the market value of the 1,722,722 common shares held by the
Company’s shareholders immediately prior to the date of acquisition (December 3, 2013) plus the value of the Company’s net
liabilities ($86,081) on the date of acquisition.
Research and development expenses incurred by the Company during the year increased by $305,388, or 18%, from
$1,715,843 in 2013 to $2,021,231 in 2014. This increase in expenditure related to costs incurred in the successful development
of the Company’s Generation 4 SIM™ solution and other related activities aimed at developing further refinements of existing
products and the development of new applications based around the Company’s proprietary core technology, all of which
will deliver additional products for sale.
Sales, marketing and distribution expenses incurred by the Company during the year increased by $82,601, or 5%, from
$1,633,163 in 2013 to $1,715,764 in 2014. This modest increase was attributable to the launch of the Company’s product in
the US marketplace in collaboration with its exclusive distribution partner, Medline Industries Inc., and to engage with and
assist existing customers during the transition from the Generation 3 to the Generation 4 product. It is expected that as the
Company strives to increase its sales in the US, and potentially European, markets during the 2015 financial year, additional
sales, marketing and distribution expenses will be incurred.
During the 2014 financial year, a significant non-cash share-based payment expense of $1,302,333 was incurred in respect of
2,309,543 warrants and 6,876,664 options granted as part of the Company’s listing, as described on page 30.
2014? FINANCIAL Report? 33
Management Discussion and Analysis (Form 51-102F1)?
continued
for the year ended June 30, 2014
OVERALL PERFORMANCE? continued
Results from operations? continued
As part of the acquisition of Simavita Holdings Limited by the Company in late 2013, total transaction expenses of $1,221,125
were incurred. A nominal amount of $64,651 in similar expenses was also incurred during the 2013 financial year in respect of
the same transaction. These expenses included legal fees, consulting fees, regulatory costs, expert’s fees and travel expenses
all associated with the acquisition of Simavita Holdings by the Company.
The Company’s income tax benefit increased by an estimated $176,439, or 17%, from $1,037,916 in 2013 to $1,214,355
in 2014. This benefit relates to a research and development tax incentive payment which is reflected in the Company’s
receivables as at June 30, 2014. The Company anticipates that the incentive payment will be received prior to the end of the
2014 calendar year.
As at June 30, 2014, the Company’s total cash and cash equivalents were $6,844,197, as compared to an amount of $737,978
as at the previous corresponding balance date. This increase arose from net cash flows from financing activities, largely
attributable to funds raised from equity raisings ($14,357,674), offset by net cash used in operating activities of $8,287,600.
SELECTED FINANCIAL DATA
The following selected financial data covers the three financial years ended June 30, 2014. The data has been prepared in
accordance with IFRS and is reported in Australian dollars.
Total revenues
$
Year ended
Net profit/(loss)
$
Total assets
$
Total non-current
liabilities
$
June 30, 2014
349,895
(10,491,790)
8,789,924
-
June 30, 2013
316,290
(7,385,811)
2,489,457
3,369,678
June 30, 2012
704,973
(6,945,652)
3,446,684
2,945,353
SUMMARY OF QUARTERLY RESULTS
The following is a comparison of revenue and earnings for the previous eight quarters ended June 30, 2014, being the
information contained in the first financial statements prepared by the Company since its reverse takeover of Simavita
Holdings. Financial information is prepared in accordance with IFRS and is reported in Australian dollars.
Total revenues
$
Quarter ended
Net profit/(loss)
$
Net loss per share
$
June 30, 2014
95,774
(867,099)
(0.03)
March 31, 2014
102,838
(4,406,615)
(0.15)
December 31, 2013
75,957
(2,865,887)
(0.09)
September 30, 2013
75,326
(2,352,189)
(0.07)
349,895
(10,491,790)
(0.34)
June 30, 2013
37,103
(1,153,445)
(0.51)
March 31, 2013
100,211
(2,405,992)
(1.07)
December 31, 2012
72,743
(2,193,494)
(0.98)
September 30, 2012
106,233
(1,632,880)
(0.73)
Totals - year ended June 30, 2013
316,290
(7,385,811)
(3.29)
Totals - year ended June 30, 2014
The significant increase in the net loss for the quarter ended March 31, 2014 arose from the recording of a share-based
payments expense of $1,302,333. The significant reduction in the net loss for the quarter ended June 30, 2014 arose from the
recording of a year-end receivable in respect of an income tax benefit relating to a research and development tax incentive
amount of $1,124,355.
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LIQUIDITY
The Group incurred total expenses of $12,176,979 during the year ended June 30, 2014 and net cash outflows from
operations during the same period of $8,287,600, which included a number of significant one-off expenses as detailed above.
As at June 30, 2014, the Company had working capital of $7,216,954. The Company believes it has sufficient funds to meet its
current working capital requirements. Details regarding the Company’s liquidity position have been provided in Note 30 to
the Financial Statements.
TRANSACTIONS WITH RELATED PARTIES
Up until December 3, 2013, the Company was a subsidiary of Genetic Technologies Limited (“GTG”), a company listed on
both the Australian Securities Exchange and NASDAQ Capital Market. During the year ended June 30, 2014, there were minor
expenses paid by GTG on the Company’s behalf that were subsequently reimbursed.
Details of the amounts paid to related parties, including members of Key Management Personnel, during the year ended
June 30, 2014, have been provided in Note 23 to the Financial Statements.
Outstanding interest-bearing liabilities that were repaid during the year ended June 30, 2014 had been advanced to the
Company to provide it with sufficient working capital to fund its continuing operations until such time as the transaction
with the former Gtech International Resources Limited and its accompanying major fundraising could be completed.
CAPITAL RESOURCES
As detailed above, the Company believes that it has sufficient financial resources to pay its ongoing administrative expenses
and to meet its liabilities for the ensuing year.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements in place as of June 30, 2014.
CHANGES IN ACCOUNTING POLICIES
During the year ended June 30, 2014, the Company changed some of its accounting policies as the result of new or revised
accounting standards which became effective for the annual reporting period commencing on July 1, 2013. The affected
policies are IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other
Entities, IFRS 19 Employee Benefits and Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7). The
Company has assessed there to be no material impact arising from these changes.
Another new accounting standard that is applicable for the first time for the year ended June 30, 2014 is IFRS 13 Fair Value
Measurement and IFRS (2009-2011 Project Cycle). This standard has introduced new disclosures for the report but did not
affect the Group’s accounting policies or any of the amounts recognized in the Financial Statements.
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Company only invests in cash deposits with large banks that are considered to be low risk.
DIRECTORS AND OFFICERS
As detailed under the heading “Overall Performance”, there were changes to the Board as a result of the acquisition by the
Company of Simavita Holdings. As at the date of this MD&A, the names of the Directors and Officers of the Company are set
out below. Details relating to the Directors and Officers of Simavita and the Company’s corporate governance practices have
been provided in the Statement which follows immediately after the Financial Statements.
?? Peter C. Cook – Chairman and Director
?? Philippa M. Lewis – Director and CEO
?? Ari B. Bergman – Director
?? Damien M. Haakman – Director
?? Thomas G. Howitt – CFO and Secretary
The Company is dependent on a number of key Directors and Officers. Loss of any of those persons could have an adverse
affect on the Company. The Company maintains “key-man” insurance in respect of Ms. Lewis as CEO.
2014? FINANCIAL Report? 35
Management Discussion and Analysis (Form 51-102F1)?
continued
for the year ended June 30, 2014
OTHER INFORMATION
Additional Disclosure for Venture Issuers without Significant Revenue
Details pertaining to the expenses incurred by the Company during the years ended June 30, 2013 and 2014 are provided
above under the heading Results from Operations.
Prior to its acquisition of Simavita Holdings, no significant external investor relations activities were carried out by the
Company. The Company maintains a website at www.simavita.com, which gives shareholders the opportunity to review
published financial reports, news releases, corporate profiles, project details and other information. Other information
relating to the Company may be found on SEDAR at www.sedar.com.
OUTSTANDING SHARE DATA
Summary of shares issued and outstanding
Number
of shares
Balance at July 1, 2012
Issue of ordinary shares by Simavita Holdings for cash
Equity transaction costs
Balance at July 1, 2013
Amount
$
7,945,423
18,914
-
18,764,144
44,570
(206,427)
7,964,337
18,602,287
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
20,928,675
2,000,000
Conversion of borrowings into equity (pre-acquisition)
49,589,520
7,885,514
Share consolidation by Simavita Holdings (1 for 3.543)
(56,331,098)
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
33,902,338
Elimination of shares in legal acquiree (Simavita Holdings)
(56,053,772)
Issue of common shares on acquisition of Simavita Holdings
56,053,772
-
Fair value of common shares held by pre-acquisition shareholders of Gtech
1,722,722
706,316
Issue of common shares by Simavita Limited for cash (post-acquisition)
7,876,832
Equity transaction costs
-
Balance at June 30, 2014
65,653,326
13,899,963
-
3,504,968
(2,663,096)
43,935,952
Summary of options outstanding
As at June 30, 2014, there was a total of 6,876,664 options over common shares in the Company outstanding. A further
1,237,500 options were granted on August 26, 2014. Refer Notes 19 and 31 of the Financial Statements for details.
Summary of warrants outstanding
As at June 30, 2014, there was a total of 2,309,543 common share purchase warrants in the Company outstanding, as well
as commitments to grant further warrants to Medline Industries, Inc. (“Medline”) as part of the Company’s distribution
arrangements with Medline (refer Note 19 of the Financial Statements for details).
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FORWARD-LOOKING STATEMENTS
This MD&A contains certain statements that may be deemed “forward-looking statements”. All statements in this release,
other than statements of historical fact, that address future acquisitions and events or developments that the Company
expects to occur, are forward-looking statements. Forward-looking statements are statements that are not historical facts
and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”,
“projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur.
Forward-looking statements in this document include statements regarding possible future acquisitions (including
opportunities in the biotechnology sector), spending plans and possible financing plans. Although the Company believes the
expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not
guarantees of future performance and actual results may differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially from those in forward-looking statements include market
conditions, availability of capital and financing, general economic, market or business conditions, and availability of possible
acquisition opportunities on favourable terms. Investors are cautioned that any such statements are not guarantees of
future performance and actual results or developments may differ materially from those projected in the forward-looking
statements. Forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on
the date the statements are made.
Except as required by securities laws, the Company undertakes no obligation to update these forward-looking statements in
the event that management’s beliefs, estimates or opinions, or other factors, should change. These statements are based on
a number of assumptions, including assumptions regarding general business and economic conditions, the state of the legal
and regulatory environment in which the Company operates, the ability of the Company to satisfy regulatory requirements
and the availability of capital and financing for the Company’s operations and contemplated or proposed transactions on
satisfactory terms.
BY ORDER OF THE BOARD
PETER C. COOK
Chairman and Director
PHILIPPA M. LEWIS
Director and Chief Executive Officer
2014? FINANCIAL Report? 37
Consolidated Statement of Comprehensive Loss
for the year ended June 30, 2014
Consolidated
Notes
June 30, 2014
$
June 30, 2013
$
349,895
316,290
? Cost of sales
(95,453)
(204,936)
Gross profit
254,442
111,354
216,392
156,958
Revenue
Other revenue
5
Expenses
? Finance costs
? General and administration
? Occupancy costs
? Loss on acquisition
2
? Research and development
(320,603)
(1,050,369)
(4,472,089)
(3,898,541)
(331,437)
(329,472)
(792,397)
-
(2,021,231)
(1,715,843)
(1,633,163)
? Sales, marketing and distribution
(1,715,764)
? Share-based payments expense
(1,302,333)
? Transaction expenses
(1,221,125)
(64,651)
(11,706,145)
(8,423,727)
1,214,355
1,037,916
(10,491,790)
(7,385,811)
(22,783)
(4,045)
(10,514,573)
(7,389,856)
(0.34)
(3.29)
Loss before income tax
Income tax benefit
8
Loss for the year
-
Other comprehensive income
? Items that may be subsequently reclassified to profit/(loss)
?? Translation of foreign operation
Total comprehensive loss for the year
Basic and diluted loss per common share
7
The accompanying notes form an integral part of these consolidated financial statements.
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Consolidated Statement of Financial Position
as at June 30, 2014
Consolidated
Notes
June 30, 2014
$
June 30, 2013
$
Assets
Current Assets
? Cash and cash equivalents
10
6,844,197
737,978
? Trade and other receivables
11
1,397,009
1,146,806
?Inventories
12
313,809
331,873
? Other assets
13
50,716
12,312
8,605,731
2,228,969
Total Current Assets
Non-Current Assets
? Property, plant and equipment
14
114,436
183,803
? Intangible assets
15
69,757
76,685
184,193
260,488
8,789,924
2,489,457
Total Non-Current Assets
Total Assets
Liabilities and Shareholders’ Equity
Liabilities
Current Liabilities
? Trade and other payables
16
1,022,823
742,777
? Interest-bearing liabilities
17
-
6,777,465
?Provisions
18
236,338
190,199
1,259,161
7,710,441
-
3,369,678
-
3,369,678
1,259,161
11,080,119
43,935,952
18,602,287
Total Current Liabilities
Non-Current Liabilities
? Interest-bearing liabilities
17
Total Non-Current Liabilities
Total Liabilities
Shareholders’ Equity
? Share capital
19
?Reserves
20
2,749,530
1,469,980
? Retained losses
21
(39,154,719)
(28,662,929)
Total Shareholders’ Equity
7,530,763
(8,590,662)
Total Liabilities and Shareholders’ Equity
8,789,924
2,489,457
The accompanying notes form an integral part of these consolidated financial statements.
2014? FINANCIAL Report? 39
Consolidated Statement of Changes in Equity
for the year ended June 30, 2014
Share capital
$
Balance at July 1, 2012
Reserves
$
Retained losses
$
Totals
$
18,764,144
1,474,025
(21,277,118)
(1,038,949)
Net loss for the year
-
-
(7,385,811)
(7,385,811)
Other comprehensive income, net of tax
-
(4,045)
Total comprehensive income for the year
-
(4,045)
(7,385,811)
(4,045)
(7,389,856)
Transactions with owners
? Issue of common shares for cash
44,570
-
-
44,570
? Equity transaction costs
(206,427)
-
-
(206,427)
Total transactions with owners
(161,857)
-
-
(161,857)
Balance at June 30, 2013
18,602,287
1,469,980
(28,662,929)
(8,590,662)
(10,491,790)
(10,491,790)
Net loss for the year
-
-
Movement in share-based payments reserve
-
1,302,333
Other comprehensive income, net of tax
-
Total comprehensive income for the year
-
1,279,550
17,404,931
-
-
-
-
(22,783)
(10,491,790)
1,302,333
(22,783)
(9,212,240)
Transactions with owners
? Issue of common shares for cash
?Issue of common shares to owners
? of Simavita Holdings Limited
? Fair value of shares issued on acquisition
9,885,514
9,885,514
-
-
? Equity transaction costs
(2,663,096)
-
-
(2,663,096)
Total transactions with owners
25,333,665
-
-
25,333,665
43,935,952
2,749,530
Balance at June 30, 2014
706,316
17,404,931
The accompanying notes form an integral part of these consolidated financial statements.
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(39,154,719)
706,316
7,530,763
Consolidated Statement of Cash Flows
for the year ended June 30, 2014
Consolidated
Notes
June 30, 2014
$
June 30, 2013
$
Cash flows from/(used in) operating activities
(10,491,790)
Loss for the year
(7,385,811)
Non-cash items
? Depreciation and amortization
? Accrued interest
? Loss on acquisition
2
? Share-based payments expense
139,899
203,567
-
1,050,369
792,397
-
1,302,333
-
-
? Unrealised foreign exchange movements
(4,045)
Changes in assets and liabilities
? (Increase)/decrease in receivables
(250,203)
78,890
? (Increase)/decrease in inventories
18,064
(7,465)
? (Increase)/decrease in other assets
(38,404)
7,297
? Increase/(decrease) in payables
280,046
35,468
46,139
42,395
? Increase/(decrease) in provisions
? Net liabilities acquired
2
(86,081)
-
(8,287,600)
(5,979,335)
? Purchases of plant and equipment
(97,756)
(75,004)
? Purchases of intangible assets
(17,042)
(8,578)
? Cash received on reverse takeover
162,542
Net cash flows from/(used in) operating activities
Cash flows from/(used in) investing activities
47,744
Net cash flows from/(used in) investing activities
(83,582)
Cash flows from/(used in) financing activities
3,504,968
? Proceeds from the issue of shares by the Company
-
? Proceeds from the issue of shares by Simavita Holdings Limited
15,899,963
44,570
? Equity transaction costs
(2,663,096)
(206,427)
-
? Draw down of borrowings
? Repayment of borrowings
(2,384,161)
Net cash flows from/(used in) financing activities
14,357,674
6,117,818
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of year
737,978
Net foreign exchange differences on cash and cash equivalents
(11,599)
Cash and cash equivalents at the end of year
10
6,844,197
6,178,703
(700,000)
5,316,846
(746,071)
1,484,049
737,978
The accompanying notes form an integral part of these consolidated financial statements.
2014? FINANCIAL Report? 41
Notes to the Consolidated Financial Statements
for the year ended June 30, 2014
1. Nature and continuance of operations
Simavita Limited (formerly Gtech International Resources Limited, the “Company”) was incorporated under the laws
of the Yukon Territory on May 28, 1968 and continued under the laws of the Province of British Columbia, Canada on
December 3, 2013.
These consolidated financial statements of the Company as at and for the year ended June 30, 2014 comprise Simavita
Limited and its subsidiaries (together referred to as the “Group” and individually as “Group Entities”). Simavita Limited is the
ultimate parent entity of the Group.
On December 3, 2013, the Company completed the acquisition of Simavita Holdings Limited (“Simavita Holdings”) (refer Note 27).
The Group’s continuing operations focus on the sale and distribution of an expanding range of innovative products derived from
its proprietary incontinence assessment and management technology, SIMTM, with an initial emphasis on the US marketplace
through an existing distribution arrangement. Simavita Holdings is located in Sydney, Australia.
2. Qualifying transaction and reverse takeover
On December 3, 2013, the Company completed a reverse takeover qualifying transaction (“Reverse Takeover”) in accordance
with TSX Venture Exchange Inc. (“TSX-V”) Policy 2.4 whereby the Company acquired all the issued shares of Simavita
Holdings Limited on the basis of one share in the Company for one share in Simavita Holdings (refer Note 27 for further
details). Under the terms of the Reverse Takeover, the Company issued a total of 56,053,772 common shares as consideration
for the acquisition of 100% of the issued and outstanding shares of Simavita Holdings. Immediately prior to the issue of the
above shares, as part of the Reverse Takeover, the Company consolidated its share capital on the basis of three old shares for
each new share. On December 3, 2013, being the date on which the Reverse Takeover was completed, the fair value of the net
liabilities (cash less accounts payable) of the Company was $86,081.
Legally, the Company is the parent of Simavita Holdings. However, as a result of the above share exchange, control of the
Group passed to the former shareholders of Simavita Holdings which, for accounting purposes, is deemed to be the acquirer.
For financial reporting purposes, these types of transactions are considered to be capital transactions of the acquirer and are
the equivalent to the issuance of shares by Simavita Holdings for the net monetary assets of the Company, accompanied by
a recapitalisation. The Reverse Takeover is assessed to be an asset acquisition and not a business combination under IFRS 3
Business combinations, as the Company has been deemed not to have been operating a business at that time for accounting
purposes. The accounting result is similar to a reverse acquisition but it does not result in the recognition of goodwill. Such
transactions fall within the scope of IFRS 2 Share-based payments, which requires the shares issued by Simavita Holdings
(the consideration) to be recognized at fair value.
The following accounting principles have been employed:
(a) the assets and liabilities of Simavita Holdings were recognized and measured at their pre-acquisition carrying amounts;
(b) the identifiable assets and liabilities of the Company are recognized at fair value at the acquisition date;
(c) the retained losses and other equity balances are the retained losses and other equity balances of Simavita Holdings
immediately prior to the share exchange transaction;
(d) the amount recognized as issued equity instruments in the consolidated financial statements is determined by adding
the fair value of the Company (which is based on the number of equity interests deemed to have been issued by Simavita
Holdings) to the issued equity of Simavita Holdings immediately before the acquisition. However, the equity structure
(that is, the number and type of equity instruments issued) shown in the consolidated financial statements reflects
the Company’s equity structure, including the equity instruments issued by the Company to effect the combination.
The equity structure of Simavita Holdings (accounting acquirer) is restated using the exchange ratio established in the
acquisition agreement to reflect the number of shares issued by the Company (the accounting acquiree) in the reverse
acquisition;
(e) the difference in the fair value of the shares deemed to have been issued by the Simavita Holdings and the fair value
of the Company’s identifiable net assets/(liabilities) represents a service received by Simavita Holdings as a loss on
acquisition. This loss of $792,397 has been recognized as an expense in the statement of comprehensive income; and
(f) the financial statements represent the continuation of Simavita Holdings’ financial information and therefore the
comparative information presented in these financial statements, covering the year ended June 30, 2013, is that of
Simavita Holdings.
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3. Summary of significant accounting policies
(a) Basis of preparation
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations issued by the International
Financial Reporting Interpretations Committee (“IFRIC”).
The preparation of these consolidated financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires Management to make judgements, estimates and assumptions that affect the
application of the Company’s accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
During the financial year ended June 30, 2014, the Group incurred a total comprehensive loss after income tax of $10,514,573
(2013: $7,389,856) and net cash outflows from operations of $8,287,600 (2013: $5,979,335). As at June 30, 2014, the Group
held total cash and cash equivalents of $6,844,197.
Subsequent to balance date, the Group raised a total of $3,633,487, prior to the payment of associated costs, from the
completion of private placement (generating $2,925,997) and share purchase plan (generating $707,490). As at July 31, 2014,
the Group held total cash and cash equivalents of $9,210,651.
During the 2015 financial year, the Company plans to increase sales of its SIM™ solution through both direct sales in the
Australian market and sales made via the distribution agreement with Medline in the US market. There is uncertainty around
both the timing of these sales and the rate of growth in both the Australian and US markets and, therefore, uncertainty
around the ability of the Company to continue as a going concern. As a result of this uncertainty, the Directors have
considered alternative strategies which may be available to the Company, if required, including sales in other markets, such
as Europe, and the possible raising of additional equity capital.
The Directors believe that the Company will be successful in these matters and, accordingly, the consolidated financial
statements contained in this Financial Report have been prepared on a going concern basis.
(b) Basis of consolidation
These consolidated financial statements include the accounts of the Company and the entities it controlled, being Simavita
Holdings Limited, Simavita (Aust.) Pty. Ltd., Simavita US, Inc. and Fred Bergman Healthcare Pty. Ltd. A Group controls an
entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. These consolidated financial statements are prepared using the principles
of reverse takeover accounting as described in Note 2. Intracompany balances and transactions, including any unrealised
income and expenses arising from any intracompany transactions, are eliminated in preparing the consolidated financial
statements. The functional and presentation currency of the Company and its subsidiaries is the Australian dollar.
(c) Changes in accounting policies
During the year ended June 30, 2014, the Company changed some of its accounting policies as the result of new or revised
accounting standards which became effective for the annual reporting period commencing on July 1, 2013. The affected
policies are IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other
Entities, IFRS 19 Employee Benefits and Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7). The
Company has assessed there to be no material impact arising from these changes.
Another new standard that is applicable for the first time for the year ended June 30, 2014 is IFRS 13 Fair Value Measurement
and IFRS (2009-2011 Project Cycle). This standard has introduced new disclosures for the report but did not affect the Group’s
accounting policies or any of the amounts recognized in the financial statements.
2014? FINANCIAL Report? 43
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
3. Summary of significant accounting policies? continued
(d) Impact of standards issued but not yet applied by the entity
?? IFRS 9 Financial Instruments (December 2013)
IFRS 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and
financial liabilities. The standard is not applicable until January 1, 2018 but is available for early adoption. The standard
is not expected to have an impact on the Group’s accounting for financial instruments.
The new hedging rules align hedge accounting more closely with the Group’s risk management practices. As a general
rule, it will be easier to apply hedge accounting going forward. The new standard also introduces expanded disclosure
requirements and changes in presentation. The Group has not yet decided when to adopt IFRS 9.
?? Annual Improvements to IFRSs 2010-2012 and 2011-2013 cycle (effective July 1, 2014)
In December 2013, the IASB approved a number of amendments to International Financial Reporting Standards as a
result of the annual improvements project. The Group does not expect that any adjustments will be necessary as the
result of applying the revised rules.
(e) Earnings per share (“EPS”)
Basic EPS is calculated by dividing the profit attributable to owners of the Company, excluding any costs of servicing equity
other than common shares, by the weighted average number of common shares outstanding during the financial year.
Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of
interest and other financing costs associated with dilutive potential common shares and the weighted average number of
common shares that would have been outstanding assuming the conversion of all dilutive potential common shares.
(f) Foreign currency translation
The functional and presentation currency of Simavita Limited and its Australian subsidiaries is the Australian dollar (AUD).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of
the transaction. Monetary assets and liabilities which are denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance sheet date. All differences are taken to the statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate
ruling at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates ruling at the date when the fair value was determined.
As at the reporting date, where appropriate, the assets and liabilities of these subsidiaries are translated into the
presentation currency of Simavita Limited at the rate of exchange ruling at the balance sheet date and the statement of
comprehensive income is translated at the weighted average exchange rates for the period. The exchange differences arising
on the retranslation are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred
cumulative amount recognized in equity relating to that particular foreign operation is recognized in the statement of
comprehensive income.
(g) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing the performance of the
operating segments, has been identified as the Chief Executive Officer.
(h) Government grants
Government grants are assistance by the government in the form of transfers of resources to the Group in return for past
or future compliance with certain conditions relating to the operating activities of the Group. Government grants include
government assistance where there are no conditions specifically relating to the operating activities of the Group other than
the requirement to operate in certain regions or industry sectors. Amounts received in respect of such grants are recognized
as revenue when received.
44
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3. Summary of significant accounting policies? continued
(i) Revenue
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer
returns, rebates and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognized when all of the following conditions are satisfied:
?? The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
?? The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
?? The amount of revenue can be measured reliably;
?? It is probable that the economic benefits associated with the transaction will flow to the Group; and
?? The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract. The stage
of completion of the contract is determined as follows:
?? Installation fees are recognized by reference to the stage of completion of the installation, determined as the proportion
of the total time expected to install that has elapsed at the end of the reporting period; and
?? Servicing fees included in the price of products sold are recognized by reference to the proportion of the total cost of
providing the servicing for the product sold, taking into account historical trends in the number of services actually
provided on past goods sold.
Interest revenue
?? Interest revenue is accrued on a time basis, by reference to the principal outstanding using the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
(j) Share-based payments
The Company provides benefits to employees and others in the form of share-based payment transactions, whereby officers
and employees render services and receive rights over shares (“equity-settled transactions”). The cost of these transactions
is measured by reference to the fair value at the date they are granted. The fair value of options granted is determined using
a Black-Scholes option pricing model.
In valuing equity-settled transactions, no account is taken of any non-market performance conditions. The cost of equitysettled transactions is recognized, together with a corresponding increase in equity, over the period in which the relevant
vesting conditions are fulfilled, ending on the date that the relevant employees become fully entitled to the award
(“vesting date”).
The cumulative expense recognized for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired; and (ii) the number of awards that, in the opinion of the Directors of the
Company, will ultimately vest. This opinion is formed based on the most current information available at balance date.
No expense is recognized for any awards that do not ultimately vest. Where the terms of an equity-settled award are
modified, as a minimum an expense is recognized as if the terms had not been modified. In addition, an expense is
recognized for any increase in the value of the transaction as a result of the modification, as measured at the date of
modification. Where appropriate, the dilutive effect of outstanding options is reflected as additional share dilution in the
computation of diluted earnings per share.
The Company’s policy is to treat the share options of terminated employees as forfeitures.
2014? FINANCIAL Report? 45
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
3. Summary of significant accounting policies? continued
(k) Income tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit
or taxable loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by
reporting date. Current tax for current and prior periods is recognized as a liability (or asset) to the extent that is it unpaid (or
refundable). The tax rate adopted in the calculation of all tax balances is the tax rate applicable in Australia as that is deemed
to be the most meaningful rate based on the nature of the Group’s activities.
Deferred tax
Deferred tax is accounted for in respect of temporary differences between the tax base of an asset or liability and its carrying
amount in the statement of financial position. The tax base of an asset or liability is the amount attributed to that asset or
liability for tax purposes.
In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized
to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary
differences or unused tax losses and tax offsets can be utilized.
However, deferred tax assets and liabilities are not recognized if the temporary differences giving rise to them arise from
the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither
taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognized in relation to taxable temporary
differences arising from the initial recognition of goodwill.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the
asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the
carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognized as an expense or income in the statement of comprehensive income, except when
it relates to items credited or debited directly to equity, in which case the deferred tax is also recognized directly in equity,
or where it arises from the initial accounting for a business combination, in which case it is taken into account in the
determination of goodwill or excess.
Tax consolidation
Simavita Holdings Limited (the “Head Entity”) and its wholly?owned Australian controlled entities have formed an income
tax consolidated group under the tax consolidation regime. As at June 30, 2014, the Group had not yet generated a profit
from the commercialization of its intellectual property. Accordingly, no deferred tax assets arising from carried forward
losses and temporary differences have yet been recognized.
(l) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits
with an original maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents
consist of cash and cash equivalents as defined above. Cash at bank earns interest at floating rates based on daily bank
deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the
Company’s immediate cash requirements, and earn interest at the respective short-term deposit rates.
46
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3. Summary of significant accounting policies? continued
(m) Trade and other receivables
Trade receivables, which are non-interest bearing and generally have terms of between 30 to 90 days, are recognized and
carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is
made when there is objective evidence that a receivable is impaired. Such evidence includes an assessment of the debtor’s
ability and willingness to pay the amount due. The amount of the allowance/impairment loss is measured as the difference
between the carrying amount of the trade receivables and the estimated future cash flows expected to be received from the
relevant debtors.
InventoriesInventories principally comprise finished goods and raw materials and are valued at the lower of cost and net realizable
value. Inventory costs are recognized as the purchase price of items from suppliers plus freight inwards and any applicable
landing charges. Costs are assigned on the basis of weighted average cost.
(o) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated
on either a straight-line or diminishing value basis over the estimated useful life of the respective asset as follows:
?? Office equipment – 2.5 years
?? Equipment under lease – 3 years
?? Testing equipment – 3.33 years
?? Motor vehicles – 3.33 years
?? Furniture and fittings – 5 years
Costs relating to day-to-day servicing of any item of property, plant and equipment are recognized in profit or loss as
incurred. The cost of replacing larger parts of some items of property, plant and equipment are capitalized when incurred
and depreciated over the period until their next scheduled replacement, with the replacement parts being subsequently
written off.
(p) Intangible assets
Patents
Patents held by the Group, which are used in the manufacture of its incontinence system and electronic components, are
carried at cost and amortized on a straight-line basis over their useful lives, being from 5 to 10 years. External costs incurred
in filing and protecting patent applications, for which no future benefit is reasonably assured, are expensed as incurred.
Research and development costs
Costs relating to research and development activities are expensed as incurred. An intangible asset arising from
development expenditure on an internal project is recognized only when the Group can demonstrate the technical feasibility
of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to
use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the
development and the ability to measure reliably the expenditure attributable to the intangible asset during its development.
To date, all development costs have been expensed as incurred as their recoverability cannot be regarded as assured.
2014? FINANCIAL Report? 47
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
3. Summary of significant accounting policies? continued
(q) Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the
higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s valuein-use cannot be estimated to be close to its fair value. In such cases, the asset is tested for impairment as part of the cashgenerating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses
relating to operations are recognized in those expense categories consistent with the function of the impaired asset unless
the asset is carried at its revalued amount, in which case the impairment loss is treated as a revaluation decrease.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A
previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognized. If so, the carrying amount of the asset is increased
to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit
or loss unless it reverses a decrement previously charged to equity, in which case the reversal is treated as a revaluation
increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying
amount, less any residual value, on a systematic basis over its remaining useful life.
(r) Trade and other payables
Trade payables and other payables are carried at amortized cost and represent liabilities for goods and services provided to
the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of these goods and services. Trade payables and other payables generally have terms of
between 30 and 60 days.
(s) Leases
Finance leases which transfer to the Group substantially all the risks and benefits incidental to ownership of the financed
item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of
the minimum lease payments.
Lease and hire purchase payments are apportioned between finance charges and a reduction of the associated liability so as
to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as an expense
in profit or loss. Capitalized leased assets and assets under hire purchase are depreciated over the shorter of the estimated
useful life of the asset or the term of the agreement. Leases where the lessor retains substantially all the risks and benefits
of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the
statement of comprehensive income on a straight-line basis over the lease term.
(t) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date.
These benefits include wages and salaries, annual leave and long service leave. Liabilities arising in respect of wages and
salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are
measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled.
All other employee benefit liabilities are measured at the present value of the estimated future cash outflows to be made in
respect of services provided by employees up to the reporting date using the projected unit credit method. Expenses for nonaccumulating sick leave are recognized when the leave is taken during the year and are measured at rates paid or payable.
In determining the present value of future cash outflows, the market yield as at the reporting date on national government
bonds, which have terms to maturity approximating the terms of the related liability, are used. Employee benefits expenses
and revenues arising in respect of wages and salaries, non-monetary benefits, annual leave, long service leave and other leave
benefits and other types of employee benefits are recognized against profits on a net basis in their respective categories.
48
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3. Summary of significant accounting policies? continued
(u) Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed,
the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects market assessments of the time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
(v) Contributed equity
Issued and paid up capital is recognized at the fair value of the consideration received by the Company. Transaction costs
arising on the issue of common shares are recognized directly in equity as a deduction, net of tax, of the proceeds received.
(w) Mineral properties and deferred costs
The Company has written-off all of its mineral property interests and retains a residual royalty entitlement in respect of its
Aurex exploration property.
4. Critical accounting estimates and judgments
Estimates and judgements are evaluated and based on historical experience and other factors, including expectations
of future events that may have a financial impact on the Company and that are believed to be reasonable under the
circumstances.
(a) Critical accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future
events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value
of certain assets and liabilities within the next annual reporting period are set out below.
Reverse Takeover
The Company’s acquisition of Simavita Holdings Limited is assessed to be an asset acquisition and not a business
combination under IFRS 3 Business combinations, as the Company has been deemed not to have been operating a business
at that time for accounting purposes.
Impairment of intangible assets
The Group determines whether intangible assets are impaired on at least an annual basis, in accordance with the accounting
policies stated in Note 3(p). This process requires an estimation to be made of the recoverable amount of the cashgenerating units to which the respective assets are allocated.
Share-based payments transactions
The Group measures the cost of equity-settled transactions with employees by reference to the value of the equity
instruments at the date on which they are granted. The fair value is determined by an independent valuer using a BlackScholes options pricing model.
Useful lives of assets
The estimation of the useful lives of assets has been based on historical experience as well as lease terms (for leased
equipment) and patent terms (for patents). In addition, the condition of the assets is assessed at least annually and
considered against the remaining useful life and adjustments to useful lives are made when considered necessary.
2014? FINANCIAL Report? 49
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
4. Critical accounting estimates and judgments? continued
(b) Critical judgements in applying the Group’s accounting policies
Research and development costs
An intangible asset arising from development expenditure on an internal project is recognized only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention
to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of
resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible
asset during its development.
To date, all development costs have been expensed as incurred as their recoverability cannot be regarded as assured.
In addition to the costs incurred by the Company’s research and development group are also included. The costs of research
and development are expensed in full in the period in which they are incurred. The Group will only capitalize its development
expenses when specific milestones are met and when the Group is able to demonstrate that future economic benefits
are probable.
Consolidated
June 30, 2014
$
June 30, 2013
$
5. Other revenue
Government grant
118,616
113,518
Interest revenue
121,183
46,089
Foreign currency gain/(loss)
(23,407)
(2,649)
Total other revenue
216,392
156,958
23,970
32,859
6. Expenses
Amortization of intangible assets
Depreciation of fixed assets
Employee benefits expenses
Research and development expenses (excluding employee benefits)
115,929
170,708
4,545,658
4,411,213
913,832
756,116
7. Loss per share
The following reflects the income and share data used in the
calculations of basic and diluted loss per share:
Loss for the year attributable to the owners of Simavita Limited
Weighted average number of shares used in calculating loss per share
(10,491,790)
(7,385,811)
30,430,727
2,247,908
Note: None of the 9,186,207 (2013: Nil) options or warrants over the Company’s ordinary shares that were outstanding as at the reporting date
are considered to be dilutive for the purposes of calculating diluted earnings per share.
50
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Consolidated
June 30, 2014
$
June 30, 2013
$
8. Income tax
Reconciliation of income tax expense to prima facie tax payable
Loss before income tax expense
Tax at the Australian tax rate of 30% (2013: 30%)
(11,706,145)
(8,423,727)
(3,511,843)
(2,527,118)
Tax effect of adjustments relating to non-temporary differences
? Loss on acquisition
237,719
-
? Research and development expenses
809,570
691,944
? Share-based payments expense
390,700
-
? Other (deductible)/non-deductible expenses
(6,351)
(2,080,205)
581
(1,834,593)
Tax effect of adjustments relating to temporary differences
? Net non-deductible transaction expenses
? Deductible equity transaction costs
220,287
(158,515)
66,433
-
? Net movements in provisions and payables
14,306
(30,437)
? Non-deductible interest expense
96,181
339,017
? Accrued interest receivable
(5,624)
(1,913,570)
Tax rate differential due to other tax jurisdictions
(35,774)
(1,459,580)
-
(1,949,344)
(1,459,580)
1,949,344
1,459,580
-
-
Research and development tax incentive
1,214,355
1,037,916
Income tax benefit
1,214,355
1,037,916
Transaction expenses
345,724
125,437
Equity transaction costs
634,062
-
Provisions and payables
93,101
80,434
Other liabilities
(5,624)
Tax losses not recognized
Deferred tax assets / (liabilities)
Deferred tax assets on temporary differences not brought to account
Total net deferred tax assets
(844)
1,067,263
205,027
(1,067,263)
(205,027)
-
-
6,386,435
5,852,549
98,156
52,814
6,484,591
5,904,733
Tax losses
Australia
United States of America
Total deferred tax assets on tax losses not recognized
2014? FINANCIAL Report? 51
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
8. Income tax? continued
Subject to the Group continuing to meet the relevant statutory tests, the tax losses are available for offset against future
taxable income.
As at balance date, there are unrecognized tax losses with a benefit of approximately $6,484,591 (2013: $5,904,733) that have
not been recognized as a deferred tax asset to the Group. These unrecognized deferred tax assets will only be obtained if:
(a) The Group companies derive future assessable income of a nature and amount sufficient to enable the benefits to be
realized;
(b) The Group companies continue to comply with the conditions for deductibility imposed by the law; and
(c) No changes in tax legislation adversely affect the Group companies from realizing the benefit.
Tax consolidation legislation
Simavita Holdings Limited (the “Head Entity”) and its wholly?owned Australian controlled entities have formed an income
tax consolidated group under the tax consolidation regime. As at June 30, 2014, the Group had not yet generated a profit
from the commercialization of its intellectual property. Accordingly, no deferred tax assets arising from carried forward
losses and temporary differences have yet been recognized.
The entities have also entered into a Tax Funding Agreement under which the wholly-owned entities compensate Simavita
Holdings Limited for any current tax payable assumed and are compensated by Simavita Holdings Limited for any current
tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Simavita
Holdings Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts
recognized in the financial statements of the respective controlled entities.
The amounts receivable or payable under the Tax Funding Agreement are due upon receipt of the funding advice from the
head entity, which is issued as soon as practicable after the end of each financial year.
9. Dividends and distributions
No dividends have been paid since the end of the previous financial year, nor have the Directors recommended that any
dividend be paid.
Consolidated
June 30, 2014
$
June 30, 2013
$
10. Cash and cash equivalents
Cash at bank and on hand
3,291,355
737,978
Short-term deposits
3,552,842
-
Total cash and cash equivalents
6,844,197
737,978
58,768
19,700
105,141
89,190
18,745
-
Research and development tax concession receivable
1,214,355
1,037,916
Total trade and other receivables
1,397,009
1,146,806
11. Trade and other receivables
Trade receivables
GST receivable
Accrued interest receivable
Note: All trade and other receivables for the Group are due in Australian dollars. Refer Note 30 for details of aging, interest rate and credit risks
applicable to trade and other receivables for which, due to their short-term nature, their carrying value approximates their fair value.
52
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Consolidated
June 30, 2014
$
June 30, 2013
$
12. Inventories
Finished goods and raw materials
313,809
331,873
Total inventories
313,809
331,873
Prepayments
25,582
2,919
Deposits
25,134
9,393
Total other assets
50,716
12,312
168,924
164,970
(151,661)
(134,967)
17,263
30,003
13. Other assets
14. Property, plant and equipment
Office equipment, at cost
Less: accumulated depreciation
Net office equipment
76,030
130,745
(64,806)
(89,179)
Net furniture and fittings
11,224
41,566
Leasehold improvements, at cost
40,961
-
Less: accumulated depreciation
(1,707)
-
Net leasehold improvements
39,254
-
Testing equipment, at cost
42,108
16,888
(19,749)
(12,440)
22,359
4,448
Furniture and fittings, at cost
Less: accumulated depreciation
Less: accumulated depreciation
Net testing equipment
Motor vehicles, at cost
Less: accumulated depreciation
Net motor vehicles
Rental assets, at cost
Less: accumulated depreciation
Net rental assets
Total property, plant and equipment
42,599
43,082
(42,599)
(35,305)
-
7,777
55,288
175,800
(30,952)
(75,791)
24,336
100,009
114,436
183,803
2014? FINANCIAL Report? 53
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
Consolidated
June 30, 2014
$
June 30, 2013
$
14. Property, plant and equipment? continued
Reconciliation of property, plant and equipment
Opening gross carrying amount
Add: additions purchased during the year
531,485
456,481
97,756
75,004
(203,331)
Less: disposals made during the year
Closing gross carrying amount
Opening accumulated depreciation
-
425,910
531,485
(347,682)
(176,974)
Add: disposals made during the year
152,137
Less: depreciation expense charged
(115,929)
(170,708)
Closing accumulated depreciation
(311,474)
(347,682)
114,436
183,803
Total net property, plant and equipment
-
Reconciliation of movements in property, plant and equipment by asset category
Opening
net carrying
amount
$
Asset category
Additions
during year
$
Net disposals
during year
$
Closing
net carrying
amount
$
(32,484)
17,263
(14,340)
11,224
-
(1,707)
39,254
25,220
-
(7,309)
22,359
-
-
(7,777)
-
(35,192)
(52,312)
24,336
(51,194)
(115,929)
114,436
Office equipment
30,003
19,744
Furniture and fittings
41,566
-
-
40,961
Testing equipment
4,448
Motor vehicles
7,777
Rental assets
100,009
11,831
Totals
183,803
97,756
Leasehold improvements
Depreciation
expense
$
-
(16,002)
Consolidated
June 30, 2014
$
June 30, 2013
$
15. Intangible assets
Patents
67,690
67,690
(23,539)
(21,656)
44,151
46,034
94,767
77,725
(69,161)
(47,074)
Total net software
25,606
30,651
Total intangible assets
69,757
76,685
Patents, at cost
Less: accumulated amortization
Total net patents
Software
Software, at cost
Less: accumulated amortization
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Consolidated
June 30, 2014
$
June 30, 2013
$
15. Intangible assets? continued
Reconciliation of software
Opening gross carrying amount
77,725
69,147
Add: additions during the year
17,042
8,578
Closing gross carrying amount
94,767
77,725
Opening accumulated amortization
(47,074)
(21,272)
Add: amortization expense charged
(22,087)
(25,802)
Closing accumulated amortization
(69,161)
(47,074)
25,606
30,651
Total net software
Reconciliation of patents
67,690
67,690
Add: additions during the year
-
-
Closing gross carrying amount
67,690
67,690
Opening accumulated amortization
(21,656)
(14,599)
Add: amortization expense charged
(1,883)
(7,057)
Closing accumulated amortization
(23,539)
(21,656)
44,151
46,034
630,888
447,907
Opening gross carrying amount
Total net patents
16. Trade and other payables
Trade payables
GST payable
Other payables and accruals
Total trade and other payables
10,535
4,317
381,400
290,553
1,022,823
742,777
Note: Trade payables and other payables for the Group include amounts due in Australian dollars of $815,721 (2013: $696,442), US dollars of
USD 23,223 (2013: USD 45,743), Canadian dollars of CAD 67,929 (2013: CAD Nil) and European euros of EUR 76,374 (2013: EUR Nil). Refer
Note 30 for details of contractual maturity and management of interest rate, foreign exchange and liquidity risks applicable to trade and
other payables for which, due to their short-term nature, their carrying value approximates their fair value.
17. Interest-bearing liabilities
Balance at the beginning of the year
Draw down of borrowings
Interest accrued during the year
10,147,143
3,727,436
-
6,178,703
249,885
941,004
Repayment of borrowings
(2,384,161)
Conversion of borrowings into equity
(7,885,514)
-
(127,353)
-
Conversion of Directors’ loans into equity
Balance at the end of the year
-
(700,000)
10,147,143
2014? FINANCIAL Report? 55
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
Consolidated
June 30, 2014
$
June 30, 2013
$
17. Interest-bearing liabilities? continued
Reconciled as follows:
Current interest-bearing liabilities
-
6,777,465
Non-current interest-bearing liabilities
-
3,369,678
Total interest-bearing liabilities
-
10,147,143
193,297
190,199
43,041
-
236,338
190,199
190,199
147,804
18. Provisions
Annual leave
Long service leave
Total provisions
Reconciliation of annual leave provision
Balance at the beginning of the year
Add: obligation accrued during the year
Less: balance utilized during the year
Balance at the end of the year
179,501
109,090
(176,403)
(66,695)
193,297
190,199
Reconciliation of long service leave provision
-
-
Add: obligation accrued during the year
43,041
-
Balance at the end of the year
43,041
-
Balance at the beginning of the year
19. Share capital
Summary of shares issued and outstanding
Number
of shares
Balance at July 1, 2012
Issue of ordinary shares by Simavita Holdings for cash
Equity transaction costs
Balance at July 1, 2013
Amount
$
7,945,423
18,764,144
18,914
44,570
-
(206,427)
7,964,337
18,602,287
20,928,675
2,000,000
Conversion of borrowings into equity (pre-acquisition)
49,589,520
7,885,514
Share consolidation by Simavita Holdings (1 for 3.543)
(56,331,098)
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
-
Issue of ordinary shares by Simavita Holdings for cash (pre-acquisition)
33,902,338
Elimination of shares in legal acquiree (Simavita Holdings)
(56,053,772)
13,899,963
-
Issue of common shares on acquisition of Simavita Holdings
56,053,772
-
Fair value of common shares held by pre-acquisition shareholders of Gtech
1,722,722
706,316
Issue of common shares by Simavita Limited for cash (post-acquisition)
7,876,832
3,504,968
Equity transaction costs
-
Balance at June 30, 2014
65,653,326
56
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(2,663,096)
43,935,952
19. Share capital? continued
Summary of warrants outstanding
As at June 30, 2014, the following warrants had been granted as part of the Company’s capital raisings:
Number
Exercise price
Grant date
Expiry date
Fair value / warrant
1,154,245
$0.41
January 31, 2014
December 3, 2016
$0.167
As at the date of this Report, the following warrants had been granted to Medline Industries, Inc. (“Medline”) as part of the
Company’s distribution arrangements with that company (refer notes below the table for further details):
Tranche
Number
Exercise price
Grant date
Expiry date
Fair value / warrant
Tranche One
1,155,298
CAD$0.42
January 31, 2014
December 6, 2018
$0.206
Tranche Two
1,444,412
(refer note 1)
January 1, 2015
January 1, 2018
N/A
Tranche Three
1,444,412
(refer note 2)
January 1, 2016
January 1, 2018
N/A
1. Tranche Two has an exercise price equal to the greater of (i) CAD$0.504, as may be adjusted; or (ii) the volume-weighted
average closing price of the common shares on the Toronto Stock Exchange and each other stock exchange upon which
the Company’s common shares are traded for the 30 days prior to the date of exercise.
2. Tranche Three has an exercise price equal to the greater of: (i) CAD$0.604, as may be adjusted; or (ii) the volumeweighted average closing price of the common shares on the Toronto Stock Exchange and each other stock exchange
upon which the Company’s common shares are traded for the 30 days prior to the date of exercise.
The right to purchase common shares in Tranches Two and Three are subject to the condition precedent that Medline meets
the Extended Sales Volumes for the Contract Year (as defined in the Distribution Agreement). All warrants vested immediately
on the date of grant.
Summary of options outstanding
As at June 30, 2014, the following options were outstanding:
Number
Exercise price
Grant date
Expiry date
Fair value / option
1,469,166
$0.41
January 31, 2014
December 3, 2016
$0.167
2,469,166
$0.52
January 31, 2014
December 3, 2016
$0.137
1,469,166
$0.65
January 31, 2014
December 3, 2016
$0.110
1,469,166
$0.82
January 31, 2014
December 3, 2016
$0.086
Consolidated
June 30, 2014
$
June 30, 2013
$
20. Reserves
2,276,913
974,580
Share capital reserve
499,445
499,445
Foreign currency reserve
(26,828)
Share-based payments reserve
Total reserves
2,749,530
4,045
1,469,980
2014? FINANCIAL Report? 57
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
Consolidated
June 30, 2014
$
June 30, 2013
$
21. Retained losses
Balance at the beginning of the year
(28,662,929)
(21,277,118)
Add: net loss attributable to owners of Simavita Limited
(10,491,790)
(7,385,811)
Balance at the end of the year
(39,154,719)
(28,662,929)
22. Employee benefits
Employee options
On November 20, 2013, the shareholders of the Company approved changes to the Company’s Stock Option Plan (the “Plan”.
Under the terms of the Plan, the Directors may, at their discretion, grant options over the common shares in Simavita Limited
to Directors, executives, consultants and employees.
During the period from the date of acquisition of Simavita Holdings Limited, being December 3, 2013, up to June 30, 2014, a
total of 6,876,664 options over common shares in the Company were granted, at no cost, to three Directors of the Company.
Each option entitles the holder to acquire one common share at a cost of between $0.41 and $0.82 (refer Note 19). The above
options granted during the 2014 financial year vested immediately on the date of grant. The fair value of each option granted
under the Plan is estimated by an external valuer using a Black-Scholes option-pricing model with the following assumptions
used for grants made during the year ended June 30, 2014:
Historic volatility and expected volatility
60%
Option exercises prices
$0.41 to $0.82
Weighted average exercise price
$0.588
Risk-free interest rate
3.03%
Expected life of an option
3 years from date of commitment
Superannuation commitments
The Group does not have any defined benefit funds. In respect of the year ended June 30, 2014, the Group made statutory
contributions to various superannuation funds on behalf of all employees in Australia at a rate of up to 9.25% per annum,
in addition to making other superannuation contributions as part of salary packaging arrangements with staff. All
superannuation contributions are expensed when incurred. Contributions made by the Group of up to 9.25% per annum of
employees’ wages and salaries are legally enforceable in Australia.
23. Related party transactions
Up until December 3, 2013, the Company was a subsidiary of Genetic Technologies Limited (“GTG”), a company listed on
both the Australian Securities Exchange and NASDAQ Capital Market. During the year ended June 30, 2014, there were minor
expenses incurred by GTG on the Company’s behalf that were subsequently reimbursed.
Details of Directors and Key Management Personnel as at balance date
Directors
Executives
Peter C. Cook (Non-Executive Chairman)
Thomas G. Howitt (Chief Financial Officer / Secretary)
Philippa M. Lewis (Chief Executive Officer)
Peter J. Curran (Chief Technology Officer)
Ari B. Bergman (Non-Executive)
Damien M. Haakman (Non-Executive)
58
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23. Related party transactions? continued
Remuneration of Key Management Personnel (“KMP”)
Short-term
Name and title of
Directors
Long-term
Post-employment Long service Share-based
Superannuation
leave
Options
$
$
$
Year
Salary/fees
$
Peter C. Cook 1
Non-Executive Chairman
2014
40,139
-
3,713
-
-
43,852
2013
-
-
-
-
-
-
Philippa M. Lewis 2
Chief Executive Officer
2014
315,000
504,776
24,281
14,582
734,583
1,593,222
2013
-
559,657
-
-
-
559,657
Ari B. Bergman
Non-Executive Director
2014
-
44,054
-
-
68,500
112,554
2013
-
144,106
-
-
-
144,106
Damien M. Haakman
Non-Executive Director
2014
37,917
210,000
-
-
-
247,917
3
4
Other
$
Totals
$
2013
17,500
1,253
-
-
-
18,753
5
2014
54,667
-
-
-
-
54,667
2013
67,087
7,016
-
-
-
74,103
Dr. Malcolm R. Brandon 6
Ex-Non-Exec. Chairman
2014
-
-
-
-
-
-
2013
-
-
-
-
-
-
Alison J. Mew 7
Ex-Non-Executive Director
2014
-
-
-
-
-
-
2013
-
-
-
-
-
-
Sub-totals for Directors
2014
447,723
758,830
27,994
14,582
803,083
2,052,212
2013
84,587
712,032
-
-
-
796,619
Maxwell C. Lloyd-Jones
Ex-Non-Exec. Chairman
Short-term
Name and title of
Executives
Long-term
Post-employment Long service Share-based
Superannuation
leave
Options
$
$
$
Year
Salary/fees
$
Thomas G. Howitt 8
Chief Financial Officer
? and Secretary
2014
52,019
-
4,444
-
68,500
124,963
2013
-
-
-
-
-
-
Peter J. Curran 9
Chief Technology Officer
2014
220,000
20,000
22,200
-
-
262,200
2013
220,000
-
19,800
-
-
239,800
Colin Christie
Ex-Chief Financial Officer
2014
210,819
20,000
18,364
-
-
249,183
2013
115,032
-
10,353
-
-
125,385
Robert J. Birrell
Ex-Chief Financial Officer
2014
-
-
-
-
-
-
2013
100,100
-
-
-
-
100,100
Sub-totals for Executives
2014
482,838
40,000
45,008
-
68,500
636,346
2013
435,132
-
30,153
-
-
465,285
2014
930,561
798,830
73,002
14,582
871,583
2,688,558
2013
519,719
712,032
30,153
-
-
1,261,904
10
11
Total remuneration of KMP
Other
$
Totals
$
Note: The heading “Other” includes commissions, bonuses, interest and expenses paid to KMP as detailed in Notes 1 to 11 below.
2014? FINANCIAL Report? 59
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
23. Related party transactions? continued
Remuneration of Key Management Personnel (“KMP”)? continued
The amounts included in the tables above include amounts paid by the Company and its subsidiaries and, prior to the
acquisition of Simavita Holdings Limited on November 20, 2013, by that group as well. The following changes to KMP
occurred during the period from July 1, 2013 up to the date of this Report and the payments noted were made:
1. Mr. Cook was appointed as a Director of the Company on November 20, 2013 and subsequently as Non-Executive
Chairman of the Board on January 31, 2014.
2. Ms. Lewis was appointed as a Director of the Company and its Chief Executive Officer on November 20, 2013, having
formerly held the position of Chief Executive Officer of Simavita Holdings Limited. Payments made to Ms. Lewis during
the year ended June 30, 2014 totalling $504,776 (as disclosed above under the heading “Other”) comprise fees and
bonuses paid to Dumur Asia Pacific Pty. Ltd., a company associated with Ms. Lewis, of $264,695 (2013: $488,750);
commission payments made in respect of the Company’s capital raising in November 2013 of $208,500 (2013: $61,770);
certain expense payment fringe benefits totalling $31,581 (2013: $Nil) and interest paid in respect of loans made by
Dumur Asia Pacific Pty. Ltd. to the Company of $Nil (2013: $9,137).
3. Mr. Bergman was appointed as a Director of the Company on November 20, 2013. He also served as a Director of Simavita
Holdings Limited from July 1, 2013. Payments made to Mr. Bergman during the year ended June 30, 2014 totalling
$44,054 (as disclosed above under the heading “Other”) comprise fees paid to Estley Pty. Ltd., a company associated with
Mr. Bergman of $44,054 (2013: $127,913), and interest paid in respect of loans made by Estley Pty. Ltd. to the Company of
$Nil (2013: $16,193).
4. Mr. Haakman was appointed as a Director of the Company on November 20, 2013. He also served as a Director of
Simavita Holdings Limited from July 1, 2013. Payments made to Mr. Haakman during the year ended June 30, 2014
totalling $210,000 (as disclosed above under the heading “Other”) comprise commission payments made paid to
Dussman Pty. Ltd., a company associated with Mr. Haakman, in respect of the Company’s capital raising in November
2013 of $90,000 (2013: $Nil) and interest and related fees paid in respect of loans made by Dussman Pty. Ltd. to the
Company of $120,000 (2013: $1,253).
5. Mr. Lloyd-Jones was appointed as a Director of the Company and as Non-Executive Chairman of the Board on November
20, 2013. He subsequently resigned as a Director of the Company on January 31, 2014. He was formerly a Director of
Simavita Holdings Limited and Non-Executive Chairman of its Board from July 1, 2013 until January 31, 2014. Payments
made to Mr. Lloyd-Jones during the year ended June 30, 2013 totalling $7,016 (as disclosed above under the heading
“Other”) comprise interest paid in respect of loans made by Wolsey Pty. Ltd., a company associated with Mr. Lloyd-Jones,
to the Company.
6. Dr. Brandon served as a Director of the Company and as Non-Executive Chairman of the Board from July 1, 2013 until
November 20, 2013 when he was not re-elected as a Director.
7. Ms. Mew served as a Director of the Company from July 1, 2013 until November 20, 2013 when she was not re-elected
as a Director.
8. Mr. Howitt served as a Director of the Company from July 1, 2013 until April 14, 2014 when he resigned from the Board to
take up the executive position of Chief Financial Officer of the Group. He also served as Secretary of the Company for the
entire year ended June 30, 2014.
9. Mr. Curran was appointed as Executive Vice President – Operations of Simavita (Aust.) Pty. Ltd. on May 28, 2009 and
subsequently as Chief Technology Officer of the Group on May 1, 2014. Payments made to Mr. Curran during the
year ended June 30, 2014 totalling $20,000 (as disclosed above under the heading “Other”) comprise bonuses paid
(2013: $Nil).
10. Mr. Christie served as Chief Financial Officer of the Group from November 19, 2012 until March 4, 2014. Payments made
to Mr. Christie during the year ended June 30, 2014 totalling $20,000 (as disclosed above under the heading “Other”)
comprise bonuses paid (2013: $Nil).
11. Mr. Birrell served as Chief Financial Officer of the Group from July 1, 2012 until December 14, 2012.
60
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23. Related party transactions? continued
Other related party transactions
During the year ended June 30, 2014, the following transactions with related parties took place:
1. Loans totalling $120,491 that were previously made to the Company by Dumur Asia Pacific Pty. Ltd., a company
associated with Ms. Lewis, were repaid by the Company.
2. Loans totalling $205,234 that were previously made to the Company by Mirest Pty. Ltd. and Estley Pty. Ltd., both
companies associated with Mr. Bergman, were repaid by the Company.
3. Loans totalling $2,172,556 that were previously made to the Company by Dussman Pty. Ltd., a company associated
with Mr. Haakman, were repaid by the Company.
4. Loans totalling $74,103 that were previously made to the Company by Wolsey Pty. Ltd., a company associated with
Mr. Lloyd-Jones, were repaid by the Company.
The loans that were repaid during the year ended June 30, 2014 had been advanced to the Company to provide it with
sufficient working capital to fund its continuing operations until such time as the transaction with the former Gtech
International Resources Limited and the accompanying major fundraising could be completed.
Shares and CHESS Depositary Interests (“CDIs”) held by members of Key Management Personnel
(or parties related to them)
Shares/CDIs held
in Simavita Group
Balance
July 1, 2012
Acquired
Balance
June 30, 2013
Sold
Acquired
Balance
June 30, 2014
Sold
Director
N/A
N/A
N/A
N/A
120,000
-
120,000
Philippa M. Lewis
Peter C. Cook
644,582
-
-
644,582
(218,747)
-
425,835
Ari B. Bergman
259,134
-
-
259,134
417,176
-
676,310
1,424,126
-
-
1,424,126
23,514,701
-
24,938,827
-
-
-
-
15,000
-
15,000
Damien M. Haakman
Executive
Thomas G. Howitt
Peter J. Curran
-
-
-
-
-
-
-
Colin Christie
-
-
-
-
N/A
N/A
N/A
7,700
N/A
N/A
N/A
N/A
N/A
N/A
2,335,542
-
-
2,327,842
23,848,130
-
26,175,972
Robert J. Birrell
Totals
Note: Common shares and CDIs disclosed in the above table comprise securities held in Simavita Limited and, prior to the acquisition of
Simavita Holdings Limited, securities in that company as well. The securities listed also include those held by associates of the parties
named. Adjustments have been made to reflect various conversions of debt into equity and the consolidations of equity made the Group
during the financial year ended June 30, 2014. The net reduction in securities held by Ms. Lewis arose from such consolidations.
Mr. Cook became a member of Key Management Personnel (“KMP”) upon becoming a Director of the Company on November 20, 2013.
Mr. Haakman became a member of KMP upon becoming a Director of Simavita Holdings Limited on December 10, 2012. Mr. Christie
ceased to be a member of KMP upon his resignation on March 4, 2014. Mr. Birrell ceased to be a member of KMP upon his resignation
on December 14, 2012.
2014? FINANCIAL Report? 61
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
23. Related party transactions? continued
Options held by members of Key Management Personnel
As at June 30, 2014, the following options had been granted to members of Key Management Personnel:
Philippa M. Lewis – Chief Executive Officer
Number
Exercise price
Grant date
Expiry date
Fair value / option
1,469,166
$0.41
January 31, 2014
December 3, 2016
$0.167
1,469,166
$0.52
January 31, 2014
December 3, 2016
$0.137
1,469,166
$0.65
January 31, 2014
December 3, 2016
$0.110
1,469,166
$0.82
January 31, 2014
December 3, 2016
$0.086
Ari B. Bergman – Non-Executive Director
Number
Exercise price
Grant date
Expiry date
Fair value / option
500,000
$0.52
January 31, 2014
December 3, 2016
$0.137
Thomas G. Howitt – Chief Financial Officer and Secretary
Number
Exercise price
Grant date
Expiry date
Fair value / option
500,000
$0.52
January 31, 2014
December 3, 2016
$0.137
Consolidated
June 30, 2014
$
June 30, 2013
$
24. Commitments and contingencies
Operating lease expenditure commitments
Minimum operating lease payments
- not later than one year
172,786
59,454
- later than one year but not later than five years
475,848
-
-
-
648,634
59,454
- later than five years
Total minimum operating lease payments
As at June 30, 2014, the Group had entered into two operating leases relating to the following premises:
Location
Landlord
Use
Date of expiry
of lease
Level 13, 54 Miller Street
North Sydney, NSW 2060 Australia
54 Miller Street Pty. Ltd.
Office
June 30, 2018
616,914
Level 40, 140 William Street
Melbourne, Victoria 3000 Australia
ServCorp Pty. Ltd.
Office
May 11, 2015
31,720
Total
62
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Minimum
payments ($)
648,634
25. Segment information
As at June 30, 2014, the Group had one reportable business segment being the sale of products and services associated
with the assessment and management of urinary incontinence. As at balance date, the Group’s only geographic segment
was Australia.
26. Auditors’ remuneration
Other assurance
services
$
Audit services
$
Other services
$
Totals
$
Name of Auditor
Year
PricewaterhouseCoopers
2014
2013
-
-
-
-
BDO East Coast Partnership
2014
10,000
61,095
34,431
105,526
2013
34,000
-
19,750
53,750
2014
-
-
12,620
12,620
2013
8,233
-
-
8,233
2014
104,000
61,095
47,051
212,146
2013
42,233
-
19,750
61,983
De Visser Gray LLP
Total auditors’ remuneration
94,000
-
-
94,000
27. Acquisition of Simavita Holdings Limited
On July 29, 2013, the Company announced that it had executed a Scheme Merger Agreement (the “Agreement”) with
Simavita Holdings Limited (“Simavita Holdings”). Pursuant to the Agreement, a meeting of the shareholders of the Company
(the “Meeting”) was held on November 20, 2013 to approve the issue of new shares by the Company to the shareholders of
Simavita Holdings to acquire 100% of the issued capital of Simavita Holdings (the “Merger”). The Merger was implemented
by way of a scheme of arrangement under the Australian Corporations Act.
At the Meeting held on November 20, 2013, various resolutions were passed by the shareholders pursuant to which:
1. A consolidation of the Company’s share capital took place on the basis on one post-consolidation share for every three
pre-consolidation shares such that the number of shares on issue was reduced from 5,168,167 to 1,722,722.
2. The Company changed its business as a result of it issuing a total of 56,053,772 post-consolidation shares to the
shareholders of Simavita, following which Simavita became a wholly-owned subsidiary of the Company. The transaction
was accounted for as an asset acquisition.
3. The Company changed its name from Gtech International Resources Limited to Simavita Limited.
4. The Company continued into British Columbia, Canada under the Business Corporations Act (British Columbia)
(“BCBCA”) and adopted constating documents that comply with the BCBCA.
5. The Company adopted changes to its Stock Option Plan and subsequently issued certain options and warrants.
6. Dr. Malcolm R. Brandon and Alison J. Mew were not re-elected as Directors of the Company.
7. Maxwell C. Lloyd-Jones, Philippa M. Lewis, Ari B. Bergman, Peter C. Cook and Damien M. Haakman were all appointed
as Directors of the Company, with Mr. Lloyd-Jones being appointed as Chairman and Ms. Lewis being appointed as CEO.
Subsequently, Mr. Lloyd-Jones resigned and Mr. Cook was appointed as Chairman.
8. The Company resumed trading on the TSX Venture Exchange under the symbol “SV”.
A total of $14,305,928 was raised by the Group from the issue of common and ordinary shares as part of the acquisition of
Simavita Holdings. These funds were used to repay existing debts of the Company, expand the Group’s operations in the US
market, meet the costs of the transaction and provide on-going working capital.
2014? FINANCIAL Report? 63
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
28. Exploration agreements
Canada; Yukon Territory
Aurex Property – Mayo Mining District
The Company previously had a 100% interest in this property, which consisted of 155 mineral claims. On August 16, 2001,
the Company agreed with Yukon Zinc Corp. (“Yukon Zinc”) to accept CAD 84,000, to be paid by the issue of 600,000 common
shares in Yukon Zinc, as final settlement for the sale of the property. The property was subsequently sold to StrataGold
Corporation which was purchased by Victorian Gold Corp. in June 2009. Simavita retains a 1.5% royalty on the project which
Victorian Gold Corp. may purchase from the Company for CAD$1,000,000.
Revenue Creek Area – Whitehorse Mining District
The Company previously owned 69 mineral claims which it sold to ATAC Resources Limited (“ATAC”), a Canadian public
company, on January 16, 2002. The Company agreed to accept 200,000 common shares in ATAC and a cash payment of
CAD$5,000 in final settlement for the transfer of the project. Simavita retains a 1.5% net smelter royalty which ATAC may
purchase from the Company for CAD$600,000.
29. Group structure
The following diagram is a depiction of the Group structure as at June 30, 2014.
Simavita Limited
(ARBN 165 831 309)
100%
Simavita Holdings Limited
(ACN 071 409 179)
100%
100%
Simavita (Aust.)
Pty. Ltd.
(ACN 134 938 435)
Simavita US, Inc.
100%
Fred Bergman
Healthcare Pty. Ltd.
(ACN 004 864 466)
Group interest (%)
Name of Group company
Incorporation details
2014
2013
Simavita Limited
May 28, 1968; Yukon, Canada
(continued into British Columbia, Canada
on December 3, 2013)
N/A
N/A
Simavita Holdings Limited
October 11, 1995; Victoria, Australia
100%
N/A
Simavita (Aust.) Pty. Ltd.
January 15, 2009; NSW, Australia
100%
100%
Simavita US, Inc.
August 11, 2012; Delaware, USA
100%
100%
Fred Bergman Healthcare Pty. Ltd.
January 28, 1971; Victoria, Australia
100%
100%
64
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30. Financial risk management
The Group’s activities expose it to a variety of financial risks such as credit risk, market risk (including foreign currency risk
and interest rate risk) and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses
different methods to measure the different types of risk to which it is exposed. These methods include sensitivity analysis in
the case of foreign exchange, interest rate and aging analysis for credit risk.
Risk management is managed by the Group’s Audit and Risk Committee (the “Committee”) under guidance provided by the
Board of Directors. The Committee identifies and evaluates financial risks in close cooperation with the Group’s operating
units. The Board, via the Committee, provides guidance for overall risk management, as well as policies covering specific
areas, such as credit risk, foreign exchange risk and interest rate risk.
The Group’s principal financial instruments comprise cash and cash equivalents. The Group also has other financial assets
and liabilities, such as trade receivables and payables, which arise directly from its operations.
The Group does not typically enter into derivative transactions, such as interest rate swaps or forward currency contracts.
It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be
undertaken. The main risks arising from the Group’s financial instruments are credit risk exposures, foreign currency risk,
interest rate risk and liquidity risk. The policies and procedures for managing these risks are summarized below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in Note 2.
The Group holds the following financial instruments:
Consolidated
June 30, 2014
$
June 30, 2013
$
Financial assets
Cash and cash equivalents
6,844,197
737,978
Trade and other receivables
1,397,009
1,146,806
50,716
12,312
8,291,922
1,897,096
Performance bond and deposits
Total financial assets
Financial liabilities
Trade and other payables
1,022,823
742,777
Interest-bearing liabilities
-
10,147,143
1,022,823
10,889,920
Total financial liabilities
2014? FINANCIAL Report? 65
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
30. Financial risk management? continued
Credit risk
The Group’s credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with
banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed
transactions. If there is no independent rating, the Group assesses the credit quality of the customer, taking into account its
financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings. The
compliance with credit limits by customers is regularly monitored by Management. The maximum exposures to credit risk as
at June 30, 2014 in relation to each class of recognized financial assets is the carrying amount of those assets, as indicated in
the balance sheet.
Financial assets included on the balance sheet that potentially subject the Group to concentration of credit risk consist
principally of cash and cash equivalents and trade receivables. In accordance with the guidelines of the Group’s Short Term
Investment Policy, the Group minimizes this concentration of risk by placing its cash and cash equivalents with financial
institutions that maintain superior credit ratings in order to limit the degree of credit exposure. For banks and financial
institutions, only independently-rated parties with a minimum rating of “A-1” are accepted. The Group has also established
guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. The Group does
not require collateral to provide credit to its customers, however, the majority of the Group’s customers to whom credit is
provided are substantial, reputable organisations and, as such, the risk of credit exposure is relatively limited. The Group has
not entered into any transactions that qualify as a financial derivative instrument.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is
not significant. As at June 30, 2014, the Group had raised no provision for doubtful debts. In certain circumstances, the Group
may also obtain security in the form of guarantees, deeds of undertaking or letters of credit from customers which can be
called upon if the counterparty is in default under the terms of the agreement.
Credit risk further arises in relation to financial guarantees given by the Group to certain parties in respect of any obligations
of its subsidiaries. Such guarantees are only provided in exceptional circumstances. An analysis of the aging of trade and
other receivables and trade and other payables is provided below:
Consolidated
June 30, 2014
$
June 30, 2013
$
Trade and other receivables
1,373,973
1,135,081
31 days to 60 days
13,421
1,485
61 days to 90 days
2,420
805
Greater than 90 days
7,195
9,435
1,397,009
1,146,806
987,352
683,600
35,471
21,803
61 days to 90 days
-
27,516
Greater than 90 days
-
9,858
1,022,823
742,777
Current (less than 30 days)
Total trade and other receivables (Note 11)
Trade and other payables
Current (less than 30 days)
31 days to 60 days
Total trade and other payables (Note 16)
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30. Financial risk management? continued
Market risk
Foreign currency risk
The Group operates internationally and is exposed to foreign currency exchange risk, primarily as at balance date with
respect to the US dollar and Canadian dollar, through financial assets and liabilities. It is the Group’s policy not to hedge
these transactions as the exposure is considered to be minimal from a consolidated operations perspective. Further, as the
Group incurs expenses which are payable in US dollars, the financial assets that are held in US dollars provide a natural
hedge for the Group.
Foreign exchange risk arises from planned future commercial transactions and recognized assets and liabilities denominated
in a currency that is not the entity’s functional currency and net investments in foreign operations. The risk is measured using
sensitivity analysis and cash flow forecasting.
The Group has a Foreign Exchange Management Policy which was developed to establish a formal framework and
procedures for the efficient management of the financial risks that impact on Simavita Limited through its activities outside
of Australia, predominantly in the United States. The policy governs the way in which the financial assets and liabilities of
the Group that are denominated in foreign currencies are managed and any risks associated with that management are
identified and addressed. Under the policy, which is updated as circumstances dictate, the Group generally retains in foreign
currency only sufficient funds to meet the expected expenditures in that currency. Surplus funds, if any, are converted into
Australian dollars as soon as practicable after receipt.
As at June 30, 2014, the Group held the following financial assets and liabilities that were denominated in the various
currencies stated:
Year
AUD
USD
CAD
EUR
Totals (AUD)
Financial assets
Cash and cash equivalents
2014
Trade and other receivables
Performance bond and deposits
Total financial assets
6,554,970
21,933
267,908
-
6,844,197
2013
729,999
8,079
-
-
737,978
2014
1,397,009
-
-
-
1,397,009
2013
1,146,806
-
-
-
1,146,806
2014
50,716
-
-
-
50,716
2013
12,312
-
-
-
12,312
2014
8,002,695
21,933
267,908
-
8,291,922
2013
1,889,117
8,079
-
-
1,897,096
2014
815,721
23,223
67,929
76,374
1,022,823
2013
696,442
45,743
-
-
742,777
2014
815,721
23,223
67,929
76,374
1,022,823
2013
696,442
45,743
-
-
742,777
Financial liabilities
Trade and other payables
Total financial liabilities
Notes:? AUD – Australian dollars? USD – United States dollars?
CAD – Canadian dollars?
EUR – European euros
2014? FINANCIAL Report? 67
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
30. Financial risk management? continued
Market risk? continued
During the year ended June 30, 2014, the Australian dollar / US dollar exchange rate increased by 2.5%, from 0.9194 at the
beginning of the year to 0.9420 at the end of the year.
During the same period, the Australian dollar / Canadian dollar exchange rate increased by 4.2%, from 0.9654 at the
beginning of the year to 1.0057 at the end of the year.
Also, during the same period, the Australian dollar / Euro exchange rate decreased by 1.7%, from 0.7019 at the beginning of
the year to 0.6902 at the end of the year.
Based on the financial instruments held at June 30, 2014, had the Australian dollar weakened / strengthened by 10% against
the US dollar with all other variables held constant, the Group’s consolidated loss for the year would not have changed
materially.
Based on the financial instruments held at June 30, 2014, had the Australian dollar weakened / strengthened by 10% against
the Canadian dollar with all other variables held constant, the Group’s equity, relating solely to the movement in profit and
loss for the year, would have been $22,000 lower / $18,000 higher (2013: loss $Nil / loss $Nil), due to changes in the values of
cash and cash equivalents which are denominated in Canadian dollars, as detailed in the above tables.
Based on the financial instruments held at June 30, 2014, had the Australian dollar weakened / strengthened by 10% against
the Euro with all other variables held constant, the Group’s loss for the year would have been $12,000 higher / $10,000 lower
(2013: loss $Nil / loss $Nil), due to changes in the values of cash and cash equivalents which are denominated in Canadian
dollars, as detailed in the above tables.
Interest rate risk
The Group’s main interest rate risk arises in relation to its short-term deposits with various financial institutions. If rates were
to decrease, the Group may generate less interest revenue from such deposits. However, given the relatively short duration
of such deposits, the associate risk is relatively minimal. As at balance date, the Group has no debt or hire purchase liabilities
on which interest expense is charged.
The Group has a Short Term Investment Policy which was developed to manage the Group’s surplus cash and cash
equivalents. In this context, the Group adopts a prudent approach that is tailored to cash forecasts rather than seeking the
highest rates of return that may compromise access to funds as and when they are required. Under the policy, the Group
deposits its surplus cash in a range of deposits over different time frames and with different institutions in order to diversify
its portfolio and minimise overall risk.
On a monthly basis, Management provides the Board with a detailed list of all cash and cash equivalents, showing the
periods over which the cash has been deposited, the name and credit rating of the institution holding the deposit and the
interest rate at which the funds have been deposited. A comparison of interest rate movements from month to month and a
variance to an 11am deposit rate is also provided.
At June 30, 2014, if interest rates had changed by +/- 50 basis points from the year-end rates, with all other variables held
constant, the Group’s equity, relating solely to the movement in profit and loss for the year, would not have changed
materially. The Group’s main interest rate risk during the years ended June 30, 2013 and 2014 arose in respect of fixed rate
borrowings with interest rates that did not fluctuate.
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30. Financial risk management? continued
Interest rate risk? continued
The exposure to interest rate risks and the effective interest rates of financial assets and liabilities, both recognized and
unrealised, for the Group is as follows:
Consolidated
Year
Floating
rate
$
Fixed
rate
$
Carrying
amount
$
Weightedaverage rate
%
Maturity
period
days
2014
3,291,355
3,552,842
6,884,197
3.24%
At call
2013
737,978
-
737,978
2.15%
At call
2014
-
50,716
50,716
-
At call
2013
-
12,312
12,312
-
At call
2014
3,291,355
3,603,558
6,894,913
2013
737,978
12,312
750,290
2014
-
-
-
-
-
2013
-
10,147,143
10,147,143
18.82%
58
2014
-
-
-
2013
-
10,147,143
10,147,143
Financial assets
Cash and cash equivalents
Performance bond / deposits
Totals
Financial liabilities
Interest-bearing liabilities
Totals
Notes: All periods in respect of financial assets are for less than one year.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and the availability of funding
through an adequate amount of committed credit facilities, such as its hire purchase and credit card facilities. The Group
manages liquidity risk by continuously monitoring forecast and actual cash flows and, wherever possible, matching the
maturity profiles of financial assets and liabilities. Due to the dynamic nature of the underlying business, Management aims
to maintain flexibility in funding by keeping committed credit lines available. Surplus funds are generally only invested in
instruments that are tradable in highly liquid markets.
A balanced view of cash inflows and outflows affecting the Group is summarized in the table below:
Consolidated
6 to 12
months
$
Year
< 6 months
$
1 to 5 years
$
> 5 years
$
Totals
$
2014
1,022,823
-
-
-
1,022,823
2013
742,777
-
-
-
742,777
2014
-
-
-
-
-
2013
10,147,143
-
-
-
10,147,143
2014
1,022,823
-
-
-
1,022,823
2013
10,889,920
-
-
-
10,889,920
Financial liabilities
Trade and other payables
Interest-bearing liabilities
Total financial liabilities
2014? FINANCIAL Report? 69
Notes to the Consolidated Financial Statements?
continued
for the year ended June 30, 2014
30. Financial risk management? continued
Classification of financial instruments
IFRS 13 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value,
as follows:
Level 1:? quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2:?inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3:? inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair values of the Company’s financial assets and liabilities as at June 30, 2014 (as set out above) approximate their
carrying values due to the short term nature of these instruments.
Borrowing facilities
The Group had access to the following borrowing facility as at June 30, 2014:
Nature of facility
Credit card facility
Facility limit
$
Amount used
$
Amount available
$
25,000
(7,024)
17,976
31. Subsequent events
On June 23, 2014, the Company announced that it had closed an initial tranche (the “First Tranche”) of a private placement
(the “Private Placement”) to sophisticated and institutional investors. Pursuant to the First Tranche, Simavita raised a total
of $3,099,003 (before the payment of associated costs) by issuing 6,886,673 common shares and CHESS Depositary Interests
(“CDIs”) in the Company at an issue price of $0.45 per Share and CDI. The shares and CDIs were issued on June 30, 2014.
Each CDI issued in Australia represents one common share of Simavita and ranks equally with existing CDIs.
The above Private Placement also consisted of a subsequent tranche (the “Second Tranche”) which was subject to
shareholder approval. Such approval was sought and received at a Special Meeting of the Company’s shareholders held
on July 23, 2014. As a result, a total of 6,502,216 common shares as CDIs were issued on July 30, 2014 at an issue price of
$0.45 per share/CDI, raising a total of $2,925,997, before the payment of associated costs.
In addition to the above capital raising, the Company conducted a capital raise only in Australia via a CDI purchase plan (the
“SPP”) to raise up to an additional $1,080,000 at an issue price of $0.45 per CDI. The SPP offer opened on June 26, 2014 and
closed on July 25, 2014. Pursuant to the terms of the SPP, the Company issued a total of 1,572,201 common shares as CDIs to
those who subscribed under the SPP. The shares/CDIs were issued on July 30, 2014 at an issue price of $0.45 per share/CDI,
raising a total of $707,490, before the payment of associated costs.
The proceeds from the Private Placements and the SPP will be used to: (i) accelerate the roll-out of Simavita’s current
technologies in the US and European markets; (ii) accelerate the development of the Company’s SIMTM Generation 5 (cloud
compatible) product and SIMTM Community Care (home-based) product; (iii) appoint distributors to roll-out SIMTM Generation
4 in Europe; (iv) acquire and develop complimentary intellectual property; and (v) for general working capital purposes.
All CDIs issued pursuant to the Private Placement and SPP are fully tradeable and listed on the Australian Securities
Exchange. The Shares issued pursuant to the Private Placement that are listed on the TSX Venture Exchange are subject to
a statutory four month hold plus one day commencing from the date of issuance.
On August 26, 2014, the Company granted a total of 1,237,500 options over the Company’s common shares to various
employees of the Company. Each option, which entitles the holder to acquire one common share at a price of $0.70 per
share, was granted at no cost. The options, which vested immediately upon the date of grant, have an expiry date of
August 31, 2018.
Apart from these transactions, there were no events that have occurred subsequent to balance date that have not been
disclosed elsewhere in these financial statements.
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PricewaterhouseCoopers Audit Opinion
2014? FINANCIAL Report? 71
Corporate Governance Statement
for the year ended June 30, 2014
INTRODUCTION
Simavita Limited (“Simavita” and the “Company”) and its Board are committed to achieving and demonstrating the highest
standards of corporate governance. The Board continues to review and improve its corporate governance framework and
practices to ensure they meet the interests of shareholders. In this statement, the Company and its controlled entities
together are referred to as the “Group”.
A description of the Group’s main corporate governance practices is set out below. Unless otherwise stated, these practices
were in place from February 20, 2014, being the date on which the Company was admitted to the Official List of the
Australian Securities Exchange (“ASX”).
On the whole, the Company complies with the Corporate Governance Principles and Recommendations (including relevant
amendments) of the ASX. While in most respects, Simavita complies with the Recommendations, in several areas, policies
and practices are being further developed and introduced to bring them more closely into line. As new policies are produced,
or as the existing ones are amended, they are published on the Company’s website.
As at the date of this Statement, the following Corporate Governance documents had either been adopted by the Board
or were in the final stages of development, in addition to the Company’s Articles which were revised and subsequently
approved by the Company’s shareholders in November 2013. All significant policies, once approved, are published on the
Company’s website (www.simavita.com).
?? Board Charter, which defines the role of the Board and that of Management;
?? Audit and Risk Sub-Committee Charter;
?? Nomination and Remuneration Sub-Committee Charter;
?? Board Protocol, which clarifies the responsibilities of Directors and the Company’s expectations of them;
?? Code of Conduct, including a Document Retention Policy;
?? Board Performance Evaluation Policy;
?? Risk and Compliance Policy;
?? Continuous Disclosure Policy;
?? Securities Trading Policy;
?? Diversity Policy;
?? Shareholder Communications Policy; and
?? Whistleblower Policy.
ASX PRINCIPLES AND RECOMMENDATIONS
Principle 1: Lay solid foundations for management and oversight
The relationship between the Board and Management is critical to the Group’s success. The Directors are responsible to the
shareholders for the performance of the Group in both the short and longer terms and seek to balance sometimes competing
objectives in the best interests of the Group as a whole. Their focus is to enhance the interests of shareholders and other key
stakeholders and to ensure the Group is properly managed.
The responsibilities of the Board include:
?? providing strategic guidance to the Group, including contributing to the development of and approving the Group’s
corporate strategy;
?? reviewing and approving business plans, the Group’s annual budget and other financial plans, including available
resources and major capital expenditure initiatives;
?? overseeing and monitoring:
–– organizational performance and the achievement of the Group’s strategic goals and objectives;
–– compliance with the Company’s future Code of Conduct; and
–– progress of major capital expenditures and other significant projects, including any acquisitions or divestments;
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Principle 1: Lay solid foundations for management and oversight? continued
?? monitoring the Group’s financial performance, including approval of the annual and half-year financial reports and
regular liaison with the Company’s external auditors;
?? appointment, performance assessment and, if necessary, removal of the Chief Executive Officer;
?? ratifying the appointment and/or removal and contributing to the performance assessment for the members of the
Senior Leadership Team;
?? ensuring there are effective management processes in place for approving major corporate initiatives;
?? overseeing the operation of the Group’s system for compliance and risk management reporting to shareholders; and
?? ensuring appropriate resources are available to senior Management to enable them to implement the strategies
approved by the Board.
Day-to-day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives
are formally delegated by the Board to the Chief Executive Officer and the Senior Leadership Team. These delegations are
reviewed by the Board on an annual basis. Performance appraisals for all members of the Senior Leadership Team last took
place in July/August 2014.
Principle 2: Structure the Board to add value
The Board operates in accordance with the broad principles which are being documented in a formal Board Charter that,
once approved, will be uploaded to the corporate governance information section of the Company’s website (www.simavita.
com). The Charter will document details of the Board’s composition and responsibilities.
Board composition
The principles to be documented in the Charter state that:
?? the Board is to be comprised of both executive and non-executive Directors with ideally a majority of non-executive
Directors. Non-executive Directors bring with them a fresh perspective to the Board’s consideration of strategic, risk and
performance matters;
?? in recognition of the importance of independent views and the Board’s role in supervising the activities of Management,
the Chairman must be an independent non-executive Director, the majority of the Board should ideally be independent
of Management and all Directors are required to exercise independent judgement and review and constructively
challenge the performance of the Senior Leadership Team;
?? the Chairman is elected by the full Board and is encouraged to meet regularly with the Chief Executive Officer;
?? the Company should, where possible, maintain a mix of Directors on the Board from different genders, age groups,
ethnicity and cultural and professional backgrounds who have complementary skills and experience;
?? the Board should establish measurable Board gender diversity objectives and assess annually the objectives and
progress made in achieving them; and
?? the Board should undertake an annual Board performance review and consider the appropriate mix of skills required by
the Board to maximize its effectiveness and its contribution to the Group.
The Board seeks to ensure that:
?? at any point in time, its membership represents an appropriate balance between directors with experience and
knowledge of the Group and its activities and directors with an external or fresh perspective; and
?? the size of the Board is conducive to effective discussion and efficient decision-making.
2014? FINANCIAL Report? 73
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 2: Structure the Board to add value? continued
Directors’ independence
The Board has adopted principles in relation to the independence of its Directors. These principles state that, when
determining independence, a Director must be a non-executive and the Board should consider whether the Director:
?? is a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial
shareholder of the Company;
?? is, or has been, employed in an executive capacity by the Company or any other Group member within three years before
commencing his or her service on the Board;
?? within the last three years has been a principal of a material professional adviser or a material consultant to the
Company or any other Group member, or an employee materially associated with the service provided;
?? is a material supplier or customer of the Company or any other Group member, or an officer of or otherwise associated
directly or indirectly with a material supplier or customer;
?? has a material contractual relationship with the Company or a controlled entity other than as a Director of the Group;
and
?? is free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with
the Director’s independent exercise of his or her judgement.
Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over five percent of
annual turnover of the Group or five percent of the individual Directors’ net worth is considered material for these purposes.
In addition, a transaction of any amount or a relationship is deemed material if knowledge of it may impact the shareholders’
understanding of the Director’s performance.
Recent thinking on corporate governance has introduced the view that a Director’s independence may be perceived to be
impacted by lengthy service on the Board. To avoid any potential concerns, the Board has determined that, as a guide, a
Director may not be deemed independent if he or she has served on the Board of the Company for more than ten years. The
Board will continue to monitor developments on this issue as they arise.
The Board assesses Director independence each year. To enable this process to occur efficiently, the Directors must provide
all information that may be relevant to the assessment.
Board members
As at the date of this Financial Report, three of the Company’s four Directors served as non-executive Directors and only
one of them (Mr. Damien Haakman) had a relationship (being a major shareholder) which may adversely affect his or her
independence. The Company is currently seeking to recruit a further independent Director to join the Board.
Term of office
The Company’s Articles specifies that all Directors must retire from office each year. Where eligible, a Director may stand for reelection.
Chairman and Chief Executive Officer (“CEO”)
The Chairman is responsible for leading the Board, ensuring that Directors are briefed in all matters relevant to their role
and responsibilities, facilitating Board discussions and managing the Board’s relationship with the Company’s Senior
Leadership Team. The Chairman is encouraged to meet regularly with the CEO. In accepting the position, the Chairman had
acknowledged that his role will require a significant time commitment and has confirmed that other positions will not hinder
his effective performance in that role.
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Principle 2: Structure the Board to add value? continued
Commitment
The Board held nine meetings and passed six circular resolutions during the year ended June 30, 2014. Non-executive
Directors are expected to spend adequate time preparing for and attending Board and Sub-Committee meetings and
associated activities. The number of meetings of the Company’s Board of Directors and of each Sub-Committee held during
the year ended June 30, 2014, and the number of such meetings attended by each Director, are disclosed in the table
below. From the date of the Company’s listing on the ASX to the date of this Report, the full Board met to discuss all matters
normally covered by the Nomination and Remuneration Sub-Committee. It is envisaged that this Sub-Committee will meet
independently in future years, as required.
Sub-Committees of the Board
Directors’ meetings
Name of Director
Peter C. Cook 1
Audit and Risk
Nomination and Rem.
Eligible
Attended
Eligible
Attended
Eligible
Attended
7
7
-
-
-
-
7
7
-
-
-
-
7
7
-
-
-
-
Damien M. Haakman 1
7
7
-
-
-
-
Thomas G. Howitt
Philippa M. Lewis
1
Ari B. Bergman 1
6
6
2
2
-
-
Maxwell C. Lloyd-Jones 3
1
1
-
-
-
-
Dr. Malcolm R. Brandon 4
2
2
2
2
-
-
Alison J. Mew
2
2
2
2
-
-
2
4
Notes:
1. Messrs. Cook, Lewis, Bergman and Haakman served as Directors of the Company from November 20, 2013 to June 30, 2014.
2. Mr. Howitt served as served as a Director of the Company from July 1, 2013 to April 14, 2014.
3. Mr. Lloyd-Jones served as a Director of the Company from November 20, 2013 to January 31, 2014.
4. Dr. Brandon and Ms. Mew served as Directors of the Company from July 1, 2013 to November 20, 2013.
As at the date of this Report, the Company had two Sub-Committees of the Board of Directors: an Audit and Risk Committee
and a Nomination and Remuneration Committee. The various individuals who served as members of the two SubCommittees during the year ended June 30, 2014 were:
Name of Member
Audit and Risk-Period served
Nomination and Rem.-Period served
Peter C. Cook
January 31, 2014 to June 30, 2014
April 15, 2014 to June 30, 2014
Philippa M. Lewis
Not applicable
Not applicable
Ari B. Bergman
April 15, 2014 to June 30, 2014
January 31, 2014 to June 30, 2014
Damien M. Haakman
January 31, 2014 to June 30, 2014
January 31, 2014 to June 30, 2014
Thomas G. Howitt
July 1, 2013 to April 14, 2014
January 31, 2014 to April 14, 2014
Maxwell C. Lloyd-Jones
Not applicable
Not applicable
Dr. Malcolm R. Brandon
July 1, 2013 to December 3, 2013
Not applicable
Alison J. Mew
July 1, 2013 to December 3, 2013
Not applicable
Notes:
1. Dr. Brandon served as the Chairman of the Audit and Risk Sub-Committee from July 1, 2013 to December 3, 2013.
2. Mr. Howitt served as the Chairman of the Audit and Risk Sub-Committee from December 4, 2013 to April 14, 2014.
3. Mr. Haakman served as the Chairman of the Audit and Risk Sub-Committee from April 15, 2014 to June 30, 2014.
4. Mr. Bergman served as the Chairman of the Nomination and Remuneration Sub-Committee from the date of its establishment on January 31,
2014 to June 30, 2014.
2014? FINANCIAL Report? 75
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 2: Structure the Board to add value? continued
The commitments of all non-executive Directors are considered by the Nomination and Remuneration Sub-Committee prior
to the respective Director’s appointment to the Board and are reviewed each year as part of the annual Board performance
assessment.
Prior to appointment or being submitted for re-election, each non-executive Director is required to acknowledge that they
have, and will continue to have, the time available to discharge their responsibilities to the Company.
Induction
The induction provided to new Directors enables them to actively participate in Board decision-making as soon as possible.
It ensures that they have a full understanding of the Company’s financial position, strategies, operations, culture, values and
risk management policies. It also explains the respective rights, duties, responsibilities, interaction and roles of the Board
and the Senior Leadership Team and the Company’s meeting arrangements.
Conflict of interests
In accordance with the principles to be laid out in the Company’s Board Charter, all Directors are required to declare all
interests in dealings with the Company and are required to take no part in decisions relating to them. In addition, those
Directors are not entitled to receive any papers from the Group pertaining to those dealings. Apart from Mr. Haakman’s
association with the Company’s major shareholder, no such declarations were received from any Director during the
financial year.
Independent professional advice
All Directors and members of the Board’s two Sub-Committees have the right, in connection with their duties and
responsibilities, to seek independent professional advice at the Company’s expense. Prior written approval of the Chairman
is required, but such approval is not to be unreasonably withheld.
Performance assessment
The Board undertakes an ongoing self-assessment of its collective performance, the performance of the Chairman and of its
two Sub-Committees. The assessment also considers the adequacy of the Company’s induction and continuing education
processes, access to information and the support provided by the Secretary.
Members of the Senior Leadership Team are invited to contribute to this appraisal process. The results and any action plans
are documented together with specific performance goals which are agreed for the coming year. The Chairman undertakes
an assessment of the performance of Directors and meets with each Director to discuss this assessment.
Board Sub-Committees
The Board has established two Sub-Committees to assist in the execution of its duties and to allow detailed consideration of
complex issues. The current Sub-Committees of the Board are the Audit and Risk and Nomination and Remuneration SubCommittees. Each Sub-Committee is comprised entirely of non-executive Directors and their structures and membership are
reviewed on an annual basis.
Each of the Board’s two Sub-Committees is in the final stages of documenting its own written Charter setting out its role and
responsibilities and that of its members, its composition, structure, membership requirements and the manner in which
the Sub-Committee is to operate. Once complete, both of these Charters will be reviewed on an annual basis and be made
available on the Company’s website. All matters determined by the Sub-Committees are submitted to the full Board as
recommendations for Board decisions.
Minutes of Sub-Committee meetings are tabled for review at the subsequent Board meeting. Additional requirements for
reporting by the Sub-Committees to the Board will be addressed in the Charter of the respective Sub-Committee.
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Principle 2: Structure the Board to add value? continued
Nomination and Remuneration Sub-Committee
The Group’s Nomination and Remuneration Sub-Committee consists of Ari Bergman (Chairman), Peter Cook and Damien
Haakman. Details of their attendance at meetings of the Sub-Committee are set out in the table above. The Sub-Committee
operates in accordance with principles which are to be documented in a formal Charter which, once approved, will be
available on the Company’s website. The main responsibilities of the members of the Nomination and Remuneration SubCommittee are to:
?? conduct an annual review of the membership of the Board, having regard to present and future needs of the Company
and to make recommendations on Board composition and appointments;
?? conduct an annual review of, and conclude on the independence of, each Director;
?? propose candidates for Board vacancies;
?? oversee the annual performance assessment program;
?? oversee Board succession, including the succession of the Chairman, and review whether succession plans are in place to
maintain an appropriately balanced mix of skills, experience and diversity on the Board; and
?? assess the effectiveness of the induction process.
When a new Director is to be appointed, the Sub-Committee prepares a Board skills matrix to review the range of skills,
experience and expertise on the Board, and to identify its needs. From this, the Sub-Committee prepares a short-list of
candidates with appropriate skills and experience. A number of channels are used to source candidates to ensure the
Company benefits from a diverse range of individuals in the selection process. Where necessary, advice is sought from
independent search consultants.
The full Board then appoints the most suitable candidate who must stand for election at the Company’s next AGM. The
Sub-Committee’s nomination of existing Directors for reappointment is not automatic and is partly contingent on their past
performance, contribution to the effective operation of the Board and the current and future needs of both the Board and
Company. The Board and the Sub-Committee are also aware of the advantages of Board renewal and succession planning.
Notices of meetings for the election of Directors comply with the ASX Corporate Governance Council’s best practice
recommendations.
New Directors are advised of the Company’s expectations, their responsibilities, rights and the terms and conditions of their
employment. All new Directors participate in a formal induction program which covers the operation of the Board and its
Sub-Committees and financial, strategic, operations and risk management issues.
Principle 3: Promote ethical and responsible decision making
Code of conduct
The Company is developing a statement of values and a Code of Conduct (the “Code”) which will be endorsed by the Board
and which will apply to all Directors. The Code will be regularly reviewed and updated as necessary to ensure it reflects
the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the Group’s
integrity and to take into account the legal obligations and reasonable expectations of the Company’s stakeholders.
In summary, the Code will require that at all times Directors and employees act with the utmost integrity, objectivity and in
compliance with the letter and the spirit of the law and Company policies.
The purchase and sale of Company securities by Directors and employees is governed by the Securities Trading Policy. Such
trading is not permitted during the two-month periods immediately following the end of the Company’s two financial halfyears, i.e. after December 31 and June 30 of each year. Any transactions undertaken by Directors outside of these periods
must be notified to the Secretary in advance.
The Code will require employees who are aware of unethical practices within the Group or breaches of the Company’s
Securities Trading Policy to report such breaches in compliance with the principles to be documented in the Company’s
whistleblower program which can be done anonymously.
2014? FINANCIAL Report? 77
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 3: Promote ethical and responsible decision making? continued
The Directors are satisfied that the Group has complied with its policies on ethical standards, including trading in the
Company’s securities.
Diversity policy
The Company values diversity and recognizes the benefits it can bring to the organisation’s ability to achieve its goals.
Accordingly, the Company has developed and introduced a series of guidelines that are to be documented in a formal
diversity policy which outlines its diversity objectives in relation to gender, age, cultural background, ethnicity and other
factors. These include requirements for the Board to establish measurable objectives for achieving diversity, and for the
Board to assess annually both the objectives, and the Company’s progress made in achieving them.
In accordance with the Company’s guidelines and ASX Corporate Governance principles, the Board has established various
objectives in relation to gender diversity. The Company’s aim is to achieve these objectives over the coming two to three
years as relevant positions become vacant and appropriately-skilled candidates are available.
The objectives set by the Board in relation to gender diversity are set out in the following table.
Objective
Category
Actual
Number
Percentage
Number
Percentage
Number of women in whole organization
16
50%
16
50%
Number of women in senior executive positions
2
33%
1
17%
Number of women on the Board
1
20%
1
25%
Responsibility for diversity falls on the Nomination and Remuneration Sub-Committee.
Principle 4: Safeguard integrity in financial reporting
Audit and Risk Committee
The Audit and Risk Sub-Committee consists of Damien Haakman (Chairman), Ari Bergman and Peter Cook. Details of their
attendance at meetings of the Sub-Committee are set out in the table above. The Sub-Committee operates in accordance
with principles which are to be documented in a formal Charter which, once approved, will be available on the Company’s
website. The main responsibilities of the members of the Sub-Committee are to:
?? review, assess and approve the annual and half-year financial reports and all other financial information published by
the Company or released to the Market;
?? assist the Board in reviewing the effectiveness of the organization’s internal control environment covering:
–– effectiveness and efficiency of operations;
–– reliability of financial reporting; and
–– compliance with applicable laws and regulations;
?? oversee the effective operation of the Company’s risk management framework;
?? recommend to the Board the appointment, removal and remuneration of the external auditors, and review the terms of
their engagement, the scope and quality of the audit and assess their performance;
?? consider the independence and competence of the external auditor on an ongoing basis;
?? review and approve the level of non-audit services provided by the Group’s external auditors and ensure that it does not
adversely impact on the auditors’ independence;
?? review and monitor all related party transactions and assess their propriety; and
?? report to the Board on matters relevant to the Sub-Committee’s role and responsibilities.
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Principle 4: Safeguard integrity in financial reporting? continued
In fulfilling its responsibilities, the Audit and Risk Sub-Committee:
?? receives regular reports from both Management and the Company’s external auditors;
?? meets with the external auditors at least twice a year, or more frequently if necessary;
?? reviews the processes the CEO and CFO have in place to support their annual certifications to the Board;
?? reviews any significant disagreements between the auditors and Management, irrespective of whether they have been
resolved; and
?? provides the external auditors with a clear line of direct communication at any time to either the Chairman of the Audit
and Risk Sub-Committee or, if necessary, the Chairman of the Board.
The Audit and Risk Sub-Committee has authority, within the scope of its responsibilities, to seek any information it requires
from any employee or external party.
External auditors
The Company and Audit and Risk Sub-Committee policy is to appoint external auditors who clearly demonstrate both quality
of service and independence. The performance of the external auditor is reviewed annually and applications for tender of
external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing
value and tender costs. PricewaterhouseCoopers (“PwC”) was appointed as the Company’s external auditor during the year
ended June 30, 2014. It is PwC’s policy to rotate audit lead engagement partners on listed companies at least every five years.
An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in Note 26
to the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence to
the Audit and Risk Sub-Committee which is reproduced in the Company’s Annual Report.
The external auditor attends the Company’s AGM and is available to answer shareholder questions about the conduct of the
audit and the preparation and content of the audit opinion.
Principles 5 and 6: Make timely and balanced disclosures and respect the rights of shareholders
Continuous disclosure and shareholder communication
The Company has principles which are being written into policies and procedures on information disclosure that focus on
continuous disclosure of any information concerning the Group that a reasonable person would expect to have a material
effect on the price of the Company’s securities. Once complete, these policies and procedures will include the arrangements
the Company has in place to promote communication with shareholders and encourage effective participation at general
meetings. These policies and procedures will be made available on the Company’s website.
The Secretary has been nominated as the person responsible for communications with the TSX Venture Exchange (“TSX-V”)
and the Australian Securities Exchange (“ASX”). This role includes responsibility for ensuring compliance with the continuous
disclosure requirements in the ASX Listing Rules and overseeing and co-ordinating information disclosure to the TSX-V, ASX,
analysts, brokers, shareholders, the media and the public.
All information disclosed to the TSX-V and the ASX is uploaded to the Company’s website as soon as it is disclosed to them.
When analysts are briefed on aspects of the Group’s operations, the material used in the presentation is released to the
TSX-V and the ASX and uploaded to the Company’s website. Procedures have also been established for reviewing whether
any price sensitive information has been inadvertently disclosed and, if so, this information is also immediately released to
the Markets.
The Company’s website also enables users to provide feedback and has an option for shareholders to register their email
address for direct email updates on Company matters.
All shareholders are entitled to receive a hard copy of the Company’s Annual and Half-Year Reports which are also available
for download on its website.
2014? FINANCIAL Report? 79
Corporate Governance Statement?
continued
for the year ended June 30, 2014
Principle 7: Recognize and manage risk
The Board is responsible for satisfying itself annually, or more frequently as required, that Management has developed and
implemented a sound system of risk management and internal control. Detailed work on this task is delegated to the Audit
and Risk Sub-Committee and reviewed by the full Board.
The Audit and Risk Sub-Committee is responsible for ensuring there are adequate policies in relation to risk management,
compliance and internal control systems. They monitor the Company’s risk management by overseeing Management’s
actions in the evaluation, management, monitoring and reporting of material operational, financial, compliance and
strategic risks. In providing this oversight, the Sub-Committee:
?? reviews the framework and methodology for risk identification, the degree of risk the Company is willing to accept, the
management of risk and the processes for auditing and evaluating the Company’s risk management system;
?? reviews Group-wide objectives in the context of the above mentioned categories of corporate risk;
?? reviews and, where necessary, approves guidelines and policies governing the identification, assessment and
management of the Company’s exposure to risk;
?? reviews and approves the delegations of financial authorities and addresses any need to update these authorities on an
annual basis; and
?? reviews compliance with agreed policies.
The Sub-Committee recommends any actions it deems appropriate to the Board for its consideration.
Management is responsible for designing, implementing and reporting on the adequacy of the Company’s risk management
and internal control system and has to report to the Audit and Risk Sub-Committee on the effectiveness of:
?? the risk management and internal control system during the year; and
?? the Company’s management of its material business risks.
Risk management group
The Company’s risk management policies and the operation of the risk management and compliance system are managed
by the Company’s risk management group which consists of selected senior executives and is chaired by the CFO. The Board
receives reports from this group as to the effectiveness of the Company’s management of material risks that may impede or
impact on the Company’s ability to meet its business objectives.
Each of the Company’s business units report to the risk management group on the key business risks applicable to their
respective areas. The review is undertaken by business unit management. The risk management group then consolidates the
business unit reports and recommends any actions to the Board for its consideration.
Corporate reporting
In complying with recommendation 7.3, the CEO and CFO make the following annual certifications to the Board:
?? that the Company’s financial reports are complete and present a true and fair view, in all material respects, of the
financial condition and operational results of the Company and the Group and are in accordance with relevant
accounting standards; and
?? that the above statement is founded on a sound system of risk management and internal compliance and control which
implements the policies adopted by the Board and that the Company’s risk management and internal compliance and
control is operating efficiently and effectively in all material respects in relation to financial reporting risks.
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Principle 8: Remunerate fairly and responsibly
All matters pertaining to the remuneration of Company Directors and employees are overseen and managed by the
Nomination and Remuneration Sub-Committee (refer above). Sub-Committee members may receive briefings from external
remuneration experts on recent developments on remuneration and related matters.
Each member of the Senior Leadership Team signs a formal employment contract at the time of their appointment
covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. The standard
contract refers to a specific formal job description. This job description is reviewed by the Nomination and Remuneration
Sub-Committee on a regular basis and, where necessary, is revised in consultation with the relevant employee.
Further information on Directors’ and Executives’ remuneration is set out in Note 23 to the financial statements for the year
ended June 30, 2014. In accordance with Group policy, participants in equity-based remuneration plans are not permitted to
enter into any transactions that would limit the economic risk of options or other unvested entitlements.
The Sub-Committee also assumes responsibility for overseeing management succession planning, including the
implementation of appropriate executive development programs and ensuring adequate arrangements are in place, so that
appropriate candidates are recruited for later promotion to senior positions.
2014? FINANCIAL Report? 81
ASX Additional Information
The following additional information is required by the Listing Rules of the Australian Securities Exchange and is not disclosed
elsewhere in this Annual Report. The information provided is current as at September 16, 2014.
The Company’s common shares are quoted on the TSX Venture Exchange in Canada. The ticker symbol for the common shares
is SV. The Company also has a listing of CHESS Depositary Instruments (“CDIs”) on the Australian Securities Exchange. The ASX
Home Exchange is Melbourne, Victoria. The ASX code for the Company’s CDIs is SVA. Each CDI comprises one common share.
DISTRIBUTION OF EQUITY SECURITIES
The numbers of security holders as at September 16, 2014, ranked by size of holding in each range of securities, are as follows:
Common shares
Ranges
Holders
1 – 1,000
CDIs
Units
Holders
Combined
Units
Holders
Units
%
193
6,543
3
18
196
6,561
0.01%
1,001 – 5,000
57
15,078
31
25,694
88
40,772
0.06%
5,001 – 10,000
73
322,452
197
1,080,610
270
1,403,062
1.90%
10,001 – 100,000
62
2,053,555
159
5,474,750
221
7,528,305
10.21%
100,001 – 1,000,000
18
4,186,117
27
7,243,747
45
11,429,864
15.50%
1,000,001 and over
8
31,616,953
8
21,702,226
16
53,319,179
72.32%
411
38,200,698
425
35,527,045
836
73,727,743
100.00%
Totals
The number of CDI holders holding less than a “marketable parcel” of CDIs (being 878 CDIs) on September 16, 2014 was 19.
The total number of CDIs held by these holders on that date was 11,032.
As disclosed above, as at September 16, 2014, the Company had a total of 73,727,743 common shares on issue, of which
a total of 35,527,045 common shares were held in CDI form, representing approximately 48.19% of the Company’s total
number of issued securities.
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TWENTY LARGEST SECURITY HOLDERS
The names of the twenty largest registered security holders, as at September 16, 2014, are:
Rank
Name of registered security holder
Shares
CDIs
1
Dussman Pty. Ltd. <Devonia Investment A/C>
14,024,295
2
Dussman Pty. Ltd. <Charolais Super Fund A/C>
3
HSBC Custody Nominees (Australia) Limited
4
Sim Finance Pty. Ltd.
5
6
Totals
%
6,079,547
20,103,842
27.27%
6,445,010
-
6,445,010
8.74%
-
4,065,472
4,065,472
5.51%
3,519,617
-
3,519,617
4.77%
BNP Paribas Nominees Pty. Ltd. <DRP A/C>
-
3,111,112
3,111,112
4.22%
Thorney Holdings Pty. Ltd.
-
2,439,000
2,439,000
3.31%
7
Citicorp Nominees Pty. Ltd.
-
2,213,334
2,213,334
3.00%
8
Robert James Hutchison and Maryann McKenzie
? <Inspiration Super Fund A/C>
2,000,085
-
2,000,085
2.71%
9
Dussman Pty. Ltd. <Devonia Investment No. 2 A/C>
1,799,049
-
1,799,049
2.44%
10
Jolimont Lodge Pty. Ltd. <Powell Family Super Fund A/C>
1,572,752
-
1,572,752
2.13%
11
HSBC Custody Nominees (Australia) Limited <No. 2 A/C>
12
Dussman Pty. Ltd.
13
National Nominees Limited
14
Denzil and Sarah Sheldon <Sheldon Family Super Fund A/C>
15
Dyspo Pty. Ltd. <Super Fund A/C>
-
1,567,857
1,567,857
2.13%
1,256,145
-
1,256,145
1.70%
-
1,200,000
1,200,000
1.63%
-
1,025,904
1,025,904
1.39%
1,000,000
-
1,000,000
1.36%
16
UBS Nominees Pty. Ltd.
-
890,686
890,686
1.21%
17
J.P. Morgan Nominees Australia Limited
-
720,556
720,556
0.98%
18
Carluke Pastoral Co. Pty. Ltd. <Carluke Super Fund A/C>
-
552,922
552,922
0.75%
19
Aggregated Capital Pty. Ltd. <Super Fund No. 2 A/C>
-
500,000
500,000
0.68%
20
Ephpheta Foundation Inc.
-
500,000
500,000
0.68%
Totals – Top 20
31,616,953
24,866,390
56,483,343
76.61%
Remainder
6,583,745
10,660,655
17,244,400
23.39%
Totals
38,200,698
35,527,045
73,727,743
100.00%
SUBSTANTIAL SECURITY HOLDERS
As at September 16, 2014, the names of the only substantial shareholder holding shares representing more than 5% of the
Company’s total issued capital, who have notified the Company in accordance with section 671B of the Corporations Act
2001, is:
Name of substantial shareholder
Number of
securities
% held
Damien M. Haakman
31,107,707
42.19%
2014? FINANCIAL Report? 83
ASX Additional Information?
continued
RESTRICTED SECURITIES
As at September 16, 2014, a total of 12,512,867 common shares were subject to escrow. As a result of the merger transaction
involving the Company and Gtech International Resources Limited that closed on December 3, 2013, certain shareholders
of the Company holding a total of 25,025,733 common shares were required to enter into value escrow agreements with the
TSX Venture Exchange. Pursuant to the value escrow agreement, the securities were released from escrow on a timed release
schedule, whereby 25% of the total number of securities are released every six months.
VOTING RIGHTS
The Company is governed by the Business Corporations Act (British Columbia). Pursuant to Article 12 of the Company’s
articles, subject to any special rights and restrictions attached to any shares and to the restrictions imposed on joint
shareholders:
(a) On a vote by show of hands, every person present who is a shareholder or proxy holder and entitled to vote on the
matter, has one vote; and
(b) On a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on
the matter and held by that shareholder and may exercise that vote either in person or by proxy.
A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may
appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors,
that the person is a personal or other legal personal representative or a trustee in bankruptcy for a shareholder who is
entitled to vote at the meeting.
If there are joint shareholders registered in respect of any share:
(a) Any one of the joint shareholders may vote at any meeting of shareholders, personally or by proxy, in respect of the share
as if that joint shareholder were solely entitled to it; or
(b) If more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them
votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central
securities register in respect of the share will be counted.
Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company,
entitled to vote at a meeting of shareholders may, by proxy, appoint one or more proxy holders to attend and act at the
meeting in the manner, to the extent and with the powers conferred by the proxy.
BUSINESS OBJECTIVES
The Company was admitted to the official list of the ASX on 20 February 2014. In accordance with ASX Listing Rule 4.10.19,
the Company confirms that its cash assets as at that date have been used in a way consistent with its business objectives.
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Corporate Information
Directors
Auditor
Peter C. Cook (Non-Executive Chairman)
Philippa M. Lewis (Chief Executive Officer)
Ari B. Bergman (Non-Executive)
Damien M. Haakman (Non-Executive)
PricewaterhouseCoopers
Chartered Accountants
Freshwater Place
2 Southbank Boulevard
Southbank VIC 3006
Australia
Secretary
Thomas G. Howitt
Banker (Canada)
Registered Office
Bank of Montreal
595 Burrard Street
Vancouver BC V7X 1L7
Canada
26th Floor, 700 West Georgia Street
Vancouver BC V7Y 1B3
Canada
HEAD OFFICE
Level 13, 54 Miller Street
North Sydney NSW 2060
Australia
Telephone: +61 2 8405 6300
Facsimile:
+61 2 8088 1301
Email: [email protected]
Company website
www.simavita.com
Australian Registered Business Number
165 831 309
Common Share Register
Computershare Investor Services Inc.
Level 2, 510 Burrard Street
Vancouver BC V6C 3B9
Canada
Telephone: +1 604 661 9400
Facsimile:
+1 604 661 9549
Website: www.computershare.com
CDI Register
Computershare Investor Services Pty. Ltd.
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
Australia
Telephone: +61 3 9415 5000
Facsimile:
+61 3 9473 2500
Website: www.computershare.com.au
Banker (Australia)
Westpac Banking Corporation
694-696 Pittwater Road
Brookvale NSW 2100
Australia
Banker (USA)
J.P. Morgan Chase Bank
3700 Wiseman Boulevard
San Antonio TX 78251
USA
Stock Exchanges
TSX Venture Exchange
? Symbol: SV (common shares)
650 West Georgia Street
Vancouver BC V6B 4N9
Canada
Australian Securities Exchange
? Code: SVA (CDIs)
Level 4, Rialto North Tower
525 Collins Street
Melbourne VIC 3000
Australia
Simavita Limited? 2014 Annual Report
doc_122468517.pdf