1
ANNUAL REPORT 2023ANNUALREPORT 2023 2023 HIGHLIGHTS
NORMALISED
EBITDA1 PROFITABLE
VS. ~ BREAKEVEN
(GUIDANCE)
60%
TOTAL REVENUE
55%
PRODUCT REVENUE
268%
MYRIAD™ PRODUCT
REVENUE, TO NZ$13.5M
2
NEW PRODUCTS
LAUNCHED POST
31 MARCH 2023
(MYRIAD MORCELLS
FINE™ & SYMPHONY™)
8%
PRODUCT
GROSS MARGIN
FIRST US FDA
CLEARANCE RECEIVED
POST 31 MARCH 2023
FOR COMPONENTS OF
ENIVO™ SYSTEM
CONTENTS
AROA’s Journey to Date
Results in Brief
New Products
Chair’s Review
CEO’s Report
Our Values
Our Board
Our Senior Leadership
Sustainability Report
Directors’ Report
Remuneration Report
Directors’ Responsibility Statement
Independent Auditor’s Report
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Additional Information
Glossary and Other Information
Corporate Directory
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6
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10
12
17
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29
35
41
53
55
61
65
97
103
105
KEY DATES
3 AUGUST 2023
Annual General Meeting of Shareholders
30 SEPTEMBER 2023
Financial Half Year End
28 NOVEMBER 2023*
Half Year Results Announcement
31 MARCH 2024
*Indicative date
Financial Year End
This Annual Report is dated 30 June 2023 and is signed on behalf of Aroa Biosurgery
Limited by Jim McLean, Independent Chair of the Board and Brian Ward, Managing
Director and CEO.
Jim McLean
Independent Chair
of the Board
Brian Ward
Managing Director
and CEO
ANNUAL REPORT 2023
AROA’S JOURNEY TO DATE
2023 marks fifteen years since veterinary surgeon Brian Ward founded AROA with a vision to unlock regenerative
healing for everybody. Brian identified that the use of ECM for wound repair and soft tissue reconstruction
was constrained by variable results and the high cost of existing products. He recognised the regenerative
properties of ruminant forestomach ECM technology and was determined to improve patient outcomes by
offering a leading ECM that is purposefully priced to improve patient access.
We are very proud to reflect on the significant milestones our team has achieved in that relatively short time.
With your support, over 6 million AROA devices (and counting) have been applied in treating patients globally.
510k
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ANNUAL REPORT 2023
5
ANNUAL REPORT 2023 RESULTS
IN BRIEF
NZ
$63.4m
TOTAL REVENUE
( 60% ON FY22)
NZ
$60.5m
PRODUCT REVENUE
( 55% ON FY22)
84%
PRODUCT GROSS MARGIN
(↑ 8% ON FY22)
NZ
$1.5m
NORMALISED EBITDA
NZ
~$45m
CASH BALANCE
6
ANNUAL REPORT 2023
R&D Spend
*
*
*
*
*% of product sales
Reflects an aggregate of 101 patent applications filed,
relating to 14 patent families
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ANNUAL REPORT 2023 NEW
PRODUCTS
We are excited about the recent US launch
of our latest products designed to achieve
a step change in healing outcomes.
Myriad Morcells Fine
Myriad Morcells Fine
is a morselised
conformable ECM graft that can be
Key features include:
•
increased particulate surface area maximises delivery of biology
from the AROA ECM™.
used either by itself or synergistically
•
conforms to optimize contact with the wound bed & helps
with Myriad Matrix.
create a planar wound surface.
•
faster incorporation & hydration (vs. Myriad Morcells).
Interlocking tab
What is Symphony?
Symphony is combination
cellular and tissue
product (CTP),
comprising of AROA ECM
with hyaluronic acid.
AROA ECM
Hyaluronic Acid
Symphony
We
formally
launched Symphony at
industry-leading conference, Symposium of
Advanced Wound Care, in April this year.
It is designed to facilitate the regeneration
Key features include:2
• HA is a naturally occurring component of tissue ECM and plays
an important role in accelerating soft tissue repair. HA has been
shown to reduce wound healing times and improve the quality
of new tissue.
of functional tissue and the combination
•
Symphony’s unique engineered structure enables
rapid
of AROA ECM and hyaluronic acid (HA)
3-dimensional cell migration and proliferation to help drive
acts synergistically to drive wound closure.
wound closure, while allowing exudate flow.
Symphony is typically used in diabetic,
venous and pressure ulcers, alongside a wide
array of other acute and chronic surgical and
traumatic wounds.
• Multiple layers add more structure and biology, and enhances
biomechanical strength.
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ANNUAL REPORT 2023
9
ANNUAL REPORT 2023 CHAIR’S
REVIEW
AROA is reaching an
inflection point and
entering an exciting new
stage of its evolution.
The Board has been very
focused on ensuring that
the Company is set up
to deliver sustainable
profitable growth over the
long-term. This strategy
continues to deliver
results.
AROA’s FY23 performance reflects strong compounding
growth across all key metrics. AROA was profitable on
a normalised EBITDA basis, exceeding our guidance
and marking the first year we have been in that position
since listing. The Company also delivered on the
remaining components of guidance with 60% growth
in total revenue, 55% growth in total product revenue
and an 8% increase in product gross margin. These
are impressive statistics, and on behalf of the Board,
I want to congratulate Brian and our people for their
continued exceptional work.
I also want to take this opportunity to reflect on AROA’s
progress in the fifteen years since founding. The
Company has achieved many significant milestones in
that short time, exemplifying its culture of agility and
delivery. The AROA ECM portfolio now comprises of
four commercialised product families, representing
eight products in multiple formats. The talent and
breadth of our US commercial team and operations is
notable, as it is just two years since we moved away
from our shared salesforce with Hydrofera, LLC. The
team has done an excellent job, delivering year-on-year
growth in Myriad sales with 268% growth in FY23.
The Company is well placed to continue delivering strong
top-line growth from current and future products. Our
existing AROA ECM portfolio has an estimated TAM
of over US$3 billion3 and compounding sales growth
proves the compelling value of our existing products
to customers. We are confident this will continue well
beyond the US$61 million achieved in FY23.4
AROA is in a very strong cash position. As Brian
outlines in the CEO’s Report, we have decided to invest
into bringing AROA’s innovative second technology
platform, Enivo, to market as quickly as possible.
Enivo has an estimated TAM of over US$1 billion5 and
is expected to deliver a pipeline of new products to
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ANNUAL REPORT 2023
11
fuel medium and long-term returns. The increasingly
profitable nature of our business allows us to continue
this investment whilst trading EBITDA positive on a
normalised basis.
We are committed to ensuring AROA stays true to
its core vision and culture in spite of the changes
our continuing growth will inevitably bring. We have
reviewed and updated AROA’s Values; a set of principles
and behaviours we want our people to embody, and
which guide our decisions. We are pleased to share
these with you in this Annual Report. Sustainability is
also a key focus at leadership level, and we are pleased
to present our inaugural Sustainability Report within
this Annual Report.
As previously announced, Dr. Catherine Mohr joined
the Board in November 2022. She brings an impressive
breadth of skills and experience, complementing the
other Directors’ perspectives. We have also refreshed
the composition of two of our permanent Board
committees, including to reflect her addition. The
changes and current membership of each Board
committee is outlined in this Annual Report.
AROA is on a strong growth trajectory, supported by a
team of over 270 across New Zealand and North America
and regulatory approval in over 50 countries. Our
shareholders’ confidence in AROA is instrumental to our
success and we thank you for your continued support.
Jim McLean
Independent Chair of the
Board of Directors
ANNUAL REPORT 2023 CEO’S
REPORT
We have for the second year running exceeded our initial revenue
guidance and also met or exceeded other upgraded guidance.
This is testament to the accelerating momentum underpinning AROA’s
corporate strategy and the hard work and dedication of our people.
As Jim outlined, AROA is entering a new phase with confidence,
buoyed by the fundamentals already in place.
US operations delivering results
As previously signalled, we continued to invest into our
US commercial operations, growing the overall resource
by ~30% to 70. We now have 41 field sales representatives
and given the importance of reimbursement in driving
Symphony conversion, have established an in-house
customer reimbursement support function.
Our investment continues to furnish results. We
expected Myriad sales to underpin AROA’s growth, and
the team delivered; with strong sales of Myriad Matrix
and Myriad Morcells contributing 22% of total product
sales (reflecting an impressive 268% increase), 131%
year-on-year growth in Myriad active accounts6 to 166
and ten field sales representatives at an average run
rate of over US$500,000 per annum. Myriad is now our
direct sales team’s highest selling brand.
We have also added leading GPO, Premier Inc., to
our existing complement of contracts, and now have
purchasing agreements in place with all four of the
Enivo system
largest GPOs in the US. Over 95% of US hospitals have
We are very pleased with the progress achieved since
access to our products through their primary GPO.
FY22 on Enivo, AROA’s innovative second technology
We are also continuing to build upon the clinical evidence
for Myriad, with progress on the Myriad Augmented Soft
Tissue Regeneration Registry (MASTRR) study tracking
ahead of target. The MASTRR study is AROA’s largest
prospective study to date, evaluating AROA’s Myriad
Matrix and Myriad Morcells products (including short
and long-term healing outcomes and any observed
platform. We plan to develop a portfolio of products
based on this platform over time for a range of soft
tissue reconstruction procedures. The Enivo system is
comprised of a specially designed AROA ECM implant
that is coupled to an external negative pressure pump,
and designed to close tissue cavities at a surgical site
created by surgical dissection or tissue removal.
post-surgical complications) in a wide range of surgical
The Enivo technology reflects significant commercial
specialties and procedures in the US. At the end of
potential; representing a unique opportunity to address
FY23, 156 patients had been recruited across four sites,
a currently unmet market need, leverage synergies
against the study target of 300 patients across ten sites.
with the existing AROA ECM portfolio to deliver a
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ANNUAL REPORT 2023
step change in outcomes and leverage and enhance
of 188.5 mL for the Standard of Care treatment. We have
the productivity of our field sales team. To maximise
also commenced a pilot clinical study (n=10) evaluating
shareholder value, we have and are continuing to
the use of Enivo in mastectomies. We expect this study to
invest
into accelerating the commercialisation of
conclude in March 2024.
Enivo. This strategy has meant that we have sacrificed
becoming highly profitable in the short-term to ensure
TELA Bio
that our medium-term portfolio has the potential to
transform healing outcomes for patients and reward
shareholders for this investment. In the absence of the
Enivo investment, AROA’s normalised EBITDA for FY23
would have been NZ$8.5 million - demonstrating
that our existing underlying business is already highly
profitable on a normalised basis.
On 7 April 2023, we received US FDA 510(k) clearance
for the pump and catheter, key components of the Enivo
system. We are currently pursuing further dialogue
with the US FDA to clarify the additional requirements
for the remaining components and expect to provide
further updates in late September.
TELA Bio continued to perform strongly, reporting
CY22 total revenue growth of ~41% to US$41.4 million.
TELA Bio has also bolstered its funding, with net proceeds
of US$46.4 million received from an underwritten public
offering completed after 31 March 2023.
International sales and NZ
operations
AROA’s international sales network continued to build
momentum, delivering a 60% increase on FY22 ex-US
product revenue. The pipeline looks promising, including
with a contract in place to provide leading Canadian
GPO, HealthPRO’s over 1,300 members with access to
We are also developing a body of clinical evidence for
Endoform Natural and Endoform Antimicrobial from
Enivo. A peer-reviewed pre-clinical study published
in October 20227 demonstrates the potential benefits
of Enivo to promote tissue apposition and reduce the
formation of seromas in surgical sites. Seromas are a
common post-surgical complication which can disrupt
healing, increase pain, oedema (swelling) and result in
poor cosmetic outcomes. They can also lead to more
severe complications such as wound dehiscence, infection
and necrosis of overlying tissue. The study found that use
of Enivo resulted in near complete dead space closure at
the conclusion of treatment (two weeks post-treatment),
with a median seroma area of 2% and median seroma
volume of 1.3 mL, compared to an area of 98% and volume
1 June 2023. AROA also received regulatory clearance
for Myriad Matrix in Australia and Brazil during the
financial year.
The Company invested further into its manufacturing
operations, and now has the capacity to support
product sales of ~NZ$150 million. We have also
improve efficiencies
operationalised
initiatives
to
and support medium-term growth. This includes
implementing
an enterprise
resource planning
platform for the New Zealand operations and acquiring
additional office space in close proximity to the existing
New Zealand sites.
13
FY24 outlook
We will continue to focus on disciplined investment
into our US commercial operations to drive growth,
while also managing expenses to facilitate increasing
profitability beyond FY24.
We expect our expanded product portfolio to drive
product revenue and gross margin growth, through
sales of our higher margin Myriad and Symphony
products. Our recently launched Myriad Morcells Fine
products can be used synergistically with the existing
Myriad Matrix products. Symphony is also a notable
We also look forward to Scott Sherriff joining our
leadership team as Chief Operating Officer from July. Scott
has substantial global sales and marketing experience,
including with Novartis in the US and Bayer in Europe.
His most recent role was as Chief Commercial Officer at
Douglas Pharmaceuticals, a New Zealand headquartered
life sciences company that,
like AROA, develops,
manufactures and commercialises products globally.
Scott will further bolster our existing sales and marketing
expertise and we look forward to having him on board.
Concluding remarks
addition to our portfolio. It builds upon our existing
Endoform business in the outpatient setting and
early clinical feedback indicates effective healing and
2023 marks fifteen years since I founded AROA to
unlock regenerative healing for everybody. It has been
an incredibly rewarding journey, seeing that vision
persistence. Whilst TELA Bio’s CY23 product revenue
crystalising with the support of many stakeholders;
is expected to grow by 45-57%, we are currently
customers, commercial partners, suppliers, government
assuming modest growth in FY24 product sales to
agencies, and especially – our shareholders and our
TELA Bio due to high safety stock levels during H1 and
lumpy shipments of replacement SKUs. We will have
people. I am proud of everything that we have achieved
so far, and I look forward to the future as we advance
increasing clarity of TELA Bio’s demand requirements
that founding vision.
as the year progresses.
Assuming currency headwinds (reflecting a constant
currency rate of US$0.65/NZ$1.00), we have announced
product revenue, product gross margin and normalised
EBITDA guidance of NZ$72-75 million, 85% and NZ$1-2
million respectively.8
Brian Ward
Managing Director and CEO
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ANNUAL REPORT 2023
ANNUAL REPORT 2023
OUR
VALUES
A core set of values helps us stay true to who we are, identify the behaviours we want our team
to display and guides our decision making. As a growing business, change is constant and our
values provide an anchor, representing what we stand for and helping to shape our future.
Being a trusted partner means that we take the
We courageously push boundaries, are
opportunity to build relationships with the people
entrepreneurial
in our approach and
we encounter. Whether interacting with other
focused on innovation.
team members, suppliers or customers, we use our
skills to earn trust and credibility. We communicate
effectively, are transparent and keep patient
outcomes front of mind.
We are proud of the diversity across our team
As a team, we know that we can achieve
and want to foster a sense of belonging at AROA.
so much more together. Through conscious
We respect and appreciate each other, and are
collaboration we can support each other to
encouraged to bring our true selves to work, letting
get the best outcomes. Along the way we
our personality, values and spirit shine through.
will become more resilient and respond to
challenges more effectively as they arise.
In the long run, our relationships will be
stronger allowing us to focus on successful
patient outcomes.
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OUR BOARD
ANNUAL REPORT 2023
ANNUAL REPORT 2023
James (Jim) is a resident of New Zealand. He has over 25 years’ experience
serving as chair, director, or an executive of research and technology
businesses for both commercial and New Zealand Government organisations.
In addition to AROA, current appointments include Chair of Prevar Limited
and R J Hill Laboratories Limited.
He was Chair of the New Zealand Institute of Plant & Food Research and
Chair of its predecessor HortResearch, as well as several private businesses
and start-up companies. He served on the board of the then Foundation
for Research, Science, and Technology including five years as Deputy Chair.
Jim was an executive and director of Genesis Research & Development
Corporation Limited during its early stages through to public listing.
Before specialising in science and technology businesses, Jim held
management positions with an international manufacturing business and
spent thirteen years as a partner at chartered accountants, EY. His time at
EY was focused on business strategy and included two years’ secondment
to EY’s Washington DC office.
Jim has a BSc (Hons) in Chemistry from University of Otago and a Post
Graduate Diploma in Accounting from Victoria University of Wellington.
James McLean
BOARD RESPONSIBILITIES
Chairman and independent non-
executive director and member
of the Audit Committee. Until 1
March 2023, Jim also served as
member of the Risk Committee
and member of the Remuneration
& Nomination Committee
TERM OF OFFICE
First appointed 10 August 2011
Last re-elected 10 August 2022
Brian is the founder of AROA and a resident of New Zealand. He has held
senior corporate roles in life sciences and health care companies for more than
25 years. He has extensive management experience in life science companies
spanning clinical, technical, sales, marketing, corporate development and
strategy having worked for a number of multinationals including Baxter,
Beecham and SmithKline Beecham throughout the world. He has managed
investments into New Zealand technology companies for the Foundation for
Research Science and Technology, served as the founding CEO of NZBio, and
has sat on a number of government and industry expert panels.
Brian has been responsible for leading AROA’s growth from start-up through
to the present.
As CEO and a substantial shareholder in the Company, he is considered by
the Board to not be an independent director.
Brian is a graduate of Massey University with a Bachelor’s degree in
Veterinary Science, a Member of the Royal College of Veterinary Surgeons
(UK), and holds a Masters degree in Business Administration graduating
with distinction.
Brian Ward
BOARD RESPONSIBILITIES
Managing Director (and CEO)
TERM OF OFFICE
First appointed
21 September 2007
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Catherine is a New Zealand citizen and resident of the US. She has over
30 years’ experience across a diverse range of fields, including engineering,
healthcare, alternative energy, aerospace and global entrepreneurship.
Her expertise spans many areas related to AROA’s next stage of growth,
including medtech product research and development, FDA approvals,
product commercialisation and surgery technology innovation.
She has been President of the Intuitive Foundation since 2018. Prior to
leading the Foundation, Catherine held senior roles at Intuitive Surgical,
including Vice President of Strategy and Director of Medical Research.
Intuitive Surgical is a pioneer in the robotic-assisted surgery field and
developed the da Vinci surgical robotic system which is used in millions of
surgical procedures across the globe every year.
Catherine is also on the board of directors for FINCA International and
cofounded VeriSure, where she invented the LapCap™, the first of a new
category of laparoscopic surgery enabling products.
DR. CATHERINE
MOHR
BOARD RESPONSIBILITIES
Independent non-executive
director and (from 1 March 2023)
member of the Risk Committee
TERM OF OFFICE
First appointed 1 November 2022
Catherine holds a Bachelor of Science and Master of Science in Mechanical
Engineering from Massachusetts Institute of Technology (MIT) and Doctor
of Medicine from the Stanford University School of Medicine.
STEVEN ENGLE
BOARD RESPONSIBILITIES
Independent non-executive
director, Chair of the
Remuneration & Nomination
Committee and member of the
Risk Committee
TERM OF OFFICE
First appointed 1 April 2015
Last re-elected 10 August 2022
Steve is a resident of the US. He has over 20 years’ executive leadership
experience with public biotech companies developing breakthrough
products in metabolic, autoimmune, oncologic and infectious disease areas.
Steve
is
the CEO and executive director of Gradalis
Inc., a
late-stage biopharmaceutical company focused on the development and
commercialisation of novel personalized therapeutics to treat cancer. He is
also the non-executive Chairman of the board of Prescient Therapeutics Ltd.
(ASX: PTX), an ASX listed clinical stage oncology company, and executive
Chairman of Author-it Software Corporation, a developer of authoring
information solutions for pharmaceutical and biotechnology companies.
Steve also runs Averigon, an advisory firm to the life science industry on
matters ranging from business development to management team coaching.
He was previously CEO of CohBar, a clinical stage biotechnology company
developing mitochondria-based therapeutics to treat age-related diseases
and extend healthy lifespan. Prior to that, he held roles as Chairman and CEO
of XOMA Corporation, a leader in the development of therapeutic antibodies
and antibody technologies, and La Jolla Pharmaceutical Company, which
discovered the biology of B cell tolerance, developed the first B cell toleragen
for lupus patients, and received an approvable letter from the FDA. Earlier,
he served as Vice President of Marketing for Cygnus, a drug delivery systems
company, where he helped to gain FDA approval and launch Nicotrol for
smoking cessation.
He is a former director of industry associations, BIO, BayBio and BIOCOM,
and was a member of the board of the Lupus Foundation of America.
Steve holds M.S.E.E. and B.S.E.E. degrees from the University of Texas with a
focus on biomedical engineering.
20
Philip (Phil) McCaw is a resident of New Zealand and is the Founding Partner
of Movac, one of New Zealand’s leading Venture Capital funds. He led the
original investment round into AROA in 2008, has worked closely with the
Company and has served on the Board since then. He is also Chair of the
New Zealand Government’s Startup Advisors’ Council, established to help
identify and address the opportunities and challenges facing high growth
start-up businesses.
Phil has over 20 years’ experience investing into New Zealand technology
companies and helping to guide their growth. He was an early investor in
Trade Me, New Zealand’s leading on-line trading community, which was
sold to Fairfax in 2006. Phil was also an early investor into PowerByProxi,
a wireless power technology spin-out from Auckland University, which was
sold to Apple in 2018.
Outside of Movac, Phil remains an active angel investor and maintains
a personal angel investment portfolio. He is a strong advocate for
PHILIP MCCAW
BOARD RESPONSIBILITIES
Non-executive director and
member of the Remuneration
& Nomination Committee
TERM OF OFFICE
First appointed 5 March 2008
the development of the entrepreneurial and early-stage investment
eco-system in New Zealand and was the past Chair of the Angel Association of
Last re-elected 20 July 2021
New Zealand.
Prior to starting Movac, Phil spent 10 years with Deloitte Consulting working
in New Zealand and the US.
As a substantial shareholder in AROA, Phil is considered by the Board to not
be an independent director.
Phil has a Bachelor of Business Studies (Senior Scholar)
from
Massey University.
John is a resident of the US. He has over 30 years of global experience leading
biologic, small molecule pharmaceutical, gene therapy and device operations
across Asia, Europe and the Americas. His expertise and leadership spans
engineering, quality, manufacturing and translational sciences. He joined
Ultragenyx in July 2015 and currently holds the role of EVP, Translational
Sciences and Chief Quality Operations Officer. He provides leadership for
Ultragenyx’s translational sciences functions which includes Pharmacology
and Toxicology, Research and Bioanalytical Development, as well as GxP
Quality and Compliance and CMC Analytical QC.
As a key member of Ultragenyx’s executive leadership team reporting
directly to the CEO, he also contributes to ongoing business development,
clinical development, commercial and strategic planning activities.
John is also an advisory board member for Celestial Therapeutics,
Inc., a biopharmaceutical company focused on the development and
commercialisation of next-generation novel and ground-breaking mRNA
vaccines and therapeutics for the treatment and prevention of a variety of
infectious diseases, rare diseases and cancers.
John has previously held operational and senior leadership roles in
Genentech (subsequently Roche post Genentech acquisition, as Senior Vice
President and Global Head of Quality and Compliance for Pharma Technical
Operations) and Baxter International’s Renal, Bioscience, Parenterals and
Device divisions.
He holds a B.S. in Mechanical Engineering from West Virginia University.
21
JOHN PINION
BOARD RESPONSIBILITIES
Independent non-executive
director, Chair of the Risk
Committee and member of the
Audit Committee
TERM OF OFFICE
First appointed 1 February 2015
Last re-elected 20 July 2021
ANNUAL REPORT 2023 John is a resident of Australia and has over forty years’ experience as a CFO,
CEO and director of both private and publicly listed companies. John is
currently the non-executive Chairman of xReality Group Limited (ASX:XRG),
and is a non-executive director of Surf Lakes Holdings Limited and DIT
AgTech Limited.
John has extensive knowledge and experience in the practical application
of ASX Listing Rules, Australian corporations’ law, international accounting
standards and corporate governance principles. He heads a CPA firm
providing corporate advisory services to SME and mid-cap companies and
has managed the listing process, secondary capital raisings and ASX listings
in a number of diverse industry sectors, including oil and gas, food and retail,
telecommunications, adventure tourism, biotechnology, and the dental and
medical sectors.
John holds a Bachelor of Commerce from University of NSW, is a Fellow of
the Australian Society of CPAs and a Fellow of the Australian Institute of
Company Directors.
JOHN DIDDAMS
BOARD RESPONSIBILITIES
Independent non-executive
director and Chair of the Audit
Committee. Member of the
Remuneration & Nomination
Committee from 1 March 2023
TERM OF OFFICE
First appointed 21 November 2019
22
OUR SENIOR LEADERSHIP TEAM
BRIAN WARD
Chief Executive Officer and Founder, Managing Director
See previous section.
JAMES AGNEW
Chief Financial Officer and Joint Company Secretary
James joined AROA’s management team in 2013 and has over 20 years’ experience
in business and finance. He has extensive experience in corporate finance, investment
management, M&A, strategic and operational planning, contractual management and
negotiation, international taxation and compliance, including US GAAP.
Prior to this role, he was the VP of Finance & Operations for MXM Mobile (a division of
the Meredith Corporation) based in New York, overseeing all international subsidiaries
following the acquisition of The Hyperfactory Ltd (NZ high growth technology
company) where he held the role of Group Financial Controller. In his earlier career,
James worked in public practice providing accounting and business advisory services
to a diverse range of successful New Zealand companies.
In 2011 James was a finalist in the Young Financial Manager of the year at the Annual
CFO Awards. James holds a Bachelor of Laws and Bachelor of Commerce from
Auckland University.
DR. BARNABY MAY
Chief Scientific Officer
Barnaby joined AROA’s management team in 2008. He completed his doctoral thesis
on the design and synthesis of novel HIV protease inhibitors at the University of
Canterbury, New Zealand. He subsequently undertook postdoctoral studies in 2000
at the University of California San Francisco (UCSF). During this time, he established
and led a drug discovery program targeting human prion diseases, and successfully
identified a compound that underwent immediate clinical studies. Barnaby developed
additional related research programs in the areas of protein misfolding diseases,
parasitic diseases, computational and structural biology. In 2003, he accepted an
invitation to a faculty role at UCSF where he built and led a drug discovery program.
This program spanned target and lead identification, high-throughput screening,
medicinal chemistry, and pre-clinical pharmacokinetics. In 2004, Barnaby joined
InPro Biotechnology as Scientific Director to lead product development of prion-
related medical devices and diagnostics. After 8 years abroad, he returned to New
Zealand in 2008 and joined AROA.
23
ANNUAL REPORT 2023 BRAD ADAMS
VP – Commercial (USA)
Brad joined AROA in November 2019. He has over 22 years of experience in the
strategic sales and marketing of medical devices within the United States medical
system and in other jurisdictions. Prior to AROA, he served as Vice President, Sales
at ACell Inc., a Columbia, Maryland based regenerative medicine company. Brad has
also held roles within both the Smith+Nephew, and, Johnson & Johnson families of
companies, much of the time spent in senior global commercial roles. Brad has a
proven record of accelerating revenue growth across multiple platforms including
medical device, pharmaceutical, biologic, wound/tissue repair and regenerative
medicine.
Brad holds a Master of Health Administration (Medical College of Virginia), a Bachelor
of Arts in Economics with distinction (Virginia Military Institute) and has undertaken
professional courses at Harvard Business School and The Wharton School,
University of Pennsylvania. He is a long-standing member of the American College
of Healthcare Executives.
ROD STANLEY
VP – Manufacturing Operations
Rod joined AROA in 2013 and has over 15 years’ experience in medical device design
and manufacturing.
Prior to joining AROA, Rod worked in development of novel polymer coatings for
microfluidic devices at Industrial Research Limited. Rod’s professional expertise
includes chemical processing of biomaterials, and implementation of steralisation
processes. During his time at AROA, Rod’s focus has been on process design and
transfer into manufacturing, redevelopment and scale-up activities for the Auckland
site, as well as overseeing routine production activities.
Rod holds Master of Science and Bachelor of Science degrees in Chemistry from the
University of Otago.
ISAAC MASON
VP – Product Development
Isaac joined AROA in 2014, and has held several senior Engineering roles, including
leading the development of AROA’s Tissue Apposition Platform, Enivo.
Isaac is responsible for leading AROA’s Product Development program including
portfolio management, selection and prioritization of projects, new product and process
development activities, project management, technical oversight, and resourcing.
Prior to starting at AROA, Isaac held roles at Olympus Surgical Technologies Europe
and Fisher & Paykel Healthcare.
Isaac holds a Bachelor of Engineering with Honors in Mechanical Engineering.
24
YASMIN WINCHESTER
VP – Quality, Regulatory and Sustainability
Yasmin joined AROA in 2014 and has held several roles in the quality space. Her
role covers a wide scope, overseeing quality assurance, as well as regulatory affairs,
health and safety, and sustainability. Yasmin’s role is responsible for developing
and implementing AROA’s social and sustainability approach to achieve long-term
stability and sustainability of our operations, while continuing to deliver medical
devices that are safe and effective for use.
Before joining the AROA team, Yasmin held roles in Quality Assurance at Glaxo Smith
Kline and Johnson & Johnson Medical.
Yasmin holds a Bachelor of Science with a major in Biology.
FRAZER MURRAY
Director of Global Marketing and Strategy
Frazer joined AROA in September 2020 and is Director of Global Marketing and
Strategy. Frazer’s role is responsible for leading Marketing and Strategy on behalf of
the organisation, which includes marketing, business & brand strategy, medical device
coding & reimbursement and digital promotion.
Frazer worked for almost 6 years as Veterinary Surgeon before moving to human
healthcare, and has recently held roles in leadership, sales, strategy and marketing at
healthcare companies Novartis and Johnson and Johnson.
Frazer holds a Masters in Business from London Business School, Bachelor of
Veterinary Science, and a Certificate in Human Medical Genetics.
NEETHA ALEX-KUMAR
General Counsel
Neetha joined AROA in February 2021, following its IPO. She oversees AROA’s legal
and risk practice and supports the Company’s investor relations activities.
Neetha is an experienced corporate and commercial lawyer. Her professional
background includes experience at leading law firms in New Zealand and overseas;
including acting on M&A, cross-border intragroup reorganisations and corporate
advisory matters at Bell Gully (NZ) and DAC Beachcroft (UK) and on commercial
healthcare matters for the UK NHS at Bevan Brittan (UK). Prior to joining AROA,
Neetha was at Fisher & Paykel Healthcare where she was Senior Legal Counsel and
led the initial development of the group’s global privacy practice.
Neetha has a Bachelor of Laws and a Bachelor of Commerce (double majoring in
Economics and Finance) from the University of Auckland.
25
ANNUAL REPORT 2023 PATRICK HUNT
Director of Business Development
Patrick joined AROA in 2018 as the Director of Business Development. Patrick’s
role entails overseeing the development of new markets, including identifying
opportunities, initiating, and managing relationships with international distribution
partners, and directing sales.
Patrick has considerable experience in clinical research and has also held roles in
product management, sales, and product planning.
A career highlight for Patrick was being part of the team that developed the first
perforated biodegradable interference screw for ACL fixation which has since become
the standard implant for ACL reconstruction surgeries.
Patrick is a qualified Veterinary Surgeon and also holds MBA and PhD qualifications.
RACHEL STUART
Director of People and Culture
Rachel joined AROA in February 2022 as the Director of People and Culture.
Rachel and her team focus on enabling people to do their best work, ensuring the
culture at AROA creates amazing employee experience and customer outcomes.
Rachel has an extensive background in Human Resources across several industries,
most recently leading People & Culture at veterinary software startup ezyVet through
a period of considerable growth and their acquisition by IDEXX Laboratories.
Rachel holds a Bachelor of Science with a major in Psychology.
26
ANNUAL REPORT 2023 28
Environmental Sustainability
To guide us on our journey, we have developed a
dashboard to measure key sustainability metrics,
including waste to landfill, water usage, wastewater,
electricity usage, and freight carbon emissions. The
dashboard will help us to measure our environmental
impact, providing data
to drive
continuous
improvements in our sustainability performance. During
the next financial year, we will formally review the data
and develop reduction targets for our emissions.
SUSTAINABILITY
REPORT
We are pleased to present the Company’s inaugural
sustainability report, sharing our goals and vision for
the coming year.
At AROA, we are committed to contributing to a more
sustainable future for everybody. We recognise that
it takes a collective approach with organisations,
individuals and the community all taking meaningful
and consistent actions. We are conscious that the
decisions we make today, help shape the future.
We
support
the United Nations Sustainable
Development Goals of:
We are working to implement a range of initiatives to
support these goals and look forward to sharing our
progress in next year’s annual report.
29
ANNUAL REPORT 2023 Diversity, Equity and Inclusion
We are committed to fostering a diverse and inclusive
AROA is te reo Maori for understanding, and we strive to
culture across all levels of the Company.
cultivate an environment of respect and understanding
of each other.
As at 30 April 2023
27O
EMPLOYEES
2O0
in NZ
70
in North America
OVER 20
DIFFERENT ETHNICITIES
SELF-IDENTIFIED BY
TEAM MEMBERS
WOMEN
MAKE UP
43%
OF OUR
EMPLOYEE
POPULATION
27%
OF WOMEN
IN SENIOR
LEADERSHIP
ROLES
53% OF NZ
EMPLOYEES SELF-REPORT
AS BEING FROM A
‘DIVERSE POPULATION’.
The table below shows the ratio of women to men among our Board members, executives, senior leadership,
and all employees as at 31 March 2023, across New Zealand and North America.
Board
Senior Leadership Team
Supervisors and Managers
All employees
Women
1
3
20
116
FY23
Women%
Men%
14%
27%
33%
43%
86%
73%
67%
57%
Men
6
8
40
152
Our Diversity, Equity, and Inclusion Actions
We are a proud member of Diversity Works, New Zealand’s
community, encouraging women from across all areas of
national body for workplace diversity and inclusion.
the organisation to build meaningful connections, share
95% of people managers participated in Unconscious
their successes and challenges, and support each other.
Bias training as part of our ‘Manager’s Essentials’
AROA is committed to reaching 40:40:20 gender
training workshops. This training will be provided
representation (40% women, 40% men and 20% open)
for all new people managers at AROA as part of our
by 2033. Over the coming year we will further our
Learning and Development programme, and we look
progress towards gender representation at all levels by
to extend unconscious bias training to the rest of the
setting measurable objectives in line with our scale and
organisation in FY24.
number of employees.
In 2022, the AROA Women’s Network was established
To support parents who are returning to work after the
to promote diversity and inclusion. The AROA Women’s
birth of a child, we have made a private and comfortable
Network aims to foster a supportive and empowering
Parents Room available.
30
Our People and Culture Actions
With the cost of living rising significantly in recent years,
we are pleased to report that all our New Zealand based
team are remunerated at or above the New Zealand
living wage.
To support our objective of being a great place to work,
this year we introduced a range of employee benefits
designed to attract and retain high calibre team
members, including:
Birthday Leave: Permanent team members can take
a paid day off on their birthday to celebrate their
special day.
Summer hours: Compressed hours available for eligible
roles, to maximise the opportunity to enjoy the summer
weather and promote work life balance.
Employee Referral Programme: We want AROA to be
a place where people feel a strong sense of belonging
and recommend joining the team to their friends
and family, so we developed the AROA employee
referral programme.
In 2022, over 20% of new employees joined AROA
through our employee referral program.
Remote Working and Flexible Working: For eligible
roles, there are a range of options for onsite, offsite and
hybrid working with a focus on flexibility, providing our
people with greater choice and autonomy in the ways
they can work.
31
ANNUAL REPORT 2023 Community
At AROA, we believe it is important to support
community initiatives that align with our mission
and purpose.
Our Community Actions
Established in 1999, the Middlemore Foundation aims
to improve the health and wellbeing of the people
of South Auckland, through a range of targeted
community initiatives.
South Auckland based Butterbean Motivation
(BBM) led by “Brown Butterbean” Dave Letele, was
established in 2014, to educate and support New
Zealand communities that have been struggling with
obesity, diabetes and heart disease.
The Middlemore
Foundation Health
Science
Scholarships aim to remove barriers and increase
diversity within the health workforce by supporting the
journeys of 20 Pasifika students into their first years
of university in a health science discipline.
In support of this, AROA was proud to donate
$10,000, funding two Health Science Scholarships
in 2023.
The 2022 KidzFirst Christmas party, organised and
led by Middlemore Foundation and BBM provided
the
families of over 200 children
living with
long-term health conditions in South Auckland with a
day of entertainment, gifts and fun. Over 6000
gifts and 600 food parcels were given out on the day.
32
AROA was proud to support this key community
event with a $10,000 donation as well as our team
members volunteering at the event on the day.
In March, we worked collaboratively with Middlemore
Foundation, FOU- The Future is Open To Us, Puhoro
STEMM Academy and other Middlemore Health
Science Scholarship funders to support the MALU
Girls in STEMM Breakfast Panel Discussion event.
Over 100 young Maori and Pasifika girls heard from
Maori and Pasifika women working in Sciences,
Technology and Engineering roles. AROA’s Esther
Ulu, Associate Manager, Quality Control shared her
career journey as a panel member.
ANNUAL REPORT 2023 DIRECTORS’ REPORT
The directors present their report on the Group for the financial year ended 31 March 2023.
AROA’s activities and operations
AROA is in the business of soft tissue regeneration. During the year, the Group’s principal activity was the
development, manufacture and distribution of products globally to improve healing in complex wounds and
Commentary on the Group’s operations and activities during the year is set out in the Chair’s Review and CEO’s
soft tissue reconstruction.
Report.
Financial results for the year
Normalised Profit or Loss
Reported
2023
NZ$000
Reported
Reported
YoY %
2022
NZ$000
CC
2023
NZ$000
CC
YoY %
76%
800bps
500 bps
60,512
1,090
61,602
51,718
84%
1,734
(2,292)
3,834
1,542
1,394
39,154
526
39,680
30,303
1,116
(4,629)
3,132
(1,498)
(954)
55
107
55
71
55
63
27
55
(50)
22
203
246
(84)
60,383
1,083
61,466
51,582
84%
1,734
(45,446)
(10,612)
(56,058)
(2,741)
3,834
1,093
931
(1,810)
Normalised selling and administrative
expenses1
(45,131)
(27,693)
Research and development
(10,612)
(8,354)
Total normalised operating expenses
(55,743)
(36,047)
Product revenue
Normalised other revenue 1
Total revenue
Gross profit
Product gross margin %
Other income
Normalised EBIT
Add back: Depreciation & amortisation
Normalised EBITDA
Normalised net finance income /
(expenses)1
Product Revenue
Normalised loss before income tax
(898)
(5,583)
1.
These items have been normalised by the amounts outlined within the section headed ‘Reconciliation of
Normalised Profit or Loss to NZ GAAP Profit or Loss’.
Product revenue for the year was NZ$60.5 million (NZ$60.4 million in constant currency) representing growth
of 55% on the previous year (38% in constant currency). Myriad, OviTex and OviTex PRS products were the
major contributors to the growth whereas Endoform grew modestly as expected. Myriad sales contributed
22% to total product sales, growing 268% (236% on a constant currency basis) to NZ$13.6 million. OviTex and
OviTex PRS contributed 58% to total product sales, with Endoform making up the balance.
Normalised Other Revenue
Normalised other revenue grew to NZ$1.1 million, compared to NZ$0.5 million in the previous year. Normalised
other revenue represents project fees income received for product development projects undertaken with
38
84
38
47
55
52
27
47
33
22
1
224
(36)
1
34
DIRECTORS’ REPORT
The directors present their report on the Group for the financial year ended 31 March 2023.
AROA’s activities and operations
AROA is in the business of soft tissue regeneration. During the year, the Group’s principal activity was the
development, manufacture and distribution of products globally to improve healing in complex wounds and
soft tissue reconstruction.
Commentary on the Group’s operations and activities during the year is set out in the Chair’s Review and CEO’s
Report.
Financial results for the year
Normalised Profit or Loss
Reported
2023
NZ$000
Reported
2022
NZ$000
Reported
YoY %
Product revenue
Normalised other revenue 1
Total revenue
Gross profit
Product gross margin %
Other income
60,512
1,090
61,602
51,718
84%
1,734
39,154
526
39,680
30,303
55
107
55
71
76%
800bps
1,116
Normalised selling and administrative
expenses1
(45,131)
(27,693)
Research and development
(10,612)
(8,354)
Total normalised operating expenses
(55,743)
(36,047)
Normalised EBIT
Add back: Depreciation & amortisation
Normalised EBITDA
Normalised net finance income /
(expenses)1
(2,292)
3,834
1,542
1,394
(4,629)
3,132
(1,498)
(954)
Normalised loss before income tax
(898)
(5,583)
CC
2023
NZ$000
60,383
1,083
61,466
51,582
84%
1,734
(45,446)
(10,612)
(56,058)
(2,741)
3,834
1,093
931
(1,810)
CC
YoY %
38
84
38
47
500 bps
55
52
27
47
33
22
1
224
(36)
55
63
27
55
(50)
22
203
246
(84)
1.
These items have been normalised by the amounts outlined within the section headed ‘Reconciliation of
Normalised Profit or Loss to NZ GAAP Profit or Loss’.
Product Revenue
Product revenue for the year was NZ$60.5 million (NZ$60.4 million in constant currency) representing growth
of 55% on the previous year (38% in constant currency). Myriad, OviTex and OviTex PRS products were the
major contributors to the growth whereas Endoform grew modestly as expected. Myriad sales contributed
22% to total product sales, growing 268% (236% on a constant currency basis) to NZ$13.6 million. OviTex and
5
OviTex PRS contributed 58% to total product sales, with Endoform making up the balance.
Normalised Other Revenue
Normalised other revenue grew to NZ$1.1 million, compared to NZ$0.5 million in the previous year. Normalised
other revenue represents project fees income received for product development projects undertaken with
1
35
ANNUAL REPORT 2023
DIRECTORS’ REPORT
The directors present their report on the Group for the financial year ended 31 March 2023.
AROA’s activities and operations
AROA is in the business of soft tissue regeneration. During the year, the Group’s principal activity was the
development, manufacture and distribution of products globally to improve healing in complex wounds and
Commentary on the Group’s operations and activities during the year is set out in the Chair’s Review and CEO’s
soft tissue reconstruction.
Report.
Financial results for the year
Normalised Profit or Loss
Reported
2023
NZ$000
Reported
Reported
YoY %
2022
NZ$000
CC
2023
NZ$000
CC
YoY %
76%
800bps
500 bps
60,512
1,090
61,602
51,718
84%
1,734
(2,292)
3,834
1,542
1,394
39,154
526
39,680
30,303
1,116
(4,629)
3,132
(1,498)
(954)
55
107
55
71
55
63
27
55
(50)
22
203
246
(84)
60,383
1,083
61,466
51,582
84%
1,734
(45,446)
(10,612)
(56,058)
(2,741)
3,834
1,093
931
(1,810)
38
84
38
47
55
52
27
47
33
22
1
224
(36)
Normalised selling and administrative
expenses1
(45,131)
(27,693)
Research and development
(10,612)
(8,354)
Total normalised operating expenses
(55,743)
(36,047)
Product revenue
Normalised other revenue 1
Total revenue
Gross profit
Product gross margin %
Other income
Normalised EBIT
Add back: Depreciation & amortisation
Normalised EBITDA
Normalised net finance income /
(expenses)1
Product Revenue
Normalised loss before income tax
(898)
(5,583)
1.
These items have been normalised by the amounts outlined within the section headed ‘Reconciliation of
Normalised Profit or Loss to NZ GAAP Profit or Loss’.
Product revenue for the year was NZ$60.5 million (NZ$60.4 million in constant currency) representing growth
of 55% on the previous year (38% in constant currency). Myriad, OviTex and OviTex PRS products were the
major contributors to the growth whereas Endoform grew modestly as expected. Myriad sales contributed
22% to total product sales, growing 268% (236% on a constant currency basis) to NZ$13.6 million. OviTex and
OviTex PRS contributed 58% to total product sales, with Endoform making up the balance.
Normalised Other Revenue
Normalised other revenue grew to NZ$1.1 million, compared to NZ$0.5 million in the previous year. Normalised
other revenue represents project fees income received for product development projects undertaken with
TELA Bio but excludes the ‘one off’ royalty payment of NZ$1.8m received from TELA Bio during the year.
Product Gross Margin %
1
FY23 full year product gross margin of 84% (84% on a constant currency basis), representing an 8% increase
on FY22, primarily resulted from growth in sales of high margin Myriad products, manufacturing efficiency
improvements and favourable foreign exchange movements. Product gross margin grew 5% on FY22 on a
constant currency basis.
Other Income
Other income was NZ$1.7 million, compared to NZ$1.1 million in the previous year. This comprised of tax
credits of NZ$1.6 million under the Research & Development Tax Incentive program (compared to NZ$1.0
million previously), rental and grant income.
Normalised Operating Expenses & EBITDA
Selling and administrative expenses were NZ$45.1 million, representing a 63% increase (52% in constant
currency) from NZ$27.7 million in FY22. This increase primarily reflects annualisation of the prior year’s
investment and incremental investment during FY23 into the Company’s US-based sales operations and
aggregate commission payments to US sales staff for increased Myriad sales.
Research and development expenses were NZ$10.6 million, compared to NZ$8.4 million in FY22. This was
largely attributable to the increased investment into the Company’s second platform technology (Enivo™)
increasing from approximately NZ$5 million in FY22 to NZ$7 million in FY23.
AROA capitalised NZ$1.3 million of development costs in FY23 in line with the NZ Equivalent to International
Accounting Standard (NZ IAS 38). These development costs primarily represent investments made into
existing product line extensions and manufacturing process improvements, where the Company has certainty
of the investments generating future economic benefits.
AROA generated a normalised EBITDA profit of NZ$1.5 million in FY23, compared to a NZ$1.5 million loss in
FY22. The normalised loss before income tax was NZ$0.9 million (NZ GAAP Loss before income tax of
NZ$0.4 million) compared to loss of NZ$5.6 million in FY22 (NZ GAAP Loss before income tax of NZ$8.3
million).
Notably in the absence of the Enivo investment in FY23, AROA would have delivered a normalised EBITDA
profit of NZ$8.5 million, reflecting a normalised EBITDA margin of 14%.
Cashflows
Net cash outflows from operating activities improved to NZ$3.8 million (compared to previous outflows of
NZ$11.5 million) as a result of the Company’s improved operating performance. AROA’s reported positive
EBITDA was offset by an increase in the Company’s working capital position resulting from year-on-year sales
growth. Operating cashflows were also impacted by the timing of OviTex and OviTex PRS sales during the last
quarter of the financial year (with subsequent receipts in Q1 of FY24).
Purchases of property plant and equipment were NZ$6.0 million (compared to NZ$4.5 million in FY22)
primarily reflecting the Company’s investment into plant and equipment to further expand its manufacturing
capacity. As noted in the previous section, AROA commenced capitalising development costs in FY23.
Cash on hand and term deposits were NZ$44.7 million as at 31 March 2023 compared to NZ$56.2 million as at
31 March 2022. The Company remains debt-free.
36
2
DIRECTORS’ REPORT
The directors present their report on the Group for the financial year ended 31 March 2023.
AROA’s activities and operations
AROA is in the business of soft tissue regeneration. During the year, the Group’s principal activity was the
development, manufacture and distribution of products globally to improve healing in complex wounds and
Commentary on the Group’s operations and activities during the year is set out in the Chair’s Review and CEO’s
soft tissue reconstruction.
Report.
Financial results for the year
Normalised Profit or Loss
Reported
2023
NZ$000
Reported
Reported
YoY %
2022
NZ$000
CC
2023
NZ$000
CC
YoY %
76%
800bps
500 bps
60,512
1,090
61,602
51,718
84%
1,734
(2,292)
3,834
1,542
1,394
39,154
526
39,680
30,303
1,116
(4,629)
3,132
(1,498)
(954)
55
107
55
71
55
63
27
55
(50)
22
203
246
(84)
60,383
1,083
61,466
51,582
84%
1,734
(45,446)
(10,612)
(56,058)
(2,741)
3,834
1,093
931
(1,810)
Normalised selling and administrative
expenses1
(45,131)
(27,693)
Research and development
(10,612)
(8,354)
Total normalised operating expenses
(55,743)
(36,047)
Product revenue
Normalised other revenue 1
Total revenue
Gross profit
Product gross margin %
Other income
Normalised EBIT
Add back: Depreciation & amortisation
Normalised EBITDA
Normalised net finance income /
(expenses)1
Product Revenue
Normalised loss before income tax
(898)
(5,583)
1.
These items have been normalised by the amounts outlined within the section headed ‘Reconciliation of
Normalised Profit or Loss to NZ GAAP Profit or Loss’.
Product revenue for the year was NZ$60.5 million (NZ$60.4 million in constant currency) representing growth
of 55% on the previous year (38% in constant currency). Myriad, OviTex and OviTex PRS products were the
major contributors to the growth whereas Endoform grew modestly as expected. Myriad sales contributed
22% to total product sales, growing 268% (236% on a constant currency basis) to NZ$13.6 million. OviTex and
OviTex PRS contributed 58% to total product sales, with Endoform making up the balance.
38
84
38
47
55
52
27
47
33
22
1
224
(36)
1
Normalised Other Revenue
Reconciliation to NZ GAAP profit or loss
Normalised other revenue grew to NZ$1.1 million, compared to NZ$0.5 million in the previous year. Normalised
other revenue represents project fees income received for product development projects undertaken with
Normalised loss before income tax
Other Revenue
Share based payments
Transaction costs
Unrealised FX Gains
Loss before income tax (NZ GAAP)
Reported
2023
NZ$000
(898)
1,759
(2,578)
-
1,333
(384)
Reported
2022
NZ$000
(5,583)
-
(2,965)
(50)
336
(8,261)
Other Revenue
Other revenue of NZ$1.8 million represents receipt of a royalty payment during the current year ($nil in
previous year), from TELA Bio. This represents TELA Bio’s final royalty payment to AROA pursuant to the
parties’ licensing agreement.
Share Based Payments
Share based payments is a non-cash expense that reflect the three-year grant of share options issued to the
CEO and directors of the Company in H2 of FY23; the vesting of grants made to employees and directors on
the Group’s IPO in 2020; and to “one-off” grants to certain employees, including the US based sales team
during FY23.
Transaction Costs
Transaction costs of NZ$0.1 million in FY22 reflect the costs associated with the capital raise in August 2021.
Unrealised FX gains
Unrealised FX gains are non-cash gains that reflect the gain on US$ denominated transactions that have not
been completed as at the reporting date.
Dividends
No dividends were paid, declared or recommended during the financial year.
Corporate Governance Statement
AROA recognises the importance of good corporate governance and is committed to ensuring that the
AROA recognises the importance of good corporate governance and is committed to ensuring that the
business maintains a high standard of corporate governance and ethical standards. The Board reviews the
business maintains a high standard of corporate governance and ethical standards. The Board reviews the
Company’s policies and governance practices by reference to the Principles of Good Corporate Governance
Company’s policies and governance practices by reference to the Principles of Good Corporate Governance
established by the ASX Corporate Governance Council. Please refer to AROA’s Corporate Governance
established by the ASX Corporate Governance Council. Please refer to AROA’s Corporate Governance
Statement (available at https://aroa.com/nz/investors/) for more information about how the Company’s
Statement (available at https://aroa.com/nz/investors/) for more information about how the Company’s
policies and practices align with these principles. The Corporate Governance Statement forms part of, and
policies and practices align with these principles.
should be read in conjunction with, this Annual Report.
Indemnification and insurance of Directors and Officers
Indemnification and insurance of Directors and Officers
The Company has arranged, as provided for under its Constitution, insurance policies for Directors’ and
The Company has arranged, as provided for under its Constitution, insurance policies for Directors’ and
Officers’ liability which, with a deed of indemnity entered into with each director and company secretary, are
intended to ensure (to the extent permitted by applicable law) that the directors and officers will not incur
intended to ensure (to the extent permitted by applicable law) that the directors and officers will not incur
Officers’ liability which, with a deed of indemnity entered into with each director and company secretary, are
monetary losses as a result of actions undertaken by them as a director or officer (as applicable) of any Group
monetary losses as a result of actions undertaken by them as a director or officer (as applicable) of any Group
company. Certain actions are specifically excluded, for example the incurring of penalties and fines which may
intended to ensure (to the extent permitted by applicable law) that the directors and officers will not incur
be imposed in respect of breaches of the law.
company. Certain actions are specifically excluded, for example the incurring of penalties and fines which may
monetary losses as a result of actions undertaken by them as a director or officer (as applicable) of any Group
be imposed in respect of breaches of the law. company. Certain actions are specifically excluded, for example
the incurring of penalties and fines which may be imposed in respect of breaches of the law.
3
37
ANNUAL REPORT 20233 Reconciliation to NZ GAAP profit or loss Other Revenue Other revenue of NZ$1.8 million represents receipt of a royalty payment during the current year ($nil in previous year), from TELA Bio. This represents TELA Bio’s final royalty payment to AROA pursuant to the parties’ licensing agreement. Share Based Payments Share based payments is a non-cash expense that reflect the three-year grant of share options issued to the CEO and directors of the Company in H2 of FY23; the vesting of grants made to employees and directors on the Group’s IPO in 2020; and to “one-off” grants to certain employees, including the US based sales team during FY23. Transaction Costs Transaction costs of NZ$0.1 million in FY22 reflect the costs associated with the capital raise in August 2021. Unrealised FX gains Unrealised FX gains are non-cash gains that reflect the gain on US$ denominated transactions that have not been completed as at the reporting date. Dividends No dividends were paid, declared or recommended during the financial year. Corporate Governance Statement AROA recognises the importance of good corporate governance and is committed to ensuring that the business maintains a high standard of corporate governance and ethical standards. The Board reviews the Company’s policies and governance practices by reference to the Principles of Good Corporate Governance established by the ASX Corporate Governance Council. Please refer to AROA’s Corporate Governance Statement (available at https://aroa.com/nz/investors/) for more information about how the Company’s policies and practices align with these principles. Indemnification and insurance of Directors and Officers The Company has arranged, as provided for under its Constitution, insurance policies for Directors’ and Officers’ liability which, with a deed of indemnity entered into with each director and company secretary, are intended to ensure (to the extent permitted by applicable law) that the directors and officers will not incur monetary losses as a result of actions undertaken by them as a director or officer (as applicable) of any Group company. Certain actions are specifically excluded, for example the incurring of penalties and fines which may be imposed in respect of breaches of the law. Reported Reported 2023 2022 NZ$000 NZ$000 Normalised loss before income tax (898) (5,583) Other Revenue 1,759 - Share based payments (2,578) (2,965) Transaction costs - (50) Unrealised FX Gains 1,333 336 Loss before income tax (NZ GAAP) (384) (8,261)
Director re-elections
Jim McLean and Steve Engle offered themselves up for re-election, and were re-elected, at the Company’s
Jim McLean and Steve Engle offered themselves up for re-election, and were re-elected, at the Company’s
annual general meeting on 10 August 2022.
annual general meeting on 10 August 2022.
In accordance with the Board’s rotation policy, John Diddams is offering himself up for re-election at the
John Diddams is offering himself up for re-election at the Company’s upcoming annual general meeting on 3
Company’s upcoming annual general meeting on 3 August 2023. Under ASX Listing Rule 14.4, a director
August 2023. Under ASX Listing Rule 14.4, a director appointed by the board must not hold office (without
appointed by the board must not hold office (without election) past the next annual meeting following the
election) past the next annual meeting following the director’s appointment. Dr. Catherine Mohr was appointed
director’s appointment. Dr. Catherine Mohr was appointed by the Board as a director of the Company from 1
by the Board as a director of the Company with from 1 November 2022, and is accordingly also offering herself
up for election at the meeting.
November 2022, and is accordingly also offering herself up for election at the meeting.
Board and Committee meetings
The table below shows attendances by each director at Board and Committee meetings during the financial
year.
Name
Jim McLean**
Brian Ward
Steve Engle
Phil McCaw
John Pinion
John
Diddams**
Dr. Catherine
Mohr**
Board of Directors
Audit Committee
Risk Committee
Remuneration &
Nomination Committee
Eligible
Attended
Eligible*
Attended
Eligible*
Attended
Eligible*
Attended
7
7
7
7
7
7
3
7
7
7
6
7
7
3
3
-
-
-
3
3
-
3
3
-
-
2
3
-
3
-
3
-
3
-
-
3
3
3
-
3
-
-
5
-
6
6
-
1
-
5
6
6
6
-
1
-
*To attend as a member of that Committee. Other than to the extent of a conflict of interest, the full Board receives a
copy of each Committee’s meeting papers and may attend all Committee meetings.
** Dr. Mohr joined the Board from 1 November 2022. Jim McLean stepped down as a member of the Risk Committee
and the Remuneration & Nomination Committee from 1 March 2023, and was replaced by Dr. Mohr and John Diddams
(respectively).
NB: the table above does not include unscheduled calls held during the year.
Environmental and social risks
AROA’s manufacturing activities involve the controlled storage, use and disposal of hazardous materials. The
Company has in place policies and procedures designed to facilitate compliance with applicable environmental
regulations and to mitigate the risks associated with the Company’s handling of such materials.
Non-audit services
AROA’s auditor is BDO Auckland. The Group’s statutory audit fee for the financial year ended 31 March 2023
was NZ$135,000.
During the year ended 31 March 2023, BDO Auckland, or entities associated to it, provided the following non-
audit services to the Group.
Description of services
Review of interim consolidated financial statements
Fees (NZ$)
Fees (NZ$)
55,000
The Board is satisfied that the services noted above do not impair BDO’s independence as auditor on the basis
that such services were not in conflict with BDO’s audit procedures or adequate safeguards were put into place
to mitigate any independence risks.
38
4
40
REMUNERATION REPORT
REMUNERATION REPORT
(UNAUDITED)
(UNAUDITED)
remuneration for the financial year ended 31 March 2023.
This Remuneration Report, which forms part of the Directors’ Report, outlines the Group’s approach to
This Remuneration Report, which forms part of the Directors’ Report, outlines the Group’s approach to
Overview
Overview
remuneration for the financial year ended 31 March 2023.
The Remuneration & Nomination Committee assists the Board in establishing remuneration and nomination
The Remuneration & Nomination Committee assists the Board in establishing remuneration and nomination
Overview
policies and practices that attract, retain, motivate and reward talent.
policies and practices that attract, retain, motivate and reward talent. AROA’s remuneration framework (as
reviewed and approved by the Remuneration & Nomination Committee) is designed to offer compensation and
Remuneration
The Remuneration & Nomination Committee assists the Board in establishing remuneration and nomination
benefits which are competitive within industry, encourage a high level of performance and align management’s
policies and practices that attract, retain, motivate and reward talent. AROA’s remuneration framework (as
AROA’s remuneration framework (as reviewed and approved by the Remuneration & Nomination Committee) is
interests with the interests of shareholders.
reviewed and approved by the Remuneration & Nomination Committee) is designed to offer compensation and
designed to offer compensation and benefits which are competitive within industry, encourage a high level of
benefits which are competitive within industry, encourage a high level of performance and align management’s
performance and align management’s interests with the interests of shareholders.
AROA’s remuneration programme comprises of:
interests with the interests of shareholders.
•
AROA’s current remuneration programme comprises of:
AROA’s remuneration programme comprises of:
a fixed wage or salary, and legislative superannuation. This is set at a level to attract and retain high
calibre employees and is reviewed annually taking into account individual, Company and market
•
•
•
•
•
conditions;
a fixed wage or salary, and legislative superannuation. This is set at a level to attract and retain high
calibre employees and is reviewed annually taking into account individual, Company and market
a discretionary component providing the potential for an annual cash bonus based on predetermined
conditions;
company and individual performance targets; and
pre-determined
a discretionary component providing the potential for an annual cash bonus based on predetermined
discretionary long-term variable remuneration in the form of share options. The Group operated two
company and individual performance targets; and
employee and executive incentive plans during the financial year ended 31 March 2023; the NZ Option Plan
and the US Option Plan. Share options are issued for $nil consideration and are not quoted. Each share
discretionary long-term variable remuneration in the form of share options. The Group operated two
option entitles the holder to subscribe for one fully paid ordinary share in the Company at the specified
employee and executive incentive plans during the financial year ended 31 March 2023; the NZ Option Plan
exercise price. An overview of share options granted to the Company’s directors during FY23 is provided
and the US Option Plan. Share options are issued for $nil consideration and are not quoted. Each share
in the section headed ‘Director remuneration details: share based compensation’. For further details
option entitles the holder to subscribe for one fully paid ordinary share in the Company at the specified
relating to all share options issued during the year, refer to note 19 to the consolidated financial
exercise price. An overview of share options granted to the Company’s directors during FY23 is provided
statements.
in the section headed ‘Director remuneration details: share based compensation’. For further details
relating to all share options issued during the year, refer to note 19 to the consolidated financial
In accordance with corporate governance best practice, the structure of non-executive director remuneration
statements.
is separate and distinct from that for the CEO and senior leadership.
In accordance with corporate governance best practice, the structure of non-executive director remuneration
For completeness, AROA operated an employee incentive share plan from 2014 which was wound up prior to
is separate and distinct from that for the CEO and senior leadership.
AROA’s admission to the ASX in July 2020. Under this plan, to maintain incentive alignment, employees (but
not directors) who held such shares were offered an interest-free loan from AROA to pay up their shares prior
For completeness, AROA operated an employee incentive share plan from 2014 which was wound up prior to
to the plan being wound-up. The loan facility was for a maximum amount of NZ$0.8 million and was initially
AROA’s admission to the ASX in July 2020. Under this plan, to maintain incentive alignment, employees (but
due to expire on 31 March 2022. Following consideration of a range of factors including employee retention,
not directors) who held such shares were offered an interest-free loan from AROA to pay up their shares prior
the Board approved an extension to the loan repayment date but only for individuals who remained employed
to the plan being wound-up. The loan facility was for a maximum amount of NZ$0.8 million and was initially
by AROA as at 31 March 2022. Employees who are entitled to the loan extension must repay their loan by the
due to expire on 31 March 2022. Following consideration of a range of factors including employee retention,
earlier of (a) 28 February 2024, (b) the last date of their employment with AROA or (c) upon sale of the
the Board approved an extension to the loan repayment date but only for individuals who remained employed
relevant shares. As at 1 April 2023, the aggregate amount outstanding under the loan facility was NZ$236,000
by AROA as at 31 March 2022. Employees who are entitled to the loan extension must repay their loan by the
(compared to NZ$408,000 as at 1 April 2022).
earlier of (a) 28 February 2024, (b) the last date of their employment with AROA or (c) upon sale of the
relevant shares. As at 1 April 2023, the aggregate amount outstanding under the loan facility was NZ$236,000
Nomination
(compared to NZ$408,000 as at 1 April 2022).
The Remuneration & Nomination Committee’s duties also include:
Nomination
•
The Remuneration & Nomination Committee’s duties also include:
reviewing the performance and remuneration of the CEO and senior executives, and providing the Board
with recommendations on the same;
•
•
•
reviewing the performance and remuneration of the CEO and senior executives, and providing the Board
overseeing succession planning reviews and selection processes (as required from time to time) for the
with recommendations on the same;
overseeing succession planning reviews and selection processes (as required from time to time) for the
5
5
41
ANNUAL REPORT 2023
REMUNERATION REPORT
(UNAUDITED)
This Remuneration Report, which forms part of the Directors’ Report, outlines the Group’s approach to
remuneration for the financial year ended 31 March 2023.
Overview
The Remuneration & Nomination Committee assists the Board in establishing remuneration and nomination
policies and practices that attract, retain, motivate and reward talent. AROA’s remuneration framework (as
reviewed and approved by the Remuneration & Nomination Committee) is designed to offer compensation and
benefits which are competitive within industry, encourage a high level of performance and align management’s
interests with the interests of shareholders.
AROA’s remuneration programme comprises of:
•
•
•
a fixed wage or salary, and legislative superannuation. This is set at a level to attract and retain high
calibre employees and is reviewed annually taking into account individual, Company and market
conditions;
a discretionary component providing the potential for an annual cash bonus based on predetermined
company and individual performance targets; and
discretionary long-term variable remuneration in the form of share options. The Group operated two
employee and executive incentive plans during the financial year ended 31 March 2023; the NZ Option Plan
and the US Option Plan. Share options are issued for $nil consideration and are not quoted. Each share
option entitles the holder to subscribe for one fully paid ordinary share in the Company at the specified
exercise price. An overview of share options granted to the Company’s directors during FY23 is provided
in the section headed ‘Director remuneration details: share based compensation’. For further details
relating to all share options issued during the year, refer to note 19 to the consolidated financial
statements.
In accordance with corporate governance best practice, the structure of non-executive director remuneration
is separate and distinct from that for the CEO and senior leadership.
For completeness, AROA operated an employee incentive share plan from 2014 which was wound up prior to
AROA’s admission to the ASX in July 2020. Under this plan, to maintain incentive alignment, employees (but
not directors) who held such shares were offered an interest-free loan from AROA to pay up their shares prior
to the plan being wound-up. The loan facility was for a maximum amount of NZ$0.8 million and was initially
due to expire on 31 March 2022. Following consideration of a range of factors including employee retention,
the Board approved an extension to the loan repayment date but only for individuals who remained employed
by AROA as at 31 March 2022. Employees who are entitled to the loan extension must repay their loan by the
earlier of (a) 28 February 2024, (b) the last date of their employment with AROA or (c) upon sale of the
relevant shares. As at 1 April 2023, the aggregate amount outstanding under the loan facility was NZ$236,000
(compared to NZ$408,000 as at 1 April 2022).
Nomination
Nomination
The Remuneration & Nomination Committee’s duties also include:
•
•
•
•
•
reviewing the performance and remuneration of the CEO and senior executives, and providing the Board
with recommendations on the same;
overseeing succession planning reviews and selection processes (as required from time to time) for the
CEO and senior executives;
developing a process for evaluating the performance of individual directors, Board committees and the
Board as a whole;
5
regularly assessing the structure, size, composition, skills, experience, independence and diversity required
by the Board to fulfil its responsibilities and duties to shareholders having regard to AROA’s strategic
direction, and reporting the outcome of that assessment to the Board; and
establishing a process for identifying suitable candidates for appointment as new directors to the Board,
having regard to the skills required versus that represented from time to time on the Board.
The Board has completed its annual performance review and considers that the current directors possess an
appropriate mix of relevant skills, experience and expertise to enable the Board to discharge its responsibilities
and deliver the Company’s strategic objectives. Dr. Catherine Mohr’s background and expertise spans several
key areas related to AROA’s next stage of growth, and her appointment as a director in FY23 represents a
valuable addition to the Board. Please refer to AROA’s 2023 Corporate Governance Statement (available at
https://aroa.com/nz/investors/
https://aroa.com/nz/investors/) for more information relating to the Board’s current structure (including skills
and experience).
42
6
Employee remuneration
Outlined below is remuneration (inclusive of the value of other benefits) totalling NZ$100,000 or more received
Outlined below is remuneration (inclusive of the value of other benefits) totalling NZ$100,000 or more
by employees or former employees of the Group during the financial year ended 31 March 2023. The table
received by employees or former employees of the Group during the financial year ended 31 March 2023. The
includes salary, wages and discretionary annual variable remuneration paid during the 2023 financial year. This
table includes salary, wages and discretionary annual variable remuneration paid during the 2023 financial year.
does not include the CEO, who is also a director of the Company.
This does not include the CEO, who is also a director of the Company.
Offshore remuneration amounts (including commission paid to US sales representatives for delivering increased
Offshore remuneration amounts have been converted into New Zealand dollars.
Myriad sales) have been converted into New Zealand dollars.
Remuneration range (NZ$)
Number of employees
100,000 to 110,000
15
110,001 to 120,000
120,001 to 130,000
130,001 to 140,000
140,001 to 150,000
150,001 to 160,000
160,001 to 170,000
170001 to 180,000
180,001 to 190,000
190,001 to 200,000
200,001 to 210,000
210,001 to 220,000
220,001 to 230,000
230,001 to 240,000
240,001 to 250,000
260,001 to 270,000
280,001 to 290,000
290,001 to 300,000
310,001 to 320,000
320,001 to 330,000
350,001 to 360,000
370,001 to 380,000
400,001 to 410,000
420,001 to 430,000
470,001 to 480,000
520,001 to 530,000
530,001 to 540,000
540,001 to 550,000
560,001 to 570,000
570,001 to 580,000
660,001 to 670,000
670,001 to 680,000
750,001 to 760,000
810,001 to 820,000
9
8
6
4
5
7
3
6
2
4
3
5
3
4
3
1
2
1
2
1
3
2
1
1
1
1
1
1
2
1
1
1
1
7
43
ANNUAL REPORT 2023
Overview of senior leadership remuneration
Please refer to the table below for an overview of the remuneration components provided to the Company’s
senior leadership.
Component
Description
Link to strategy & performance
Fixed
Remuneration
• Base salary
•
Legislative superannuation
Annual reviews take into account
individual factors such as performance
and behaviours
•
•
•
•
•
•
•
•
•
•
Discretionary
annual variable
remuneration
Discretionary
long-term
variable
remuneration
Paid in cash
Designed to remunerate senior leadership relative to
individual
AROA’s
performance targets that are aligned with AROA’s
performance objectives
performance
targets
and
Company performance targets comprise both financial
targets and non-financial objectives, including sales,
development clinical and people metrics.
Rewards delivery of key strategic and
financial objectives in line with AROA’s
annual business plan.
The targets are set at the beginning of each financial
year and are approved by the Board
Performance against targets is determined by the
Board at the end of each financial year after review by
the Remuneration & Nomination Committee
At-risk component in the form of share options
Designed to align senior leadership’s interests with
shareholder interests over the longer term
Vesting is subject to continuing employment (unless
the Board determines otherwise), so provides a longer-
term employee benefit
Historic grants may be subject to satisfaction of
specified performance conditions
The Company has refined its long-term variable
remuneration design principles and has decided to
move to an annual award structured as follows:
Ø
50/50 mix (at target value) of service and
performance-based conditions; and
performance conditions relate to shareholder
returns (e.g. assessing AROA’s TSR against the
TSR of a comparator group and share price
performance)
Ø
Rewards delivery against longer term
strategy and provides alignment between
shareholder and senior leadership
outcomes
This is reflected in the structure of options provided to
Brian Ward in CY23 and will apply to options provided
to senior leadership from FY24 (see details in the
section headed ‘Director remuneration details; share-
based compensation’)
As noted previously, members of senior leadership (other than the CEO, who is also a director) may utilise the
loan provided by AROA in connection with the 2014 employee incentive share plan which was wound up in
2020.
44
8
Overview of CEO and Managing Director remuneration
Overview of CEO and Managing Director remuneration
Overview of CEO and Managing Director remuneration
Brian Ward’s remuneration structure is consistent with the senior leadership structure outlined above. Please
Brian Ward’s remuneration structure is consistent with the senior leadership structure outlined above. Please
refer to the section headed ‘Director remuneration details’ for information on Brian’s remuneration for the 2023
Brian Ward’s remuneration structure is consistent with the senior leadership structure outlined above. Please
financial year. Brian does not receive additional remuneration in his capacity as a director of the Company or
refer to the section headed ‘Director remuneration details’ for information on Brian’s remuneration for the 2023
refer to the section headed ‘Director remuneration details’ for information on Brian’s remuneration for the 2023
any other Group company.
financial year. Brian does not receive additional remuneration in his capacity as a director of the Company or
financial year. Brian does not receive additional remuneration in his capacity as a director of the Company or
any other Group company.
any other Group company.
Please also refer to the section headed ‘Equity instrument disclosures; FY23 option vestings’ for information
Please also refer to the section headed ‘Equity instrument disclosures; FY23 option vestings’ for information
relating to share options previously granted to Brian which vested in the 2023 financial year.
Please also refer to the section headed ‘Equity instrument disclosures; FY23 option vestings’ for information
relating to share options previously granted to Brian which vested in the 2023 financial year.
relating to share options previously granted to Brian which vested in the 2023 financial year.
Overview of non-executive director remuneration
Overview of non-executive director remuneration
Overview of non-executive director remuneration
The Board has determined that non-executive directors shall be compensated by way of cash fees and share
objectivity in decision making is not compromised.
options, but that no performance-based compensation shall be offered in order to ensure that objectivity in
objectivity in decision making is not compromised.
decision making is not compromised.
As approved by shareholders at AROA’s 2021 Annual General Meeting, the maximum aggregate annual cash-
objectivity in decision making is not compromised.
based remuneration payable to all of the Company’s non-executive directors for their services as a director
As approved by shareholders at AROA’s 2021 Annual General Meeting, the maximum aggregate annual
As approved by shareholders at AROA’s 2021 Annual General Meeting, the maximum aggregate annual cash-
As approved by shareholders at AROA’s 2021 Annual General Meeting, the maximum aggregate annual cash-
(the Cash Pool) is currently NZ$650,000. The Company has to date also granted its non-executive directors
based remuneration payable to all of the Company’s non-executive directors for their services as a director
cash-based remuneration payable to all of the Company’s non-executive directors for their services as a director
based remuneration payable to all of the Company’s non-executive directors for their services as a director
equity-based compensation in the form of share options.
(the Cash Pool) is currently NZ$650,000. The Company has to date also granted its non-executive directors
(the Cash Pool) is currently NZ$650,000. The Company has to date also granted its non-executive directors
(the Cash Pool) is currently NZ$650,000. The Company has to date also granted its non-executive directors
equity-based compensation in the form of share options.
equity-based compensation in the form of share options.
equity-based compensation in the form of share options.
The Remuneration & Nomination Committee assesses and reviews each non-executive director’s compensation
annually, having regard to their time commitment and responsibilities. The Committee commenced a
annually, having regard to their time commitment and responsibilities. The Committee commenced a
The Remuneration & Nomination Committee assesses and reviews each non-executive director’s compensation
The Remuneration & Nomination Committee assesses and reviews each non-executive director’s compensation
The Remuneration & Nomination Committee assesses and reviews each non-executive director’s compensation
comprehensive review in FY23, with detailed input from remuneration specialists at AON. AON assessed the
annually, having regard to their time commitment and responsibilities. The Committee commenced a
annually, having regard to their time commitment and responsibilities. The Committee commenced a
quantum and structure of the Company’s current non-executive director remuneration package against
comprehensive review in FY23, with detailed input from remuneration specialists at AON. AON assessed
comprehensive review in FY23, with detailed input from remuneration specialists at AON. AON assessed the
comprehensive review in FY23, with detailed input from remuneration specialists at AON. AON assessed the
benchmarked peer groups including Australian and US healthcare companies of a comparable business focus
the quantum and structure of the Company’s current non-executive director remuneration package against
quantum and structure of the Company’s current non-executive director remuneration package against
and size, measured by both market capitalisation and total revenue. Please see below an overview of key
benchmarked peer groups including Australian and US healthcare companies of a comparable business focus
benchmarked peer groups including Australian and US healthcare companies of a comparable business focus
benchmarked peer groups including Australian and US healthcare companies of a comparable business focus
themes from that review:
and size, measured by both market capitalisation and total revenue. Please see below an overview of key
and size, measured by both market capitalisation and total revenue. Please see below an overview of key
themes from that review:
themes from that review:
themes from that review:
and size, measured by both market capitalisation and total revenue. Please see below an overview of key
quantum and structure of the Company’s current non-executive director remuneration package against
•
•
•
Equity award practices - AROA’s non-executive director equity award practices to date may be more
typical of recently listed pre-commercial companies. Reflecting the Company’s increasing size and
•
Equity award practices - AROA’s non-executive director equity award practices to date may be more
• Equity award practices - The Company considers it beneficial to encourage ownership by its non-executive
Equity award practices - AROA’s non-executive director equity award practices to date may be more
maturity, the Board intends to transition away from granting non-executive directors share options as a
typical of recently listed pre-commercial companies. Reflecting the Company’s increasing size and
directors as this more strongly aligns their interests with the interests of shareholders, and has to date
typical of recently listed pre-commercial companies. Reflecting the Company’s increasing size and
component of their remuneration, towards practices more prevalent amongst more established growth
maturity, the Board intends to transition away from granting non-executive directors share options as a
elected to facilitate such share ownership through the grant of share options.
maturity, the Board intends to transition away from granting non-executive directors share options as a
companies and in particular those with a strong international presence.
component of their remuneration, towards practices more prevalent amongst more established growth
component of their remuneration, towards practices more prevalent amongst more established growth
This practice is typical of recently listed pre-commercial companies in New Zealand and Australia, and in
companies and in particular those with a strong international presence.
companies and in particular those with a strong international presence.
line with market practice in the US where half of the Company’s non-executive directors reside. The Board
The Company still considers it beneficial to encourage ownership by its non-executive directors as this
is focused on ensuring that its equity award practices continue to evolve as the Company grows in size
more strongly aligns their interests with the interests of shareholders, and the Remuneration &
The Company still considers it beneficial to encourage ownership by its non-executive directors as this
The Company still considers it beneficial to encourage ownership by its non-executive directors as this
and maturity, and reflects those prevalent amongst more established growth companies with a strong
Nomination Committee is assessing alternative structures which continue to strongly align non-executive
more strongly aligns their interests with the interests of shareholders, and the Remuneration &
more strongly aligns their interests with the interests of shareholders, and the Remuneration &
US focus. The Remuneration & Nomination Committee is, with input from external specialists, assessing
directors' interests with longer-term shareholder returns. This may include encouraging non-executive
Nomination Committee is assessing alternative structures which continue to strongly align non-executive
Nomination Committee is assessing alternative structures which continue to strongly align non-executive
alternative structures which continue to strongly align non-executive directors’ interests with longer-term
directors to acquire AROA shares by sacrificing a portion of their fees.
directors' interests with longer-term shareholder returns. This may include encouraging non-executive
directors' interests with longer-term shareholder returns. This may include encouraging non-executive
shareholder returns, whilst commensurate with market practice and the Company’s international retention
directors to acquire AROA shares by sacrificing a portion of their fees.
and recruitment needs.
directors to acquire AROA shares by sacrificing a portion of their fees.
With the exception of Dr. Catherine Mohr who joined the Board in FY23, the Company’s other non-
executive directors were issued share options in FY23 reflecting a three-year grant to 31 March 2026
With the exception of Dr. Catherine Mohr who joined the Board in FY23, the Company’s other non-
With the exception of Dr. Catherine Mohr who joined the Board in FY23, the Company’s other non-
• With the exception of Dr. Catherine Mohr who joined the Board in FY23, the Company’s other non-executive
(detailed in the section headed ‘Director remuneration details; share-based compensation’). The
executive directors were issued share options in FY23 reflecting a three-year grant to 31 March 2026
executive directors were issued share options in FY23 reflecting a three-year grant to 31 March 2026
directors were issued share options in FY23 (as approved at the 2022 AGM) reflecting a three-year grant to
Company is seeking to ensure that in the interim period until a new equity remuneration structure is
(detailed in the section headed ‘Director remuneration details; share-based compensation’). The
(detailed in the section headed ‘Director remuneration details; share-based compensation’). The
31 March 2026 (detailed in the section headed ‘Director remuneration details; share-based compensation’).
implemented, the remuneration package provided to a new non-executive director appointee remains
Company is seeking to ensure that in the interim period until a new equity remuneration structure is
Company is seeking to ensure that in the interim period until a new equity remuneration structure is
The Company is seeking to ensure that in the interim period until the Board confirms the equity award
aligned with their colleagues. AROA will therefore be seeking shareholder approval at the 2023 Annual
implemented, the remuneration package provided to a new non-executive director appointee remains
implemented, the remuneration package provided to a new non-executive director appointee remains
structure for the Company’s next phase, the remuneration package provided to a new non-executive
General Meeting for a grant of share options to Dr. Mohr, in line with the grants made to the other non-
aligned with their colleagues. AROA will therefore be seeking shareholder approval at the 2023 Annual
aligned with their colleagues. AROA will therefore be seeking shareholder approval at the 2023 Annual
director appointee remains aligned with their colleagues. AROA will therefore be seeking shareholder
executive directors in FY23. Details relating to the proposed grant will be provided in the accompanying
General Meeting for a grant of share options to Dr. Mohr, in line with the grants made to the other non-
General Meeting for a grant of share options to Dr. Mohr, in line with the grants made to the other non-
approval at the 2023 Annual General Meeting for a grant of share options to Dr. Mohr, in line with the
Notice of Meeting.
executive directors in FY23. Details relating to the proposed grant will be provided in the accompanying
executive directors in FY23. Details relating to the proposed grant will be provided in the accompanying
grants made to the other non-executive directors in FY23 with shareholder approval. Details relating to
Notice of Meeting.
the proposed grant will be provided in the accompanying Notice of Meeting.
Cash fees – further consideration is required to ensure that the fees offered to non-executive directors is
commensurate with the size, structure and composition of AROA’s Board, as well as market practice in the
Cash fees – further consideration is required to ensure that the fees offered to non-executive directors is
•
Cash fees – further consideration is required to ensure that the fees offered to non-executive directors is
• Cash fees – The Remuneration & Nomination Committee’s detailed review (with input from AON)
directors’ countries of residence. Four of the Company’s non-executive directors live outside New
commensurate with the size, structure and composition of AROA’s Board, as well as market practice in the
commensurate with the size, structure and composition of AROA’s Board, as well as market practice in the
demonstrated that further consideration is required to ensure that the fees offered to non-executive
Zealand; three are US-based and one is Australia-based. AROA is competing on a global scale for a limited
directors’ countries of residence. Four of the Company’s non-executive directors live outside New
directors is commensurate with the size, structure and composition of AROA’s Board, as well as market
pool of candidates with the requisite international and sector experience necessary to navigate the
Zealand; three are US-based and one is Australia-based. AROA is competing on a global scale for a limited
Zealand; three are US-based and one is Australia-based. AROA is competing on a global scale for a limited
practice in the directors’ countries of residence. Four of the Company’s non-executive directors live
demands, risk profile and complexities of the healthtech sector and international commercial outlook, and
pool of candidates with the requisite international and sector experience necessary to navigate the
outside New Zealand; three are US-based and one is Australia-based. AROA is competing globally for a
deliver on its strategic objectives. This must be reflected in the Company’s remuneration offering in order
demands, risk profile and complexities of the healthtech sector and international commercial outlook, and
demands, risk profile and complexities of the healthtech sector and international commercial outlook, and
limited pool of candidates with the requisite international and sector experience necessary to navigate the
to retain and attract high calibre candidates. In particular, the Company’s remuneration offering must
deliver on its strategic objectives. This must be reflected in the Company’s remuneration offering in order
deliver on its strategic objectives. This must be reflected in the Company’s remuneration offering in order
demands, risk profile and complexities of the Life Sciences sector. This must be reflected in the Company’s
to retain and attract high calibre candidates. In particular, the Company’s remuneration offering must
to retain and attract high calibre candidates. In particular, the Company’s remuneration offering must
pool of candidates with the requisite international and sector experience necessary to navigate the
directors’ countries of residence. Four of the Company’s non-executive directors live outside New
Notice of Meeting.
•
•
9
9
9
45
ANNUAL REPORT 2023
remuneration offering in order to retain and attract high calibre candidates. In particular, the Company’s
balance New Zealand and Australian market practices with the higher quantum of fees required to
remuneration offering must balance New Zealand and Australian market practices with the higher quantum
compete for director talent in the US, the Company’s key commercial focus area.
of fees required to compete for director talent in the US, the Company’s key commercial focus area.
•
The review also identified areas which necessitate prompt attention so a proposal to increase the Company’s
The review also identified areas of the current non-executive directors’ fees which necessitate prompt
maximum cash fee pool will be included on the agenda for the Company’s 2023 Annual General Meeting.
attention, so a proposal to increase the Company’s maximum cash fee pool will be included in the agenda
Details will be provided in the accompanying Notice of Meeting.
for the Company’s 2023 Annual General Meeting. Details will be provided in the accompanying Notice
of Meeting.
Please refer to section headed ‘Director remuneration details’ for information on the non-executive directors’
Please refer to section headed ‘Director remuneration details’ for information on the non-executive directors’
remuneration during the 2023 financial year. AROA does not provide superannuation arrangements or
remuneration during the 2023 financial year. Each non-executive director is also entitled to be paid for
retirement allowances to its non-executive directors. Each non-executive director is also entitled to be paid for
all reasonable travel, accommodation and other expenses incurred by that director in connection with
all reasonable travel, accommodation and other expenses incurred by that director in connection with their
their attendance at meetings or otherwise in connection with AROA’s business. AROA does not provide
attendance at meetings or otherwise in connection with AROA’s business.
superannuation arrangements or retirement allowances to its non-executive directors.
Please also refer to the section headed ‘Equity instrument disclosures: FY23 option vestings’ for information
Please also refer to the section headed ‘Equity instrument disclosures: FY23 option vestings’ for information
relating to share options previously granted to the non-executive directors which vested in the 2023 financial
relating to share options previously granted to the non-executive directors which vested in the 2023 financial
year.
year.
Director remuneration details
Aggregated
The Directors’ remuneration (in NZ$) for the year ended 31 March 2023 is set out below.
Short term benefits
Post-employment
benefits
Long term
incentives
Name
Cash salaries and
fees (NZ$)*
Discretionary
annual variable
remuneration (cash
bonus) (NZ$)
Superannuation
(NZ$)
Options**
(NZ$)
Total (NZ$)
Jim McLean
$100,000
Steven Engle
$99,137
Philip McCaw
$72,300
John Pinion
$99,137
John Diddams
$79,353
Dr. Catherine Mohr****
$41,975
-
-
-
-
-
-
-
-
-
-
-
-
$68,563
$168,563
$48,231
$147,368
$48,231
$120,531
$48,231
$147,368
$49,036
$128,389
-
$41,975
Brian Ward
$552,368
$156,555***
$23,481
$469,679
$1,252,378
TOTAL
$1,044,270
$156,555
$23,481
$731,971
$2,006,572
* Fees for directors who are not resident in NZ are fixed in their local currency, and converted into NZ$ here for
disclosure purposes.
** These amounts reflect the non-cash accounting cost of all share options held by the relevant director during the
financial year. It includes the cost of share options vesting during the financial year and the cost of share options
granted during the financial year as previously approved by shareholders at the Company’s 2022 AGM. No cash
payments are made in relation to these. The amounts are calculated based on NZ IFRS 2 – Share-based Payment.
*** Brian achieved 71% against target for AROA’s FY23 performance. He had received discretionary annual variable
remuneration of NZ$206,850 for AROA’s performance in the previous financial year (representing 99% achievement
against target).
**** Dr. Mohr joined the AROA Board from 1 November 2022.
NB, the table above does not include payments of reasonable travel, accommodation and other expenses
incurred by directors in connection with their attendance at meetings or otherwise in connection with AROA’s
business.
46
10
Vesting
Vesting
Vesting
Vesting
date
Vesting
Vesting
Vesting
Vesting
date
date
Vesting
date
date
date
Vesting
date
Vesting
date
Vesting
date
1 March
Vesting
date
Vesting
date
Vesting
1 March
1 March
Vesting
date
2024
Vesting
1 March
1 March
date
1 March
date
1 March
2024
2024
1 March
date
date
2024
2024
1 March
date
2024
1 March
1 March
2024
2024
1 March
1 March
2024
1 March
1 March
1 March
2024
2025
1 March
1 March
1 March
2024
2024
1 March
1 March
1 March
2024
1 March
1 March
2025
2025
1 March
2025
2025
2024
1 March
2024
2024
2025
Vesting
1 March
1 March
2025
2024
2025
1 March
Vesting
1 March
2025
1 March
1 March
1 March
Vesting
date
2025
2026
1 March
1 March
1 March
2025
2025
date
1 March
1 March
1 March
2025
1 March
1 March
2026
2026
1 March
date
2026
2026
2025
1 March
2025
2025
2026
1 March
1 March
2026
2025
2026
1 March
1 March
1 March
2026
1 March
1 March
1 March
1 March
2026
2024
1 March
1 March
1 March
2026
2026
1 March
1 March
2024
1 March
1 March
2026
1 March
1 March
2024
2024
1 March
2024
2024
2024
2026
1 March
2026
2026
2024
2024
1 March
1 March
2024
2026
2024
1 March
1 March
1 March
2024
1 March
1 March
1 March
1 March
2024
2025
1 March
1 March
1 March
2024
2024
1 March
1 March
2025
1 March
1 March
Vesting
2024
1 March
1 March
2025
2025
1 March
2025
2025
2025
2024
1 March
2024
2024
2025
2025
1 March
1 March
2025
date
2024
2025
1 March
1 March
1 March
2025
1 March
1 March
1 March
1 March
2025
2026
1 March
1 March
1 March
2025
2025
1 March
1 March
2026
1 March
1 March
2025
1 March
1 March
2026
2026
1 March
2026
2026
2026
2025
1 March
1 March
2025
2025
2026
2026
1 March
1 March
2026
2025
2026
1 March
1 March
1 March
2026
2024
1 March
1 March
1 March
1 March
2026
2024
1 March
1 March
1 March
2026
2026
1 March
1 March
2024
1 March
1 March
2026
1 March
1 March
2024
2024
1 March
2024
2024
2024
2026
1 March
1 March
2026
2026
2024
2024
1 March
1 March
2024
2026
2024
1 March
1 March
1 March
2024
2025
1 March
1 March
1 March
1 March
2024
2025
1 March
1 March
1 March
2024
2024
1 March
1 March
2025
1 March
1 March
2024
1 March
1 March
2025
2025
1 March
2025
2025
2025
2024
1 March
1 March
2024
2024
2025
2025
1 March
1 March
2025
2024
2025
1 March
1 March
1 March
2025
2026
1 March
1 March
1 March
1 March
2025
2026
1 March
1 March
1 March
2025
2025
1 March
1 March
2026
1 March
1 March
2025
1 March
1 March
2026
2026
1 March
2026
2026
2026
2025
1 March
1 March
2025
2025
2026
2026
1 March
1 March
2026
2025
2026
1 March
1 March
1 March
2026
2024
1 March
1 March
1 March
1 March
2026
2024
1 March
1 March
1 March
2026
2026
1 March
1 March
2024
1 March
1 March
2026
1 March
1 March
2024
2024
1 March
2024
2024
2024
2026
1 March
1 March
2026
2026
2024
2024
1 March
2024
1 March
2026
2024
1 March
1 March
1 March
2024
2025
1 March
1 March
1 March
1 March
2024
2025
1 March
1 March
1 March
2024
2024
1 March
1 March
2025
1 March
1 March
2024
1 March
1 March
2025
2025
1 March
2025
2024
2025
2025
1 March
1 March
2024
2024
2025
2025
1 March
1 March
2025
2024
2025
1 March
1 March
1 March
2025
2026
1 March
1 March
1 March
1 March
2025
2026
1 March
1 March
1 March
2025
2025
1 March
1 March
2026
1 March
1 March
2025
1 March
1 March
2026
2026
1 March
2026
2026
2026
2025
1 March
1 March
2025
2025
2026
2026
1 March
31 March
2026
2025
2026
1 March
1 March
1 March
2026
2024
1 March
31 March
31 March
1 March
2026
2023
31 March
31 March
1 March
2026
2026
1 March
1 March
2024
31 March
1 March
2026
31 March
1 March
2023
2023
31 March
2024
2023
2023
2026
31 March
1 March
2026
2026
2023
2024
31 March
1 March
2023
2026
2023
31 March
31 March
1 March
2023
2025
31 March
1 March
1 March
1 March
2023
2024
1 March
1 March
31 March
2023
2023
31 March
31 March
2025
1 March
1 March
2023
1 March
31 March
2024
2024
1 March
2025
2024
2024
2023
1 March
1 March
2023
2023
2024
2025
1 March
1 March
2024
2023
2024
1 March
1 March
1 March
2024
2026
1 March
1 March
1 March
1 March
2024
2025
1 March
1 March
1 March
2024
2024
1 March
1 March
2026
1 March
1 March
2024
1 March
1 March
2025
2025
1 March
2026
2025
2025
2024
1 March
1 March
2024
2024
2025
2026
1 March
1 March
2025
2024
2025
1 March
1 March
31 March
2025
2024
1 March
1 March
1 March
31 March
2025
2026
1 March
1 March
1 March
2025
2025
1 March
1 March
2023
1 March
31 March
2025
1 March
1 March
2026
2026
1 March
2023
2026
2026
2025
1 March
1 March
2025
2025
2026
2023
1 March
31 March
2026
2025
2026
1 March
1 March
1 March
2026
2025
1 March
31 March
31 March
1 March
2026
2024
31 March
31 March
1 March
2026
2026
1 March
1 March
2024
31 March
1 March
2026
31 March
1 March
2024
2024
31 March
2024
2024
2024
2026
31 March
1 March
2026
2026
2024
2024
31 March
2024
2026
2024
31 March
31 March
1 March
2024
2026
31 March
31 March
1 March
2024
31 March
2024
2024
31 March
31 March
31 March
31 March
2025
1 March
2025
2024
31 March
31 March
31 March
2025
2024
31 March
31 March
31 March
2024
2025
2025
2024
2025
31 March
2024
2025
2025
31 March
1 March
2025
2023
31 March
2025
2025
1 March
31 March
31 March
2025
31 March
31 March
2026
1 March
2025
31 March
2026
2025
2025
31 March
31 March
31 March
31 March
1 March
2026
2025
31 March
31 March
31 March
2026
2025
31 March
31 March
2025
2026
2026
2025
31 March
31 March
2024
2025
2026
2026
31 March
31 March
2026
31 March
2026
2024
31 March
2026
31 March
31 March
2026
2024
31 March
1 March
2026
31 March
2024
2026
2026
31 March
31 March
2026
31 March
2025
2026
2026
2026
31 March
2026
31 March
2025
31 March
1 March
2025
2025
2026
31 March
31 March
31 March
2026
31 March
2026
2024
2026
Number
Number
Number
Number
granted
Number
Number
Number
Number
granted
granted
Number
granted
granted
granted
Number
granted
Number
granted
Number
granted
89,543
Number
granted
Number
granted
Number
89,543
89,543
Number
granted
Number
89,543
89,543
granted
89,543
granted
89,543
89,543
granted
granted
89,543
granted
89,543
86,056
89,543
89,543
89,543
86,056
86,056
86,056
86,056
89,543
89,543
89,543
86,056
86,056
89,543
86,056
86,056
Number
86,056
83,330
86,056
Number
86,056
86,056
83,330
83,330
Number
granted
83,330
83,330
86,056
granted
86,056
86,056
83,330
83,330
86,056
83,330
granted
83,330
83,330
59,695
83,330
83,330
89,543
83,330
59,695
59,695
89,543
59,695
59,695
83,330
83,330
83,330
59,695
89,543
59,695
83,330
59,695
59,695
59,695
57,371
59,695
59,695
86,056
59,695
57,371
57,371
86,056
57,371
57,371
59,695
59,695
59,695
57,371
86,056
Number
57,371
59,695
57,371
57,371
57,371
55,554
granted
57,371
57,371
83,330
57,371
55,554
55,554
83,330
55,554
55,554
57,371
57,371
57,371
55,554
83,330
55,554
57,371
55,554
55,554
89,543
55,554
59,695
55,554
55,554
59,695
55,554
59,695
59,695
59,695
59,695
59,695
55,554
55,554
55,554
59,695
59,695
59,695
55,554
59,695
59,695
86,056
59,695
57,371
59,695
59,695
57,371
59,695
57,371
57,371
57,371
57,371
57,371
59,695
59,695
59,695
57,371
57,371
57,371
59,695
57,371
57,371
83,330
57,371
55,554
57,371
57,371
55,554
57,371
55,554
55,554
55,554
55,554
55,554
57,371
57,371
57,371
55,554
55,554
55,554
57,371
55,554
55,554
59,695
55,554
59,695
55,554
55,554
59,695
55,554
59,695
59,695
59,695
59,695
59,695
55,554
55,554
55,554
59,695
59,695
59,695
55,554
59,695
59,695
57,371
59,695
57,371
59,695
59,695
57,371
59,695
57,371
57,371
57,371
59,695
57,371
57,371
59,695
59,695
57,371
57,371
57,371
59,695
57,371
57,371
55,554
57,371
55,554
57,371
57,371
55,554
57,371
55,554
55,554
55,554
55,554
55,554
57,371
57,371
57,371
55,554
55,554
55,554
57,371
55,554
55,554
59,695
55,554
20,452
55,554
55,554
59,695
55,554
20,452
20,452
59,695
20,452
20,452
55,554
55,554
55,554
20,452
59,695
20,452
55,554
20,452
20,452
57,371
20,452
59,695
20,452
20,452
57,371
20,452
59,695
59,695
57,371
59,695
59,695
20,452
20,452
20,452
59,695
57,371
59,695
20,452
59,695
59,695
55,554
59,695
57,371
59,695
59,695
55,554
59,695
57,371
57,371
55,554
57,371
57,371
59,695
59,695
59,695
57,371
55,554
57,371
59,695
57,371
57,371
59,695
57,371
55,554
57,371
57,371
20,452
57,371
55,554
55,554
20,452
55,554
55,554
57,371
57,371
57,371
55,554
20,452
55,554
57,371
55,554
55,554
57,371
55,554
324,847
55,554
55,554
59,695
55,554
324,847
324,847
59,695
324,847
324,847
55,554
55,554
55,554
324,847
59,695
608,805
324,847
55,554
324,847
324,847
55,554
608,805
608,805
324,847
608,805
608,805
324,847
324,847
57,371
608,805
324,848
324,847
608,805
608,805
57,371
324,847
608,805
324,847
324,848
324,848
324,847
57,371
608,805
324,847
324,848
324,848
608,805
608,805
324,848
20,452
608,805
608,805
324,848
324,848
608,805
324,848
608,805
608,805
608,805
608,805
55,554
324,848
608,805
608,805
608,805
55,554
324,848
324,848
608,805
254,972
324,848
608,805
55,554
608,805
324,848
608,805
324,848
254,972
254,972
324,848
59,695
608,805
324,848
254,972
254,972
608,805
608,805
254,972
608,805
254,972
324,847
254,972
453,206
608,805
254,972
324,847
608,805
608,805
254,972
608,805
453,206
453,206
324,847
254,972
254,972
453,206
453,206
254,972
608,805
453,206
57,371
453,206
254,972
453,206
608,805
254,972
254,972
453,206
254,972
608,805
453,206
453,206
453,206
324,848
453,206
324,848
453,206
453,206
453,206
324,848
55,554
453,206
608,805
608,805
608,805
254,972
254,972
324,847
254,972
453,206
608,805
453,206
453,206
324,848
Share-based compensation
Share-based compensation
Share-based compensation
Share-based compensation
Share-based compensation
Share-based compensation
Share-based compensation
Share-based compensation
Share-based compensation
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share-based compensation
Share-based compensation
Share-based compensation
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share-based compensation
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share-based compensation
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share-based compensation
Share-based compensation
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share-based compensation
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
received at the 2022 AGM.
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
received at the 2022 AGM.
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
Last exercise
Performance
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
received at the 2022 AGM.
received at the 2022 AGM.
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
Last exercise
Performance
Last exercise
Performance
received at the 2022 AGM.
Share-based compensation
date
hurdle (Y/N)
Last exercise
Performance
Last exercise
Performance
received at the 2022 AGM.
Share-based compensation
Last exercise
Performance
received at the 2022 AGM.
received at the 2022 AGM.
Last exercise
Performance
date
hurdle (Y/N)
date
hurdle (Y/N)
Last exercise
Performance
received at the 2022 AGM.
Share-based compensation
date
hurdle (Y/N)
date
hurdle (Y/N)
Last exercise
Performance
date
hurdle (Y/N)
Last exercise
Performance
date
hurdle (Y/N)
date
hurdle (Y/N)
Last exercise
Performance
Last exercise
Performance
date
hurdle (Y/N)
29 February
N
Last exercise
Performance
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
date
hurdle (Y/N)
Last exercise
Performance
date
hurdle (Y/N)
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
date
hurdle (Y/N)
Last exercise
Performance
29 February
N
29 February
N
Last exercise
Performance
2028
date
hurdle (Y/N)
Last exercise
Performance
29 February
N
29 February
N
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
29 February
N
date
hurdle (Y/N)
29 February
N
date
hurdle (Y/N)
2028
2028
date
hurdle (Y/N)
29 February
N
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
date
hurdle (Y/N)
2028
2028
29 February
N
2028
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
29 February
N
2028
received at the 2022 AGM.
2028
29 February
N
29 February
N
received at the 2022 AGM.
2028
29 February
N
2028
received at the 2022 AGM.
29 February
N
2028
2028
29 February
N
29 February
N
2028
29 February
N
Share-based compensation
2028
2028
2028
Last exercise
Performance
2028
Last exercise
Performance
date
hurdle (Y/N)
Performance
Last exercise
date
hurdle (Y/N)
date
hurdle (Y/N)
Share options issued to directors during the financial year ended 31 March 2023 are set out below. In
29 February
N
29 February
N
accordance with the requirements of ASX Listing Rule 10.14, the options were issued with shareholder approval
29 February
N
29 February
N
29 February
N
2028
29 February
N
29 February
N
2028
29 February
N
29 February
N
29 February
N
2028
2028
29 February
N
2028
2028
2028
29 February
N
2028
2028
N
29 February
2028
2028
29 February
N
29 February
N
2028
29 February
N
2028
29 February
N
2028
2028
29 February
N
29 February
N
Last exercise
Performance
2028
29 February
N
2028
2028
2028
date
hurdle (Y/N)
2028
Effective
Effective
Effective
Effective
grant date
Effective
Effective
Effective
Effective
grant date
grant date
Effective
grant date
grant date
grant date
Effective
grant date
Effective
grant date
Effective
grant date
1 March
Effective
grant date
Effective
grant date
Effective
1 March
1 March
Effective
grant date
2023
Effective
1 March
1 March
grant date
1 March
grant date
1 March
2023
2023
1 March
grant date
grant date
2023
2023
1 March
grant date
2023
1 March
2023
2023
1 March
1 March
2023
1 March
2023
1 March
2023
2023
1 March
1 March
2023
1 March
2023
2023
2023
Effective
2023
Effective
Effective
grant date
grant date
grant date
1 March
1 March
1 March
1 March
1 March
2023
1 March
1 March
2023
1 March
1 March
1 March
2023
2023
1 March
2023
2023
2023
1 March
2023
2023
1 March
2023
2023
1 March
1 March
2023
1 March
2023
1 March
2023
2023
1 March
1 March
Effective
2023
1 March
2023
2023
2023
grant date
2023
Exercise
Exercise
Exercise
price per
Exercise
Exercise
Exercise
Exercise
price per
price per
Exercise
option (A$)
price per
price per
Exercise
price per
Exercise
price per
option (A$)
option (A$)
price per
Exercise
Exercise
option (A$)
option (A$)
price per
$1.083
Exercise
option (A$)
price per
option (A$)
Exercise
option (A$)
price per
price per
Exercise
$1.083
$1.083
Exercise
option (A$)
price per
Exercise
$1.083
$1.083
option (A$)
$1.083
price per
option (A$)
$1.083
option (A$)
price per
price per
$1.083
option (A$)
price per
$1.083
option (A$)
$1.083
option (A$)
option (A$)
$1.083
$1.083
option (A$)
$1.083
$1.083
$1.083
$1.083
$1.083
Exercise
Exercise
price per
Exercise
price per
option (A$)
price per
option (A$)
$1. 083
option (A$)
$1.083
$1. 083
$1. 083
$1.083
$1. 083
$1. 083
$1. 083
$1.083
$1. 083
$1. 083
$1. 083
$1. 083
$1. 083
$1. 083
$1. 083
$1. 083
$1. 083
$1. 083
Exercise
$1. 083
price per
option (A$)
Jim
Jim
Jim
McLean
Jim
Jim
Jim
Jim
McLean
McLean
Jim
McLean
McLean
Jim
McLean
Jim
McLean
McLean
Jim
Jim
McLean
Jim
McLean
Jim
McLean
McLean
Jim
Jim
McLean
Jim
McLean
McLean
McLean
McLean
Steve
Jim
Steve
Steve
Jim
Engle
Steve
Steve
McLean
Steve
Jim
Steve
Engle
Engle
Steve
McLean
Engle
Engle
Steve
Engle
McLean
Steve
Engle
Engle
Steve
Steve
Engle
Steve
Engle
Steve
Engle
Engle
Steve
Steve
Engle
Steve
Engle
Engle
Engle
Engle
received at the 2022 AGM.
Jim
Philip
Steve
McLean
Philip
Philip
Steve
McCaw
Philip
Philip
Engle
Philip
Steve
Philip
McCaw
McCaw
Philip
Engle
McCaw
McCaw
Philip
McCaw
Engle
Philip
McCaw
McCaw
Philip
Philip
McCaw
Philip
McCaw
Philip
McCaw
McCaw
Philip
Philip
McCaw
Philip
McCaw
McCaw
McCaw
McCaw
Steve
John
Philip
Engle
John
John
Philip
Pinion
John
John
McCaw
John
Philip
John
Pinion
Pinion
John
McCaw
Pinion
Pinion
John
Pinion
McCaw
John
Pinion
Pinion
John
John
Pinion
John
Pinion
John
Pinion
Pinion
John
John
Pinion
John
Pinion
Pinion
Pinion
Pinion
1 March
1 March
1 March
2023
1 March
1 March
1 March
2023
1 March
1 March
2023
1 March
1 March
1 March
2023
2023
1 March
2023
2023
2023
1 March
2023
2023
1 March
2023
2023
1 March
1 March
2023
1 March
2023
1 March
2023
2023
1 March
1 March
2023
1 March
2023
2023
2023
2023
1 March
1 March
1 March
2023
1 March
1 March
1 March
1 March
1 March
2023
1 March
1 March
2023
1 March
1 March
2023
1 March
2023
2023
2023
1 March
2023
2023
1 March
1 March
2023
2023
1 March
2023
1 March
2023
1 March
1 March
2023
1 March
2023
2023
2023
2023
2023
2023
2023
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
$1.083
$1.083
$1. 083
$1.083
$1.083
$1. 083
$1.083
$1.083
$1.083
$1. 083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1. 083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
29 February
29 February
29 February
2028
29 February
29 February
29 February
2028
29 February
29 February
2028
29 February
29 February
29 February
2028
2028
29 February
2028
2028
2028
29 February
2028
2028
29 February
2028
2028
29 February
29 February
2028
29 February
2028
29 February
2028
2028
29 February
29 February
2028
29 February
2028
2028
2028
2028
29 February
29 February
29 February
2028
29 February
29 February
29 February
2028
29 February
29 February
2028
29 February
29 February
29 February
2028
2028
29 February
2028
2028
2028
29 February
2028
2028
29 February
2028
2028
29 February
29 February
2028
29 February
2028
29 February
2028
2028
29 February
29 February
2028
29 February
2028
2028
2028
2028
Philip
John
John
McCaw
John
John
John
Diddams
John
John
Pinion
John
John
John
Diddams
Diddams
John
Pinion
Diddams
Diddams
John
Diddams
Pinion
John
Diddams
Diddams
John
John
Diddams
John
Diddams
John
Diddams
Diddams
John
John
Diddams
John
Diddams
Diddams
Diddams
Diddams
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
Y
N
N
N
Y
Y
N
Y
Y
N
N
Y
N
N
Y
Y
N
Y
N
N
N
N
Y
N
N
N
Y
Y
N
N
Y
Y
N
N
Y
N
Y
Y
Y
Y
N
Y
Y
Y
N
N
Y
N
N
Y
Y
N
Y
N
N
N
N
N
Y
N
N
N
Y
Y
N
Y
N
N
N
Y
Y
N
N
Y
Y
N
Y
Y
Y
N
N
N
Y
Y
N
Y
Y
Y
N
Y
Y
N
N
Y
N
Y
Y
Y
Y
N
Y
N
Y
Y
Y
N
Y
Y
Y
Y
N
N
N
N
Y
Y
Y
Y
N
John
John
Pinion
John
Diddams
John
Diddams
Diddams
Brian
Brian
Brian
Ward
Brian
Brian
Brian
Brian
Ward
Ward
Brian
Ward
Ward
Brian
Ward
Brian
Ward
Ward
Brian
Brian
Ward
Brian
Ward
Brian
Ward
Ward
Brian
Brian
Ward
Brian
Ward
John
Ward
Ward
Ward
Diddams
1 March
1 December
1 March
2023
1 December
1 December
1 March
2022
1 December
1 December
1 December
1 March
1 December
2022
2022
1 December
2023
2022
2022
1 December
2022
2023
1 December
1 March
2022
2022
1 December
1 December
2023
2022
1 December
1 March
1 March
2022
2023
1 March
1 March
1 December
2022
2022
1 December
1 December
1 March
2022
1 March
1 December
2023
2023
1 March
2023
2023
2022
1 March
2022
2022
2023
1 March
2023
2022
2023
1 March
1 March
2023
1 March
2023
1 March
2023
2023
1 March
1 March
2023
1 March
2023
1 March
2023
2023
2023
1 December
1 December
2023
2022
1 December
2022
2022
14
1 March
14
14
1 March
November
14
14
2023
14
1 March
14
November
November
14
2023
2022
November
November
14
November
2023
14
November
2022
2022
November
14
14
2022
2022
November
14
2022
November
2022
14
2022
November
November
14
14
2022
November
14
2022
November
2022
1 December
2022
November
November
2022
November
2022
2022
2022
2022
2022
1 March
1 March
1 March
1 March
2023
1 March
1 March
1 March
1 March
2023
2023
14
1 March
2023
2023
2023
1 March
14
2023
1 March
2023
November
14
2023
1 March
1 March
2023
November
1 March
2023
2022
1 March
November
2023
2023
1 March
1 March
2022
2023
1 March
2023
2022
2023
2023
2023
29 February
30 November
29 February
2028
30 November
30 November
29 February
2027
30 November
30 November
2028
30 November
29 February
30 November
2027
2027
30 November
2028
2027
2027
30 November
2027
2028
30 November
29 February
2027
2027
30 November
30 November
2027
30 November
29 February
29 February
2027
2028
29 February
29 February
30 November
2027
2027
30 November
30 November
29 February
2027
29 February
30 November
2028
2028
29 February
2028
2028
2027
29 February
2027
2027
2028
29 February
2028
2027
2028
29 February
29 February
2028
29 February
2028
29 February
2028
2028
29 February
29 February
2028
29 February
2028
29 February
2028
2028
2028
30 November
2028
30 November
2027
30 November
2027
2027
13 November
29 February
13 November
13 November
29 February
2027
13 November
13 November
2028
13 November
29 February
13 November
2027
2027
13 November
2028
2027
2027
13 November
2027
2028
13 November
2027
2027
13 November
13 November
2027
13 November
2027
13 November
2027
2027
13 November
13 November
2027
13 November
2027
30 November
2027
2027
2027
2027
29 February
29 February
29 February
29 February
2028
29 February
29 February
29 February
29 February
2028
2028
13 November
Brian
29 February
2028
2028
2028
29 February
13 November
Brian
2028
29 February
2028
2027
Ward
13 November
Brian
2028
29 February
29 February
2028
2027
Ward
29 February
2028
29 February
Ward
2027
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
2028
2028
29 February
29 February
2028
29 February
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
2028
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
2028
options are subject to performance conditions based on shareholder returns. The full number of these
2028
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
2028
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
options are subject to performance conditions based on shareholder returns. The full number of these
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
options are subject to performance conditions based on shareholder returns. The full number of these
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
options are subject to performance conditions based on shareholder returns. The full number of these
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
options are subject to performance conditions based on shareholder returns. The full number of these
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
options are subject to performance conditions based on shareholder returns. The full number of these
29 February
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
options are subject to performance conditions based on shareholder returns. The full number of these
29 February
13 November
Brian
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
options are subject to performance conditions based on shareholder returns. The full number of these
options are subject to performance conditions based on shareholder returns. The full number of these
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
options are subject to performance conditions based on shareholder returns. The full number of these
2028
29 February
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
2028
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
2027
Ward
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
2028
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
options are subject to performance conditions based on shareholder returns. The full number of these
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
options are subject to performance conditions based on shareholder returns. The full number of these
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
options are subject to performance conditions based on shareholder returns. The full number of these
11
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
11
11
29 February
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
11
11
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
11
11
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
11
2028
11
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
11
11
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
11
11
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
11
11
11
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
11
As noted above, to ensure alignment with shareholder value, a significant portion of Brian Ward’s share
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
options are subject to performance conditions based on shareholder returns. The full number of these
$1.083
$1.07
$1.083
$1.07
$1.07
$1.083
$1.07
$1.07
$1.07
$1.083
$1.07
$1.07
$1.07
$1.07
$1.083
$1.07
$1.07
$1.07
$1.083
$1.083
$1.083
$1.083
$1.07
$1.07
$1.07
$1.083
$1.083
$1.07
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.083
$1.07
$1.07
$1.07
$1.165
$1.083
$1.165
$1.165
$1.083
$1.165
$1.165
$1.165
$1.083
$nil
$1.165
$1.165
$1.165
$nil
$nil
$1.165
$nil
$nil
$1.165
$1.165
$nil
$1.165
$1.165
$nil
$nil
$1.165
$nil
$1.165
$1.165
$1.165
$1.165
$nil
$1.165
$1.165
$1.165
$nil
$nil
$1.165
$1.07
$nil
$nil
$1.165
$1.165
$nil
$1.165
$nil
$nil
$nil
$nil
$1.165
$nil
$nil
$nil
$1.165
$1.165
$nil
$1.165
$1.165
$nil
$nil
$1.165
$nil
$1.165
$1.165
$1.165
$1.165
$1.083
$nil
$1.165
$1.165
$1.165
$nil
$nil
$1.165
$nil
$1.165
$1.165
$1.165
$nil
$nil
$1.165
$1.165
$nil
$nil
$1.165
$nil
$nil
$nil
$1.165
$1.165
$1.165
$nil
$nil
$1.165
$nil
$nil
$nil
$1.165
$nil
$nil
$1.165
$1.165
$nil
$1.165
$nil
$nil
$nil
$nil
$1.165
$nil
$1.165
$nil
$nil
$nil
$1.165
$nil
$nil
$nil
$nil
$1.165
$1.165
$1.165
$1.165
$nil
$nil
$nil
$nil
$1.165
1 March
1 March
14
2023
1 March
2023
November
2023
2022
31 March
2025
31 March
2026
1 March
2023
254,972
608,805
453,206
$1.165
$nil
$nil
N
Y
Y
options will only vest if the Company’s performance satisfies an ambitious ‘stretch’ target. Company
performance has to satisfy a minimum ‘entry’ criterion, otherwise none of the options will vest. If performance
11
11
11
meets that ‘entry’ criterion, 25% of the options will vest increasing on a linear scale up to a maximum of 50% if
the specified ‘target’ criteria is satisfied. The performance conditions are detailed below.
11
47
ANNUAL REPORT 2023
Performance Conditions9
Total % of performance
options eligible to vest
50+ percentile Company TSR against a comparator group comprising the
Entry
top 50 (by market capitalisation) ASX-listed healthcare companies as at
25%
31 March 2022 (TSR Ranking)
Target
75+ percentile TSR Ranking
50%
1) 75+ percentile TSR Ranking;
and
2) Threshold 20-day VWAP as at the applicable vesting date. These
Stretch
are as follows:
• For 31 March 2024, A$1.50 (112% growth on 31 March 2022 20-
100%
day VWAP)
• For 31 March 2025, A$1.85 (162% growth on 31 March 2022 20-
day VWAP)
• For 31 March 2026, A$2.25 (219% growth on 31 March 2022 20-
day VWAP)
Equity instrument disclosures
Options holdings
The number of share options held by each director (or their nominee) during the financial year ended 31 March
2023 is set out below. The table does not include Dr. Mohr, who joined the Board from 1 November 2022 and
does not hold any share options.
Balance as at
1 April 2022
Granted as
compensation
Exercised
Balance at the end
of the year
Vested and
exercisable
Unvested
Jim McLean
204,800
258,929
(102,400)
361,329
102,400
258,929
Steven Engle
879,000
172,620
-
1,051,620
879,000
172,620
Philip McCaw
163,850
172,620
(81,925)
254,545
81,925
172,620
John Pinion
879,000
172,620
-
1,051,620
879,000
172,620
John Diddams
165,000
193,072
(165,000)
193,072
20,452
172,620
Brian Ward
3,132,525
2,575,483
-
5,708,008
2,088,350
3,619,658
TOTAL
5,424,175
3,545,344
(349,325)
8,620,194
4,051,127
4,569,067
9 The Board reserves the right to adjust these performance conditions or vesting outcomes to ensure that Mr.
Ward is neither penalised nor provided with a windfall benefit arising from matters outside his control.
48
12
FY23 option vestings
FY23 option vestings
The following share options granted to the directors or their nominees vested in the financial year ended 31
The following share options granted to the directors or their nominees vested in the financial year ended 31
March 2023 (no disclosure for Dr. Mohr, who joined the Board from 1 November 2022 and does not hold any
March 2023 (no disclosure for Dr. Mohr, who joined the Board from 1 November 2022 and does not hold any
share options).
share options).
Financial year in
Financial year in
which granted
which granted
Number of
options vested
Number of
options vested
Exercise price (A$)
Exercise price (A$)
Jim McLean
Jim McLean
FY21
FY21
102,400
102,400
Steven Engle
Steven Engle
FY21
FY21
Philip McCaw
Philip McCaw
FY21
FY21
John Pinion
John Pinion
FY21
FY21
81,925
81,925
81,925
81,925
81,925
81,925
John Diddams
John Diddams
FY20
FY20
165,000
165,000
John Diddams
John Diddams
FY23
FY23
20,452
20,452
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.75
0.11
0.11
1.07
1.07
Option expiry
Option expiry
23 July 2025
23 July 2025
23 July 2025
23 July 2025
23 July 2025
23 July 2025
23 July 2025
23 July 2025
30 November 2029
30 November 2029
30 November 2027
30 November 2027
The directors did not forfeit any options in FY23.
The directors did not forfeit any options in FY23.
Considering the significant opportunities associated with the Enivo™ platform and in order to further
Considering the significant opportunities associated with the Enivo™ platform and in order to further
accelerate commercialisation, the Board resolved during the year to refine AROA’s Enivo development
accelerate commercialisation, the Board resolved during the year to refine AROA’s Enivo development
strategy. This impacted the vesting conditions attaching to 1,044,175 share options granted to Brian Ward
strategy. This impacted the vesting conditions attaching to 1,044,175 share options granted to Brian Ward
(and 218,100 share options granted to James Agnew, CFO) in FY21. To ensure alignment and in accordance
(and 218,100 share options granted to James Agnew, CFO) in FY21. To ensure alignment and in accordance
with its discretion under the option plan, the Board resolved to refine the vesting conditions as follows (with
with its discretion under the option plan, the Board resolved to refine the vesting conditions as follows (with
no change in the exercise price or expiry date of any of the options):
no change in the exercise price or expiry date of any of the options):
• Vesting date: upon satisfaction of the performance hurdles between 31 March 2022 and 30 June 2025; and
• Vesting date: upon satisfaction of the performance hurdles between 31 March 2022 and 30 June 2025; and
• Performance conditions: US regulatory clearance of the first iteration of the Enivo product and completion
• Performance conditions: US regulatory clearance of the first iteration of the Enivo product and completion
of the first “in human” study with the Enivo product.
of the first “in human” study with the Enivo product.
13
13
49
ANNUAL REPORT 2023
Shareholdings
The number of ordinary shares in the Company held during the financial year ended 31 March 2023 by each
director, including their personally related parties, is set out below.
Purchases or, as
specified, other
additions
Balance at
the end of
the year
Balance as at
1 April 2022
Received during
the year on
exercise of
options
2,674,708
2,572,308
102,400*
226,553
-
19,669,229
81,925*
-
-
-
-
472,500
977,550
-
165,000*
50,000
Jim McLean10
Steven Engle
Philip McCaw11
John Pinion
John Diddams12
Dr Catherine Mohr
-
Brian Ward13
33,125,800
-
-
-
-
2,777,108
2,674,708
226,553
19,751,154
472,500
1,192,550
-
33,125,800
* Shares issued to Jim McLean, Phil McCaw and John Diddams upon the exercise of 102,400 share options (exercise
price of A$0.75 each), 81,925 share options (exercise price of A$0.75 each) and 165,000 share options (exercise price
of A$0.1075 each) respectively. The shares were issued in accordance with the exception under ASX Listing Rule
10.16(c) as the share options were issued prior to AROA’s listing on the ASX and the requisite information was
disclosed in AROA’s IPO Prospectus.
End of Remuneration Report
This Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a resolution of the
Board.
JJiimm MMccLLeeaann
Independent Chair of the Board
10 As a director of Mesynthes Nominee Limited, as at 31 March 2023 Jim McLean also had an interest in 2,568,600 shares held by
Mesynthes Nominee Limited on bare trust for certain AROA employees until payment is received for such shares.
11 Phil McCaw holds his interest through McSyth Capital Investment Trust, of which he is one of 3 trustees and a beneficiary. Mr
McCaw also has an interest in shares held by the McSyth Charitable Foundation Trust, a registered charity of which he is one of 2
trustees. As a director of Mesynthes Nominee Limited, as at 31 March 2023 Mr McCaw also had an interest in 2,568,600 shares held
by Mesynthes Nominee Limited on bare trust for certain AROA employees until payment is received for such shares.
12 This includes interests in shares held by John Diddams’ related parties; Whitfield Investments Pty Ltd and Galdarn Pty Ltd.
13 Brian Ward holds his interest through Arawai No. 2 Trust, of which he is one of 3 trustees and a beneficiary.
50
14
52
DIRECTORS’ RESPONSIBILITY STATEMENT
For the year ended 31 March 2023
The Directors are pleased to present the consolidated financial statements of Aroa Biosurgery Limited and the
Group (“Group”) for the year ended 31 March 2023.
The Directors are responsible for the preparation, in accordance with New Zealand law and generally accepted
accounting practice, of financial statements which give a true and fair view of the financial position of the Group
as at 31 March 2023 and the results of their operations and cash flows for the year ended 31 March 2023.
The Directors consider that the consolidated financial statements of the Group have been prepared using
accounting policies appropriate to the Group’s circumstances, consistently applied and supported by reasonable
and prudent judgments and estimates and that all applicable New Zealand equivalents to International Financial
Reporting Standards have been followed.
The Directors have responsibility for ensuring that the proper accounting records have been kept which enable,
with reasonable accuracy, the determination of the financial position of the Group and enables them to ensure
that the financial statements comply with the Financial Reporting Act 2013.
The Directors have responsibility for the maintenance of a system of internal control designed to provide
reasonable assurance as to the integrity and reliability of financial reporting. The Directors consider that
adequate steps have been taken of safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
Approved for and on behalf of the Board of Directors on 31 May 2023.
Jim McLean - Chairman
Brian Ward – CEO
3
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
53
ANNUAL REPORT 2023
54
BDO Auckland
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF AROA BIOSURGERY LIMITED
Opinion
We have audited the consolidated financial statements of Aroa Biosurgery Limited (“the Company”)
and its subsidiaries (together, “the Group”), which comprise the consolidated statement of
financial position as at 31 March 2023, and consolidated statement of profit or loss and other
comprehensive income, consolidated statement of movements in equity and consolidated
statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at 31 March 2023, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”) and
International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand)
(“ISAs (NZ)”). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other than in our capacity as auditor we have no relationship with, or interests in, the Company or
any of its subsidiaries.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Recognition of revenue – TELA Bio revenue share
Key Audit Matter
How The Matter Was Addressed in Our Audit
The Group's largest customer is TELA Bio who is
the Group’s sales and distribution partner for
abdominal wall reconstruction, hernia repair
and breast reconstruction in North America and
Europe. The contract with TELA Bio entitles
the Group to an agreed percentage of TELA
Bio’s net sales. This revenue is considered to
be variable consideration (“revenue share”).
The consideration is variable since the
quantum of TELA Bio’s inventory that is
• We have evaluated Management’s
revenue recognition policy based on
our understanding of the contract with
TELA Bio and the requirements of NZ
IFRS15 - Revenue from contracts with
customers.
• We have obtained Management’s
calculations and accounting paper
prepared for the revenue share accrual
and evaluated the reasonableness of
key inputs and assumptions. The key
55
ANNUAL REPORT 2023
BDO Auckland
Recognition of revenue – TELA Bio revenue share
Key Audit Matter
How The Matter Was Addressed in Our Audit
inputs included sales history, 20%
revenue growth factor, expiry dates of
inventory held, and average selling
prices achieved by TELA Bio.
• We have obtained confirmation from
TELA Bio, confirming their stock
holding, sales history and the actual
revenue share for their sales made in
the year ended 31 March 2023.
• We have compared the key inputs and
assumptions with those used by
Management last year and considered
if these are indicative of Management
bias.
• We considered if the amount of
variable consideration estimated is
only recorded by the Group to the
extent that it is highly probable that a
significant reversal in the amount of
the cumulative revenue recognised will
not occur.
• We have reviewed the disclosures in
Notes 2 and 3 to the consolidated
financial statements, including the
revenue recognition policy, to the
requirements of the accounting
standard.
eventually sold and the price that it is sold at
are uncertain.
Variable consideration to be recognised is
estimated by using the expected value method.
The estimation is based on information that is
reasonably available to the Group which
incorporates key factors including sales history,
forecast revenue growth, expiry date of
inventory held, and average selling prices
achieved by TELA Bio. The amount of variable
consideration is only recorded by the Group to
the extent that it is highly probable that a
significant reversal in the amount of the
cumulative revenue recognised will not occur
when the uncertainty associated with the
variable consideration is subsequently
resolved. During the year ended 31 March
2023, Management changed their accounting
estimate for the TELA Bio revenue share to
include a 20% revenue growth factor as
disclosed in Note 2 Summary of significant
accounting policies of the consolidated
financial statements.
We consider this to be a key audit matter
because of the judgement involved in
determining the variable consideration and the
quantum of the accrued revenue of $11.07m.
Refer to Note 2 Summary of significant
accounting policies – change in accounting
estimates and Note 3 Revenue and segment
information of the consolidated financial
statements.
Goodwill impairment
Key Audit Matter
How The Matter Was Addressed in Our Audit
The Group has recognised goodwill on a
historical acquisition. The goodwill balance of
$5.538m at 31 March 2023 is subject to an
annual impairment test in accordance with NZ
IAS 36 - Impairment of Assets.
Management performed their impairment test,
by considering the recoverable amount of the
Cash Generating Unit (‘CGU’) (to which
goodwill is allocated) using a value in use
calculation. This calculation is complex and
subject to key inputs and assumptions such as
• We obtained an understanding of key
controls relating to the review and
approval of the impairment review.
• We obtained Management’s
impairment assessment including the
value in use calculation prepared for
the CGU. We evaluated and challenged
the key inputs and assumptions. The
key inputs included revenue growth
rates, terminal growth rate, gross
margins and discount rate.
56
BDO Auckland
Goodwill impairment
Key Audit Matter
How The Matter Was Addressed in Our Audit
discount rates and future cash flows, which
inherently include a degree of estimation
uncertainty and are prone to potential bias and
inconsistent application and therefore
considered to be a key audit matter.
Refer to Note 13 Intangible assets of the
consolidated financial statements.
• We assessed the accuracy of previous
forecasts to actual performance to
form a view on the reliability of
Management's forecasting ability and to
understand key differences between
historical actual versus forecast
performance.
• We engaged our internal valuation
experts to assess the methodology used
by Management in their value in use
calculation is in accordance with NZ
IAS 36 - Impairment of Assessments,
the accuracy of the model and to
assess the terminal growth rate and
discount rate based on our expert’s
market and valuation knowledge.
• We reviewed Management's sensitivity
analysis performed on key inputs and
assumptions to determine the extent to
which any changes would affect the
recoverable amount of the CGU. We
also considered and tested alternate
sensitivities.
• We compared the carrying value of the
CGU to the recoverable amount
determined by the value in use
calculation to identify any impairment
losses.
• We have reviewed the disclosures in
Note 13 to the consolidated financial
statements, including impairment and
sensitivity analysis, to the
requirements of the accounting
standard.
Share based payment arrangements
Key Audit Matter
How The Matter Was Addressed in Our Audit
The Group issued options to certain employees,
including Directors, under the share based
payment arrangements during the year ended
31 March 2023. The share based payment
arrangements included both market based and
non-market based vesting conditions. In
determining the value of the new
arrangements, the Group used the services of a
third-party valuation specialist.
The Group also had existing share based
payment arrangements that were exercised
and forfeited during the year.
• We evaluated Management’s
assessment on the treatment of the
share based payments arrangement in
accordance with NZ IFRS 2 – Share-
based Payment.
• We agreed the terms of the share
based payment arrangements issued
during the year to contracts.
• We assessed, in conjunction with our
internal valuation experts, the
appropriateness of the valuation
methodology used by Management's
57
ANNUAL REPORT 2023
BDO Auckland
Share based payment arrangements
Key Audit Matter
How The Matter Was Addressed in Our Audit
There is judgement involved in determining the
value of share based payment arrangements
and subsequent recording of the fair value as
an expense over the estimated vesting period.
As a result, and given the magnitude of the
expense in the current year, the audit of the
share based payment arrangements was
considered a key audit matter.
The share based payments expense recorded
for the year ended 31 March 2023 is $2.58m
resulting in a share based reserve of $7.179m
as at 31 March 2023. Details of these share
based payment arrangements are disclosed in
Note 5 Employee benefit expenses and Note 19
Share based payments reserve of the
consolidated financial statements.
Other Information
specialist and the key input
assumptions such as volatility rates,
expected life and probability of
achieving the market-based
performance conditions.
• We assessed the Group's judgements in
relation to the probability of achieving
non-market based vesting conditions.
• We recalculated the share based
payments expense recorded in the
Statements of Profit or Loss and Other
Comprehensive Income over the
relevant vesting periods.
• We have reviewed the disclosures in
Note 5 and 19 in relation to the share
based payment arrangements to the
requirements of the accounting
standard.
The directors are responsible for the other information. The other information comprises the Aroa
Biosurgery FY23 Results and FY24 Outlook, and Appendix 4E – ASX Listing Rule 4.2A (but does not
include the consolidated financial statements and our auditor’s report thereon) which we obtained
prior to the date of this auditors report, and the Annual report, which is expected to be made
available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report
that fact.
If, based on the work we have performed on the other information that we obtained prior to the
date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
When we read the annual report (but does not include the consolidated financial statements and
our auditor’s report thereon), if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors.
Directors’ Responsibilities for the Consolidated Financial Statements
The directors are responsible on behalf of the Group for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
58
BDO Auckland
In preparing the consolidated financial statements, the directors are responsible on behalf of the
Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located at
the External Reporting Board’s website at: https://www.xrb.govt.nz/assurance-standards/auditors-
responsibilities/audit-report-1/.
This description forms part of our auditor’s report.
Who we Report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and the Company’s shareholders, as a
body, for our audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Blair Stanley.
BDO Auckland
Auckland
New Zealand
31 May 2023
59
ANNUAL REPORT 2023
60
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 31 March 2023
Revenue
Cost of sales
Gross profit
Other income
Selling and administrative expenses
Research and development expenses
Operating loss before net financing costs
Finance income
Finance expenses
Net finance expenses
Loss before income tax
Income tax expense
Loss for the year attributable to shareholders
Other comprehensive income
Items that will or maybe reclassified to profit or loss
Notes
3
3
4,5
6
6
7
2023
$000
63,360
(9,884)
53,476
1,734
(47,709)
(10,612)
(3,111)
3,111
(384)
2,727
(384)
(12)
(396)
2022
$000
39,680
(9,377)
30,303
1,116
(30,708)
(8,354)
(7,643)
535
(1,153)
(618)
(8,261)
(125)
(8,386)
Exchange loss arising on translation of foreign operations
(1,328)
(385)
Items that will not be reclassified to profit or loss
Changes in the fair value of equity investments at fair value
through other comprehensive income
Total other comprehensive income
Total comprehensive loss for the year attributable to shareholders
9
21
(345)
(1,307)
(1,703)
(730)
(19,116)
(9,116))
Earnings per share during the year:
Basic earnings per share (cents)
Diluted earnings per share (cents)
20
20
(0.12)
(0.12)
(2.45)
(2.45)
The above consolidated statement of profit and loss and other comprehensive income should be read in conjunction with the
accompanying notes.
9
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
61
ANNUAL REPORT 2023
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
Current assets
Cash and cash equivalents
Term deposits
Derivative assets
Trade and other receivables
Inventories
Prepayments
Contract assets
Tax receivable
Financial assets at fair value through other comprehensive income
Total current assets
Non-current assets
Property, plant, and equipment
Prepayments
Right of use assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Lease liabilities
Tax payables
Total current liabilities
Non-current liabilities
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share based payment reserve
Foreign currency translation reserve
Equity investment reserve
Accumulated losses
Total equity
On behalf of the Board
3311 MMaayy 22002233
Notes
8
8
10
11
3(a)
9
12
16
13
14
15
17
17
18
19
9
2023
$000
9,540
35,134
192
14,329
4,831
1,439
11,071
339
1,260
78,135
14,234
126
6,403
17,623
38,386
2022
$000
6,165
50,000
-
12,399
3,981
1,325
4,770
-
1,239
79,879
10,023
149
5,333
17,269
32,774
116,521
112,653
3,607
3,745
559
-
7,911
171
6,548
6,719
3,089
2,982
589
51
6,711
164
5,287
5,451
14,630
12,162
101,891
100,491
146,491
7,179
(1,515)
1,260
(51,524)
101,891
145,755
4,812
(187)
1,239
(51,128)
100,491
JJiimm MMccLLeeaann -- Chairman
BBrriiaann WWaarrdd –– CEO
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
62
10
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
For the year ended 31 March 2023
Share
Capital
Accumu-
lated
Losses
Foreign
Currency
Translation
Reserve
Equity
Investment
Reserve
Share
Based
Payment
Reserve
Total
Equity
Notes
$000
$000
$000
$000
$000
$000
145,755
(51,128)
(187)
1,239
4,812
100,491
Balance as at 1 April 2022
Comprehensive income
Loss for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
Transactions with
shareholders
-
-
-
(396)
-
-
(1,328)
(396)
(1,328)
Employee shares exercised
18/19
564
Employee shares forfeited
19
Share based payments
18/19
Total transactions with
shareholders
-
172
736
-
-
-
-
-
-
-
-
-
21
21
-
-
-
-
-
-
-
(396)
(1,307)
(1,703)
(211)
(98)
2,676
2,367
353
(98)
2,848
3,103
Balance as at 31 March
2023
Balance as at 1 April 2021
Comprehensive income
Loss for the year
Other comprehensive
income for the year
Total comprehensive
income for the year
Transactions with
shareholders
146,491
(51,524)
(1,515)
1,260
7,179
101,891
97,316
(42,742)
198
1,584
2,130
58,486
-
-
-
(8,386)
-
(8,386)
-
(385)
(385)
-
(345)
(345)
-
-
-
(8,386)
(730)
(9,116)
Issue of equity securities
18
47,740
Employee shares exercised
18/19
457
Employee shares forfeited
19
-
Share based payments
18/19
242
Total transactions with
shareholders
48,439
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,740
(283)
(162)
174
(162)
3,127
3,369
-
2,682
51,121
Balance as at 31 March
2022
145,755
(51,128)
(187)
1,239
4,812
100,491
The above consolidated statement of movements in equity should be read in conjunction with the accompanying notes.
11
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
63
ANNUAL REPORT 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2023
Note
25a
12
13
13
8
8
Cash flows from operating activities
Cash receipts from sales revenue
Cash receipts from license fees, project fees, and grant income
Cash paid to suppliers and employees
Interest received
Interest paid
Income tax paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Capitalised development costs
Proceeds from term deposits
Purchase of term deposits
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Transaction costs related to issues of equity
securities
Repayment of deferred consideration
Lease liability – Principal payments
Lease liability – Interest payments
Net cash (outflow) / inflow from financing activities
25b
Net increase / (decrease) in cash and cash equivalents
Effect of exchange rate fluctuations on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
8
2023
$000
52,408
4,167
(60,952)
1,170
-
(565)
(3,772)
(6,029)
(250)
(1,332)
14,866
-
7,255
520
-
-
(645)
(379)
(504)
2,979
396
6,165
9,540
2022
$000
29,376
1,654
(41,329)
136
(1,340)
(19)
(11,522)
(4,455)
(416)
-
-
(30,000)
(34,871)
50,324
(2,214)
(9,514)
(575)
(388)
37,633
(8,760)
(456)
15,381
6,165
Note: The Group has term deposits of $35,134,000 as at the reporting date (31.03.2022: $50,000,000). In line
with NZ IAS 7 Statement of Cash Flows, term deposit with an initial maturity of more than three months does
not become part of cash and cash equivalent and are therefore excluded in the cash and cash equivalent position
in the statement of cash flows (refer to note 8).
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
64
12
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2023
1. Corporate information
Aroa Biosurgery Limited ("the Company") together with its subsidiaries (the “Group”) is a leading soft
tissue regeneration company which develops, manufactures and sells medical devices for wound and
soft tissue repair using its proprietary extracellular matrix (ECM) technology.
The Company is a limited liability company incorporated and domiciled in New Zealand. The address of
its registered office is 64 Richard Pearse Drive, Airport Oaks, Auckland.
The consolidated financial statements of Aroa Biosurgery Limited and its subsidiaries (the "Group") for
the year ended 31 March 2023 comprise the Company and its two subsidiaries, Aroa Biosurgery
Incorporated and Mesynthes Nominee Limited. All subsidiary entities have a reporting date of 31 March.
Equity holding
Principal Activity
Aroa Biosurgery Incorporated
Sales & Distribution
Mesynthes Nominee Limited
Nominee Shareholder
Place of
Business
US
NZ
2023
%
100
100
2022
%
100
100
Aroa Biosurgery Incorporated is a subsidiary of Aroa Biosurgery Limited and is incorporated and
domiciled in the United States. The address of its registered office is 9155 Brown Deer Road #2, San
Diego, California 92121. Mesynthes Nominee Limited is a subsidiary of Aroa Biosurgery Limited and is
incorporated and domiciled in New Zealand. The address of its registered office is 64 Richard Pearse
Drive, Airport Oaks, Auckland.
The consolidated financial statements have been prepared in accordance with the requirements of the
Financial Reporting Act 2013 and the Companies Act 1993. These consolidated financial statements
were authorised for issue by the Board of Directors on 31 May 2023.
2. Summary of significant accounting policies
Statement of compliance and basis of preparation
The consolidated financial statements have been prepared in accordance with New Zealand Generally
Accepted Accounting Practice (“NZ GAAP”). They comply with New Zealand equivalents to
International Financial Reporting Standards (“NZ IFRS”), other New Zealand accounting standards and
authoritative notices that are applicable to entities that apply NZ IFRS, as appropriate for profit
orientated entities. The consolidated financial statements also comply with International Financial
Reporting Standards (“IFRS”).
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for the
following item (refer to individual accounting policies for details):
•
Financial assets at fair value through other comprehensive income
• Derivative assets at fair value through profit or loss
13
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
65
ANNUAL REPORT 2023
Functional and presentation currency
The consolidated financial statements are presented in New Zealand dollars ($) which is the Company’s
functional and Group’s presentation currency. All financial information is presented in New Zealand
dollars rounded to the nearest thousands, except where otherwise indicated.
Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with NZ IFRS requires
management to make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ
from those estimates.
Significant estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimates are revised and in any future
periods affected.
Estimates and judgements were made in respect of:
•
•
•
•
•
TELA Bio Incorporated (“TELA Bio”) accrued revenue (refer to notes 3 and 10 and “Change in
accounting estimates - Tela Bio Accrued Revenue”, as discussed below)
the likely term of leased premises, which impacts leasehold improvements assets and right of use
assets capitalised (refer to notes 12 and 16)
impairment of intangible assets (refer to note 13)
the value of development expenditure capitalised (refer to note 13)
the value of share-based payments (refer to note 19)
Management assessed its impact on financial statement areas as outlined below.
• Going concern: The Directors have concluded that the Company is a going concern. Refer below.
•
•
Investments: The Group’s financial assets include listed equities. Management is satisfied that there
is no impairment to the value as of reporting date (refer to note 9).
Intangible assets: The Group measured the recoverable amounts of assets by assessing the
recoverable amount based on value in use calculations for goodwill. No impairment was noted
(refer to note 13).
Change in accounting estimates - Tela Bio Accrued Revenue
As disclosed in note 3 (a), TELA Bio is the Group's largest customer and sales and distribution partner for
abdominal wall reconstruction, hernia repair, and breast reconstruction in North America and Europe. The
contract with TELA Bio entitles the Group to an agreed percentage of TELA Bio's net sales.
The consideration from TELA Bio is received from a transfer price for the products shipped to TELA Bio,
with the balance of the consideration received on a quarterly true up to the agreed percentage based on
TELA Bio's net sales. Using the expected value method, the Group estimates the true up on TELA Bio's
inventory at the reporting date, having considered the expected sale of those products by TELA Bio. In
prior year estimates, the Group has assumed TELA Bio sales levels for the six months preceding reporting
date remain constant (0% growth). Having considered TELA Bio’s historical sales growth rate in
conjunction with TELA Bio’s recent CY23 revenue guidance of 45% to 53% growth, the Group has applied
a 20% growth factor to TELA Bio’s last six months' sales, reflecting a more accurate estimation of the
True Up.
The change in accounting estimates has resulted in a recognition of $835,808 in incremental accrued
revenue in the current year. In accordance with NZ IAS 8 Accounting Policies, Changes in Accounting
66
14
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
Estimates and Errors, the change in accounting estimate is recognised prospectively by including it in
profit or loss in the financial year ended 31 March 2023.
Change in accounting estimates – Inventory valuation
During the year, the Company changed the inventory valuation methodology from weighted average cost
to standard cost. The change in accounting estimates has resulted in a reduction of inventory value and
an increase in the cost of goods sold by $37,408. In accordance with NZ IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors, the change in accounting estimate is recognised
prospectively by including it in profit or loss in the financial year ended 31 March 2023.
Going concern
The Group posted a net loss before tax of $384,000 for the year (2022: $8,261,000). The Group posted
total operating cash outflow of $3,772,000 (2022: outflow of $11,522,000).
The Directors have continued to apply the going concern assumption as the basis of the preparation of
the consolidated financial statements.
In reaching their conclusion that the going concern assumption is appropriate, the Directors have
considered the ability to achieve financial performance and cash flow forecasts prepared by management,
and the sufficiency of the cash on hand as at the reporting date.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the
Group as at the reporting date and the results of all subsidiaries for the year then ended.
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity when the Group is exposed to, 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.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Intercompany transactions and balances and unrealised gains on transactions between Group
companies are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
New standards, interpretations and amendments not yet effective
There are no new standards, amendments or interpretations that have been adopted or are not yet
effective that have a material impact on the Group.
3. Revenue and segment information
The Group is in the business of developing, manufacturing and selling soft tissue repair products. Revenue
from contracts with customers is recognised when performance obligations pursuant to that contract are
satisfied by the Group.
The Group has identified the following main categories of revenue:
Sales of goods
The Group’s revenue primarily consists of the sale of its products. Revenue is recorded when the customer
takes possession of the product. All contracts with customers are standardised and satisfy the criteria of
transaction approval, identification of each party’s rights, payment terms, commercial substance, and
probable collection based on the customer’s ability and intention to pay. Revenue is recognised at a point
in time when control over the product transfers to the customer, which is assessed to be at the time of
receipt of goods by the customer.
15
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
67
ANNUAL REPORT 2023
The Group also sells its products via a distributor model whereby the sales are made direct to a distributor
being the customer of the Group, with the distributor permitted to resell the Aroa products to an end
user. The Group has assessed these arrangements to consider that control passes to the distributor at the
point the distributor takes possession of the products. The Group considers itself to be acting as principal
in the sale of goods to distributors and recognise revenue on a gross basis.
All contracts with distributors are standardised and satisfy the criteria of transaction approval,
identification of each party’s rights, payment terms, commercial substance, and probable collection based
on the customer’s ability and intention to pay. Revenue is recognised at a point in time when control over
the product transfers to the distributor as the customer, which is assessed to be at the time of receipt of
goods by the distributor.
a. Revenue share
The Group's largest customer is TELA Bio who is the Group’s sales and distribution partner for abdominal
wall reconstruction and hernia repair and breast reconstruction in North America and Europe. The
contract with TELA Bio entitles the Group to an agreed percentage of TELA Bio’s net sales. This revenue
is considered to be variable consideration (“revenue share”). The consideration is variable since the
quantum of TELA Bio’s inventory that is eventually sold and the price that it is sold at are uncertain.
The consideration from TELA Bio is received from a transfer price for the products shipped to TELA Bio,
with the balance of the consideration received on quarterly true up to the agreed percentage based on
TELA Bio’s net sales. The Group estimates the true up on TELA Bio’s inventory at the reporting date by
using the expected value method. The estimation is based on information that is reasonably available to
the Group which incorporates key factors including sales history, forecast revenue growth, expiry date of
inventory held and average selling prices achieved by TELA Bio. The amount of variable consideration
estimated is only recorded by the Group to the extent that it is highly probable that a significant amount
of the cumulative revenue recognised will be received in the future. Amount receivable from Tela Bio at
31 March 2023 in relation to revenue share $11,071,000 (31.03.22 - $4,770,000).
b. Project fees
Project fees received are recognised over time when the performance obligations are fulfilled pursuant
to the project development agreement. Any project fees received, for which the requirements under the
project agreement have not been completed, are carried as income in advance (liability) until all
applicable performance obligations have been fulfilled.
c. Royalties
Royalty payments represents the payments received from TELA Bio upon achievement of cumulative
net sales of the products in European territory. Royalty payments are recognised in the statement of
profit or loss upon completion of the performance obligation.
Sales of goods (USA)
Sales of goods (Rest of the world)
Royalties (USA)
Project fees (USA)
Total revenue
Revenue recognised point in time
Revenue recognised over time
Total revenue
2023
$000
58,783
1,729
1,758
1,090
2022
$000
38,077
1,077
-
526
63,360
39,680
62,270
1,090
63,360
39,154
526
39,680
68
16
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
Segment information
Revenues from external customers are from sales of goods and project fees as reflected above.
The Group sells its products and services to external customers who are largely located in the United States of
America (the “USA”) as reflected in the sales above.
For the purpose of the internal reporting provided to the chief operating decision makers, business activities,
performances and any associated assets and liabilities are reviewed as a consolidated group.
Revenues of approximately $37,898,000 (2022: $25,336,000) are derived from a single external customer, being sales
of products and services to TELA Bio, which is the Group’s sales and distribution partner.
The Group held all of its non-current assets in New Zealand with an exception of the right-of-use assets of
approximately $0.1m for the leasehold property in the USA.
Other income
Other income includes research and development related grants and rent income. The Group expects to receive a tax
credit payment of $1,500,000 under the Research and Development Tax Incentive program. (2022: $1,064,00
4. Operating loss before net financing costs
Operating loss before net financing costs includes the following:
Transaction costs relating to issue of securities
Auditor's fees:
Statutory audit - BDO
Other assurance engagements:
Half-year review - BDO
Depreciation:
Property, Plant & Equipment - Research and development *
Property, Plant & Equipment - Other
Right of use assets – Research and development *
Right of use assets – Other
Non-executive directors' fees
Insurance
Rental lease costs – low value and short-term leases
Amortisation:
Patents
Customer relationships and reacquired rights
Research and development *
Note
12
12
16
16
21
13
13
2023
$000
-
135
55
444
1,354
119
688
493
1,187
142
74
1,161
9,936
2022
$000
50
113
55
369
765
115
658
411
817
110
63
1,161
7,847
* Total research & development expenditure is $10,499,000 (2022: $8,354,000). Research &
development expenditure includes employee entitlements of $6,682,000 (2022: $4,461,000), refer to
note 5.
17
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
69
ANNUAL REPORT 2023
5. Employee benefit expenses
Salaries & wages (including bonuses)
Employer contributions defined contribution Superannuation scheme inclusive
of tax
Share based payments
Total employee benefit expenses
Note
2023
$000
2022
$000
37,158
24,071
1,929
2,032
1
19
9
2,578
41,665
2,965
29,068
Employee entitlements includes an amount of $6,682,000 (2022: $4,461,000) disclosed as part of
research and development expenditures in note 4 and includes an amount of $558,000 (2022:
$173,000) relating to share-based payments for shares issued to the Directors as disclosed in note 19.
6. Net finance income/(expenses)
Finance income and finance expenses have been accrued to the reporting date using the effective
interest method.
Finance income
Interest received on bank balances – financial assets at amortised
cost
Other finance income
Foreign currency gains
Total finance income
Finance expenses
Interest expenses – deferred consideration – financial liabilities at
amortised cost
Interest expenses – lease liabilities (Note 17)
Other finance expenses
Finance costs – make good provision
Total finance expenses
2023
$000
2022
$000
1,315
403
1,796
3,111
132
535
-
(378)
(6)
(384)
(747)
(403)
(3)
(1,153)
Net finance income / (expenses)
2,727
(618)
70
18
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
7. Income taxes
Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or
loss except to the extent that it relates to a business combination, or items recognised directly in equity
or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in
respect of previous years. Current tax includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognised for:
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss;
temporary differences arising on the initial recognition of goodwill; and
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse, using tax rates enacted or substantively enacted at the reporting date.
In determining the amount of current and deferred tax the Group takes into account the impact of
uncertain tax positions and whether additional taxes and interest may be due. The Group believes that
its accruals for tax liabilities are adequate for all open tax years based on its assessment of many
factors, including interpretations of tax law and prior experience. This assessment relies on estimates
and assumptions and may involve a series of judgements about future events. New information may
become available that causes the Group to change its judgement regarding the adequacy of existing
tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a
determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against which
they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realised, such reductions are
reversed when the probability of future taxable profits improves.
19
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
71
ANNUAL REPORT 2023
Income tax recognised in profit or loss and other comprehensive income
Reconciliation of income tax expense
Accounting loss before income tax
Income Tax @ 28%
Impact of tax rates in overseas jurisdictions
Tax credits received subject to tax
Income not subject to tax
Prior year tax over provisions
Recognition deferred tax on temporary differences
Recognition deferred tax on temporary differences and tax losses
Income Tax Expense
Major components of tax expense/(income)
Current tax expense
Current period
R&D tax credit
Total current tax benefit
Deferred tax (income)
Total tax expense
2023
$000
(384)
(108)
(70)
278
(84)
(420)
(211)
2,396
(1,769)
12
2023
$000
12
-
-
-
12
2022
$000
(8,261)
(2,313)
(30)
1,141
-
(270)
3,164
(1,567)
125
2022
$000
125
-
-
-
125
As at 31 March 2023, the Company had tax losses of $4,604,581 (2022: $9,520,482). Utilisation of these
tax losses is dependent upon the Group meeting the continuity of ownership provisions of the Income
Tax Act 2007 and carrying forward and offsetting the net losses against net taxable income earned in
subsequent years by the Group.
The Group has elected to defer expenditure relating to research and development allowed under
section DB34 of the Income Tax Act 2007. As at 31 March 2023, the Group had $25,524,916 (2022:
$16,993,721) of expenditure available to offset against subsequent years income subject to section EJ23
of the Income Tax Act 2007.
Deferred tax assets have been recognised to the extent they offset deferred tax liabilities. No deferred
tax has been recognised on tax losses or deferred research and development expenditure in 2023 on
the basis that large tax profits are not foreseeable in the year ending 31 March 2024. Total tax effected
deferred tax asset not recognised at 31 March 2023 $5,650,000 (31.03.2023 $5,855,000).
Deferred tax assets/(liabilities) recognised:
Accrued revenue
Deferred R&D expenditure
Intangible assets
Other temporary differences
Provision
Total deferred tax asset/(liability) recognised
2023
$000
(3,100)
5,425
2022
$000
-
2,612
(2,993)
(2,993)
276
392
-
290
91
-
72
20
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
Deferred tax assets unrecognised (tax effected)
Temporary differences
Deferred R&D expenditure
Unused tax losses
Total deferred tax asset unrecognised (tax effected)
2023
$000
1,722
2,639
1,289
5,650
2022
$000
1,043
2,146
2,666
5,855
8. Cash and cash equivalents & term deposits
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and
other short term deposits with maturities of three months or less and bank overdrafts.
Bank balances
Total cash and cash equivalents
2023
$000
9,540
9,540
2022
$000
6,165
6,165
During the year, the Group entered into short-term deposit arrangements with ASB Bank and Westpac.
The term deposits not yet matured as of the reporting date had an average rate of 4.96% (2022: 1.54%)
per annum with a maturity of less than 6 months from the reporting date.
Term deposits
Total term deposits
2023
$000
35,134
35,134
2022
$000
50,000
50,000
9. Financial assets at fair value through other comprehensive income
The Group classifies the following financial assets at fair value through other comprehensive income
(“FVTOCI”):
•
Equity investments for which the Group has elected to recognise fair value gains or losses through
other comprehensive income.
Financial assets measured at FVTOCI include the following:
US listed equity securities
Total financial assets at FVTOCI
2023
$000
1,260
1,260
2022
$000
1,239
1,239
The USA listed equity securities comprise of the Group’s investment in TELA Bio. The Group held 74,316
(2022: 74,316 shares) shares at a value of US$10.64 per share as at the reporting date (2022: US$11.63).
The fair value of the listed equity securities is based on published market price (level 1 in the fair value
hierarchy) and is revalued at reporting date.
21
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
73
ANNUAL REPORT 2023
10. Trade and other receivables
Trade and other receivables are recognised initially at fair value plus directly attributable transaction
costs and subsequently measured at amortised cost using the effective interest method less provision
for impairment.
The Group applies the NZ IFRS 9 simplified approach to measuring expected credit losses using a
lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a
collective basis, trade receivables are grouped based on similar credit risk and aging. The expected loss
rates are based on the Group’s historical credit losses experienced over the three-year period prior to
the period end. The historical loss rates are then adjusted for current and forward-looking information
on macroeconomic factors affecting the Group’s customers.
Trade receivables
Less provision for impairment of trade receivables
Net trade receivables
Other receivables
Other receivables – Research and Development Tax Incentive accrual
2023
$000
12,225
(580)
11,645
1,184
1,500
2022
$000
10,385
(28)
10,357
917
1,125
Total current trade and other receivables
14,329
12,399
Trade receivables amounting to $11,645,000 (2022: $10,357,000) are shown net of impairment losses.
Provisions have been made appropriately. Trade receivables are interest free. Trade receivables of a
short-term duration are not discounted. Other receivables include an accrual of tax credit income
relating to the Research and Development Tax Incentive program.
(i)
Impaired receivables
As at 31 March 2023, current trade receivables with a nominal value of $580,000 (2022: $28,000) were
impaired and provided for.
(ii)
Past due but not impaired receivables
As at 31 March 2023, trade receivables of $3,733,000 (2022: $3,175,000) were past due but not
impaired. Subsequent to the reporting date, the Group received over $2,800,000 of these past due
trade receivables.
The ageing analysis of trade receivables is as follows:
Current
1 - 30 days overdue
30 - 60 days overdue
60 - 90 days overdue
90+ days overdue
Total trade receivables
2023
$000
7,912
2,545
309
1,422
37
2022
$000
7,212
2,733
163
140
137
12,225
10,385
74
22
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
11. Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based
on the standard cost principle, and includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing them to their existing location and
condition. In the case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and costs to sell. An inventory provision is created to reflect instances where the
product is expected to expire before being sold.
Raw materials
Work in progress
Finished goods
Provision for obsolescence
Total inventories
2023
$000
1,911
2,191
938
(209)
4,831
2022
$000
1,111
1,228
2,047
(405)
3,981
As at 31 March 2023, inventories of $209,000 (2022: $405,000) value were impaired and provided for.
12. Property, plant & equipment
i.
Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of
that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference
between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or
loss.
ii.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated
with the expenditure will flow to the Group.
23
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
75
ANNUAL REPORT 2023
iii.
Depreciation
For plant and equipment, depreciation is based on the cost of an asset less its residual value. Where
significant components of individual assets that have a useful life that is different from the remainder of
those assets, those components are depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of
each component of an item of property, plant and equipment. Assets under construction are not
subject to depreciation.
The useful life estimate for the current year of significant items of property, plant and equipment are as
follows:
Leasehold improvements
10 years
Plant & equipment
10 years
Fixtures & fittings
3 - 10 years
Computer equipment & software
3 - 4 years
Depreciation methods, rates and residual values are reviewed at reporting date and adjusted if
appropriate
76
24
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
Lease-
hold
Improve-
ments
Capital
Work In
Progress
Fixture &
Fitting
Plant
and
Equip-
ment
Computer
Equip-
ment &
Software
Total
$000
$000
$000
$000
$000
Cost
Balance 1 April 2022
Additions
Transfers in/ (out)
Disposals
Balance 31 March
2023
Accumulated
Depreciation
Balance 1 April 2022
Depreciation
Disposals
Balance 31 March
2023
Net Book Value
Balance 1 April 2022
Balance 31 March
2023
$000
8,566
397
373
(14)
4,165
4,889
(3,328)
-
5,726
9,322
-
-
-
-
(4,204)
(900)
6
(5,098)
1,631
46
2,941
-
4,618
(1,076)
(505)
-
(1,581)
555
3,037
4,165
5,726
4,362
4,224
624
152
13
-
789
(256)
(64)
-
(320)
368
469
1,287
533
1
-
16,273
6,017
-
(14)
1,821
22,276
(6,250)
(1,798)
6
(8,042)
10,023
14,234
Total
(714)
(329)
-
(1,043)
573
778
Computer
Equip-
ment &
Software
Lease-hold
Improve-
ments
Capital
Work In
Progress
Plant and
Equip-
ment
Fixture
& Fitting
$000
$000
$000
$000
$000
$000
Cost
Balance 1 April 2021
1,586
Additions
Transfers in/ (out)
Disposals
-
45
-
Balance 31 March 2022
1,631
457
3,936
(228)
-
4,165
8,559
134
42
(169)
8,566
Accumulated
Depreciation
Balance 1 April 2021
Depreciation
Disposals
(999)
(77)
Balance 31 March 2022
(1,076)
-
-
-
-
(3,559)
(809)
164
(4,204)
Net Book Value
Balance 1 April 2021
Balance 31 March 2022
587
555
457
4,165
5,000
4,362
585
44
-
(5)
624
(207)
(54)
5
(256)
378
368
968
341
141
(163)
1,287
(683)
(194)
163
(714)
12,155
4,455
-
(337)
16,273
(5,448)
(1,134)
332
(6,250)
285
573
6,707
10,023
25
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
77
ANNUAL REPORT 2023
13. Intangible assets
Patents that are acquired by the Group and have finite useful lives are measured at cost less accumulated
amortisation and accumulated impairment losses. Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the specific asset to which it relates. All other
expenditure is recognised in profit or loss as incurred.
Trademarks have finite useful lives and are measured at cost less accumulated amortisation and
accumulated impairment losses.
Patent and trademark costs are amortised on a straight-line basis over the useful life.
Goodwill, customer relationships and reacquired rights are attributable to the purchase of the wound care
business entered into between the Group and Hollister Incorporated. Goodwill is not amortised.
Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are
undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests
whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and
fair value less costs to sell), the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is
carried out on the smallest group of assets to which it belongs for which there are separately identifiable
cash flows; its cash generating units (“CGUs”). Goodwill is allocated on initial recognition to each of the
Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill.
Impairment charges are included in profit or loss. An impairment loss recognised for goodwill is not
reversed.
Customer relationships and reacquired rights are amortised on a straight-line basis in profit or loss over
their estimated useful lives, from the date that they are available for use.
The estimated useful lives for the current period are as follows:
Patents and trademarks
10 - 25 years
Customer relationships
9 years
Reacquired rights
18 years
Amortisation methods, rates and residual values are reviewed at reporting date and adjusted if
appropriate.
Research costs are expensed as incurred. Costs associated with maintaining product development are
recognised as an expense as incurred. Costs that are directly associated with the production of
identifiable and unique product developments controlled by the Group, and that will probably generate
economic benefits exceeding costs beyond one year, are recognised as intangible assets where the
following criteria are met:
•
it is technically feasible to complete asset so that it will be available for use;
• management intends to complete the asset and use or sell it;
•
•
•
•
there is an ability to use or sell the asset;
it can be demonstrated how the asset will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell it;
and
the expenditure attributable to the asset during its development can be reliably measured.
78
26
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
Other development expenditures that do not meet these criteria are expensed when incurred.
Development costs previously recognised as expenses are not recognised as assets in a subsequent
period. Development costs that have a finite useful life that have been capitalised are amortised from
the commencement of the time at which they are available for use on a straight-line basis over the
period of its expected benefit, not exceeding five years.
Capitalised development costs are carried at cost less accumulated amortisation and impairment losses.
Capitalised development costs are amortised over the periods the Group expects to benefit from
utilising the products. The amortisation expense is included within the administration expenses in profit
or loss.
Patents &
Trademarks
Customer
relationships
Reacquired
rights
Goodwill
Capitalised
Development
Costs
Total
$000
$000
$000
$000
$000
$000
Cost
Balance 1 April 2022
Additions
Balance 31 March
2023
Accumulated
Depreciation
Balance 1 April 2022
Amortisation
Balance 31 March
2023
Net Book Value
1,354
257
1,611
(314)
(74)
(388)
5,563
9,772
5,538
-
22,227
-
-
-
1,332
1,589
5,563
9,772
5,538
1,332
23,816
(2,472)
(2,172)
(619)
(542)
(3,091)
(2,714)
-
-
-
-
-
-
-
(4,958)
(1,235)
(6,193)
17,269
Balance 1 April 2022
1,040
3,091
7,600
5,538
Balance 31 March
2023
1,223
2,472
7,058
5,538
1,332
17,623
27
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
79
ANNUAL REPORT 2023
Patents &
Trademarks
Customer
relationships
Reacquired
rights
Goodwill
Total
$000
$000
$000
$000
$000
Cost
Balance 1 April 2021
Additions
938
416
5,563
9,772
5,538
21,811
-
-
-
416
Balance 31 March 2022
1,354
5,563
9,772
5,538
22,227
Accumulated
Amortisation
Balance 1 April 2021
Amortisation
Balance 31 March 2022
Net Book Value
Balance 1 April 2021
Balance 31 March 2022
(251)
(63)
(314)
(1,854)
(618)
(2,472)
(1,629)
(543)
(2,172)
-
-
-
(3,734)
(1,224)
(4,958)
687
1,040
3,709
3,091
8,143
7,600
5,538
5,538
18,077
17,269
On 31 March 2023, the Group tested whether goodwill has suffered any impairment. For the purpose of impairment
testing, goodwill is allocated to the Group’s Wound Care business, at which goodwill is monitored for internal
management purposes.
The recoverable amount is determined based on value in use calculations using the method of estimating future
cash flows and determining a discount rate in order to calculate the present value of the cash flows.
A discounted cash flow (“DCF”) model has been based on five-year forecast cash flow projections. The budget for
the year ending 31 March 2024 was the basis for the first year’s projections and projections for subsequent years
have been based on the Group’s long-term outlook. Other key assumptions are as follows:
Discount rate post tax
Terminal growth rate
2023
2022
10.1%
10.2%
3.5%
3.0%
No impairment was identified for the Wound Care business as a result of this review, nor under any reasonable
possible change, in any of the key assumptions described above.
80
28
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
14. Trade and other payables
Trade and other payables are initially recognised at fair value plus directly attributable transaction costs
and subsequently at amortised cost. Trade and other payables represent liabilities for goods and services
provided to the Group prior to the end of financial year which are unpaid.
Trade payables
Accrued expenses
Other payables
Total trade and other payables
2023
$000
1,909
1,693
5
3,607
2022
$000
1,333
1,707
49
3,089
Trade payables generally have terms of 30 days and are interest free. Trade payables of a short-term
duration are not discounted.
15. Employee benefits
i.
Short term employee benefits
Liabilities for wages and salaries, including non-monetary benefits and accumulating annual leave that is
expected to be settled wholly within 12 months after the end of the period in which the employees
render the related service are recognised in respect of employees’ services up to the end of the
reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
The obligations are presented as other payables and accruals in the statement of financial position if the
entity does not have an unconditional right to defer settlement for at least 12 months after the reporting
date, regardless of when the actual settlement is expected to occur.
ii.
Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is
provided.
Leave and wages accrual
Bonus accrual
Employee benefits
2023
$000
1,864
1,881
3,745
2022
$000
1,452
1,530
2,982
29
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
81
ANNUAL REPORT 2023
16. Right of use assets
As at 1 April 2022
Additions
Depreciation
Modification adjustment
As at 31 March 2023
Balance 1 April 2021
Depreciation
Modification adjustment
Balance 31 March 2022
Lease liabilities are disclosed in note 17.
Properties
$000
5,333
1,844
(807)
33
6,403
Properties
$000
5,951
(773)
155
5,333
Total
$000
5,333
1,844
(807)
33
6,403
Total
$000
5,951
(773)
155
5,333
82
30
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
17. Lease liabilities
As at 1 April 2022
Additions
Modification Adjustment
Interest expenses
Lease payments
As at 31 March 2023
Current
Non-current
Total
As at 1 April 2021
Modification Adjustment
Interest expenses
Lease payments
As at 31 March 2022
Current
Non-current
Total
Properties
$000
5,876
1,844
33
378
(1,024)
7,107
559
6,548
7,107
Properties
$000
6,282
155
403
(964)
5,876
589
5,287
5,876
Total
$000
5,876
1,844
33
378
(1,024)
7,107
559
6,548
7,107
Total
$000
6,282
155
403
(964)
5,876
589
5,287
5,876
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
Leases of low value assets; and
Leases with a term of 12 months or less
Lease liabilities are measured at the present value of the contractual payments due to the lessor over
the lease term, with the discount rate determined by reference to the rate inherent in the lease unless
(as is typically the case) this is not readily determinable, in which case the Group’s incremental
borrowing rate on commencement of the lease is used. Variable lease payments are only included in the
measurement of the lease liability if they are dependent on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain unchanged throughout the
lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability may also include:
•
•
•
amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the Group if it is reasonably certain
to exercise that option;
any penalties payable for terminating the lease, if the term of the lease has been estimated on the
basis of termination option being exercised.
31
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
83
ANNUAL REPORT 2023
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease
incentives received, and increased for:
•
•
•
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the Group is contractually required to dismantle,
remove or restore the leased asset.
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant
rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are
amortised on a straight-line basis over the remaining term of the lease or over the remaining economic
life of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of
the lease liability to reflect the payments to make over the revised term, which are discounted at a revised
discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future
lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made
to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term.
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends
on the nature of the modification:
•
•
•
if the renegotiation results in one or more additional assets being leased for an amount
commensurate with the standalone price for the additional rights-of-use obtained, the modification
is accounted for as a separate lease in accordance with the above policy
in all other cases where the renegotiated increases the scope of the lease (whether that is an
extension to the lease term, or one or more additional assets being leased), the lease liability is
remeasured using the discount rate applicable on the modification date, with the right-of-use asset
being adjusted by the same amount
if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the
lease liability and right-of-use asset are reduced by the same proportion to reflect the partial of full
termination of the lease with any difference recognised in profit or loss. The lease liability is then
further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments
over the renegotiated term, with the modified lease payments discounted at the rate applicable on
the modification date. The right-of-use asset is adjusted by the same amount.
For contracts that both convey a right to the Group to use an identified asset and require services to be
provided to the Group by the lessor, the Group has elected to account for the entire contract as a lease,
i.e. it does allocate any amount of the contractual payments to, and account separately for, any services
provided by the supplier as part of the contract.
Nature of leasing activities (in the capacity as lessee)
The Group leases three properties in the jurisdictions in which it operates. In some jurisdictions it is
customary for lease contracts to provide for payments to increase each year by inflation and in others
to be reset periodically to market rental rates. The Group also leases certain items of plant and
equipment.
As standard industry practice, the Group’s property leases are subject to market rent reviews. A 1%
increase in these payments would result an additional $10,000 outflow compared to the current
period’s cash outflow.
84
32
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
Lease maturity analysis
Refer to note 22.
Lease maturity analysis
Refer to note 22.
Lease maturity analysis
Lease maturity analysis
Lease maturity analysis
Lease maturity analysis
18. Share capital
Refer to note 22.
Refer to note 22.
Refer to note 22.
Refer to note 22.
18. Share capital
Ordinary shares
18. Share capital
18. Share capital
18. Share capital
18. Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
Ordinary shares
Ordinary shares
Ordinary shares
shares and share options are recognised as a deduction from equity, net of any tax effects. These
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
ordinary shares have no par value.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares and share options are recognised as a deduction from equity, net of any tax effects. These
shares and share options are recognised as a deduction from equity, net of any tax effects. These
shares and share options are recognised as a deduction from equity, net of any tax effects. These
2022
shares and share options are recognised as a deduction from equity, net of any tax effects. These
ordinary shares have no par value.
ordinary shares have no par value.
ordinary shares have no par value.
ordinary shares have no par value.
shares and share options are recognised as a deduction from equity, net of any tax effects. These
ordinary shares have no par value.
Ordinary shares
2023
Share capital at beginning of the year
Shares issued from capital raise
Share capital at beginning of the year
Shares issued from capital raise
Share capital at beginning of the year
Share capital at beginning of the year
Share capital at beginning of the year
Share capital at beginning of the year
Shares issued under Share & Option Plan (note 19)
Shares issued from capital raise
Shares issued from capital raise
Shares issued from capital raise
Shares issued from capital raise
Share capital at end of the year
Shares issued under Share & Option Plan (note 19)
Shares issued under Share & Option Plan (note 19)
Shares issued under Share & Option Plan (note 19)
Shares issued under Share & Option Plan (note 19)
Share capital at end of the year
Share capital at end of the year
Share capital at end of the year
Share capital at end of the year
# of shares
Shares issued under Share & Option Plan (note 19)
Share capital at end of the year
# of shares
# of shares
# of shares
At beginning of year
# of shares
# of shares
At beginning of year
Issue of share capital
At beginning of year
At beginning of year
At beginning of year
At beginning of year
At end of year
Issue of share capital
Issue of share capital
Issue of share capital
Issue of share capital
At end of year
At end of year
At end of year
At end of year
Issue of share capital
At end of year
145,755
$000
2023
2023
2023
145,755
2023
2023
$000
$000
$000
-
$000
$000
145,755
145,755
145,755
145,755
736
-
-
-
-
-
146,491
736
736
736
736
736
146,491
Ordinary
146,491
146,491
146,491
146,491
shares
97,316
$000
2022
2022
2022
97,316
2022
2022
$000
$000
$000
47,740
$000
$000
97,316
97,316
97,316
97,316
699
47,740
47,740
47,740
47,740
47,740
145,755
699
699
699
699
699
145,755
145,755
145,755
Ordinary
145,755
145,755
shares
648,335
Ordinary
31.03.2023
Ordinary
Ordinary
shares
Ordinary
Ordinary
shares
shares
342,461,133
shares
shares
31.03.2023
31.03.2023
31.03.2023
31.03.2023
31.03.2023
342,461,133
342,461,133
342,461,133
342,461,133
342,461,133
343,109,46
8
648,335
343,109,46
343,109,46
343,109,46
343,109,468
8
343,109,46
343,109,46
8
8
8
8
648,335
648,335
648,335
648,335
31.03.2022
Ordinary
Ordinary
Ordinary
shares
Ordinary
Ordinary
shares
shares
300,726,414
31.03.2022
shares
shares
31.03.2022
31.03.2022
31.03.2022
31.03.2022
41,734,719
300,726,414
300,726,414
300,726,414
300,726,414
342,461,133
41,734,719
41,734,719
41,734,719
41,734,719
41,734,719
342,461,133
342,461,133
342,461,133
342,461,133
342,461,133
300,726,414
19. Share based payments reserve
19. Share based payments reserve
19. Share based payments reserve
19. Share based payments reserve
19. Share based payments reserve
19. Share based payments reserve
Share option plan
Share option plan
its classifications to share capital upon settlement.
The share based payments reserve comprises the fair value of the employee share purchase plan before
The Group operates a share option plan for selected employees to provide an opportunity to participate
The Group operates a share option plan for selected employees to provide an opportunity to participate
Share option plan
Share option plan
Share option plan
in a Share Option Plan. This is an offer of options to acquire ordinary shares. Under the terms of the plan,
Share option plan
The Group operates a share option plan for selected employees to provide an opportunity to participate
a parcel of options was issued to employees with an exercise price equal to the market valuation of shares
The Group operates a share option plan for selected employees to provide an opportunity to participate
The Group operates a share option plan for selected employees to provide an opportunity to participate
The Group operates a share option plan for selected employees to provide an opportunity to participate
in a Share Option Plan. This is an offer of options to acquire ordinary shares. Under the terms of the plan,
at the time of offer. The grant of share options is split into three tranches vesting over a three year period.
in a Share Option Plan. This is an offer of options to acquire ordinary shares. Under the terms of the plan,
in a Share Option Plan. This is an offer of options to acquire ordinary shares. Under the terms of the plan,
in a Share Option Plan. This is an offer of options to acquire ordinary shares. Under the terms of the plan,
in a Share Option Plan. This is an offer of options to acquire ordinary shares. Under the terms of the plan,
a parcel of options was issued to employees with an exercise price equal to the market valuation of shares
a parcel of options was issued to employees with an exercise price equal to the market valuation of shares
a parcel of options was issued to employees with an exercise price equal to the market valuation of shares
The share based payments reserve comprises the fair value of the employee share purchase plan before
a parcel of options was issued to employees with an exercise price equal to the market valuation of shares
a parcel of options was issued to employees with an exercise price equal to the market valuation of shares
at the time of offer. The grant of share options is split into three tranches vesting over a three year period.
at the time of offer. The grant of share options is split into three tranches vesting over a three year period.
at the time of offer. The grant of share options is split into three tranches vesting over a three year period.
its classifications to share capital upon settlement.
at the time of offer. The grant of share options is split into three tranches vesting over a three year period.
at the time of offer. The grant of share options is split into three tranches vesting over a three year period.
The share based payments reserve comprises the fair value of the employee share purchase plan before
The share based payments reserve comprises the fair value of the employee share purchase plan before
The share based payments reserve comprises the fair value of the employee share purchase plan before
The share based payments reserve comprises the fair value of the employee share purchase plan before
its classifications to share capital upon settlement.
The grant date fair value of equity-settled share-based payment awards granted to employees is
its classifications to share capital upon settlement.
its classifications to share capital upon settlement.
its classifications to share capital upon settlement.
recognised as an employee expense, with a corresponding increase in equity, over the period that the
The grant date fair value of equity-settled share-based payment awards granted to employees is
The grant date fair value of equity-settled share-based payment awards granted to employees is
The grant date fair value of equity-settled share-based payment awards granted to employees is
The grant date fair value of equity-settled share-based payment awards granted to employees is
recognised as an employee expense, with a corresponding increase in equity, over the period that the
adjusted to reflect the number of awards for which the related service and non-market performance
recognised as an employee expense, with a corresponding increase in equity, over the period that the
recognised as an employee expense, with a corresponding increase in equity, over the period that the
recognised as an employee expense, with a corresponding increase in equity, over the period that the
recognised as an employee expense, with a corresponding increase in equity, over the period that the
conditions are expected to be met, such that the amount ultimately recognised as an expense is based
adjusted to reflect the number of awards for which the related service and non-market performance
on the number of awards that do meet the related service and non-market performance conditions at
adjusted to reflect the number of awards for which the related service and non-market performance
adjusted to reflect the number of awards for which the related service and non-market performance
adjusted to reflect the number of awards for which the related service and non-market performance
adjusted to reflect the number of awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately recognised as an expense is based
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
conditions are expected to be met, such that the amount ultimately recognised as an expense is based
conditions are expected to be met, such that the amount ultimately recognised as an expense is based
conditions are expected to be met, such that the amount ultimately recognised as an expense is based
conditions are expected to be met, such that the amount ultimately recognised as an expense is based
on the number of awards that do meet the related service and non-market performance conditions at
value of the share-based payment is measured to reflect such conditions and there is no true-up for
on the number of awards that do meet the related service and non-market performance conditions at
on the number of awards that do meet the related service and non-market performance conditions at
on the number of awards that do meet the related service and non-market performance conditions at
on the number of awards that do meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
differences between expected and actual outcomes.
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
value of the share-based payment is measured to reflect such conditions and there is no true-up for
value of the share-based payment is measured to reflect such conditions and there is no true-up for
value of the share-based payment is measured to reflect such conditions and there is no true-up for
value of the share-based payment is measured to reflect such conditions and there is no true-up for
differences between expected and actual outcomes.
differences between expected and actual outcomes.
differences between expected and actual outcomes.
differences between expected and actual outcomes.
value of the share-based payment is measured to reflect such conditions and there is no true-up for
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair
The grant date fair value of equity-settled share-based payment awards granted to employees is
differences between expected and actual outcomes.
33
33
33
33
33
33
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
85
ANNUAL REPORT 2023
Key valuation assumptions for the share option plan are:
Key valuation assumptions for the share option plan are:
Key valuation assumptions for the share option plan are:
Key valuation assumptions for the share option plan are:
Grant Date
Grant Date
Grant Date
Grant Date
1 August 2022
1 August 2022
1 August 2022
1 August 2022
14 November 2022
14 November 2022
14 November 2022
14 November 2022
Share price at grant date (AUD)
Share price at grant date (AUD)
Share price at grant date (AUD)
Share price at grant date (AUD)
0.775
0.775
0.775
0.775
0.93
0.93
0.93
0.93
Valuation date
Valuation date
Valuation date
Valuation date
1 March 2023
1 March 2023
1 March 2023
1 March 2023
14 November 2022
14 November 2022
14 November 2022
14 November 2022
Share price at valuation date (AUD)
Share price at valuation date (AUD)
Share price at valuation date (AUD)
Share price at valuation date (AUD)
Average exercise price (NZD)
Average exercise price (NZD)
Average exercise price (NZD)
Average exercise price (NZD)
Expected volatility
Expected volatility
Expected volatility
Expected volatility
Expected life
Expected life
Expected life
Expected life
Risk free factor
Risk free factor
Risk free factor
Risk free factor
Dividend yield
Dividend yield
Dividend yield
Dividend yield
Balance as at 1
Balance as at 1
Balance as at 1
Balance as at 1
April
April
April
April
Share based payment expense
Share based payment expense
Share based payment expense
Share based payment expense
Employee shares exercised
Employee shares exercised
Employee shares exercised
Employee shares exercised
Balance as at 31 March
Balance as at 31 March
Balance as at 31 March
Balance as at 31 March
1.10
1.10
1.10
1.10
0.64
0.64
0.64
0.64
72%
72%
72%
72%
5 years
5 years
5 years
5 years
3.55%
3.55%
3.55%
3.55%
0%
0%
0%
0%
0.93
0.93
0.93
0.93
0.94
0.94
0.94
0.94
75%
75%
75%
75%
5 years
5 years
5 years
5 years
3.24%
3.24%
3.24%
3.24%
0%
0%
0%
0%
2023
2023
2023
2023
$000
$000
$000
$000
2022
2022
2022
2022
$000
$000
$000
$000
4,812
4,812
4,812
4,812
2,130
2,130
2,130
2,130
2,578
2,578
2,578
2,578
(211)
(211)
(211)
(211)
7,179
7,179
7,179
7,179
2,965
2,965
2,965
2,965
(283)
(283)
(283)
(283)
4,812
4,812
4,812
4,812
a) Aroa Biosurgery share option plan (the “Option Plan”) – prior to IPO
a) Aroa Biosurgery share option plan (the “Option Plan”) – prior to IPO
a) Aroa Biosurgery share option plan (the “Option Plan”) – prior to IPO
a) Aroa Biosurgery share option plan (the “Option Plan”) – prior to IPO
Under the Option Plan prior to IPO, the Company granted directors, key management and certain
Under the Option Plan prior to IPO, the Company granted directors, key management and certain
employees, options to subscribe for ordinary shares since 2017.
employees, options to subscribe for ordinary shares since 2017.
Under the Option Plan prior to IPO, the Company granted directors, key management and certain
Under the Option Plan prior to IPO, the Company granted directors, key management and certain
employees, options to subscribe for ordinary shares since 2017.
employees, options to subscribe for ordinary shares since 2017.
The opening balance of share options and the share options exercised during the prior year are prior to
The opening balance of share options and the share options exercised during the prior year are prior to
The opening balance of share options and the share options exercised during the prior year are prior to
The opening balance of share options and the share options exercised during the prior year are prior to
the 75:1 share split, which took effect upon the initial public offering in July 2020.
the 75:1 share split, which took effect upon the initial public offering in July 2020.
the 75:1 share split, which took effect upon the initial public offering in July 2020.
the 75:1 share split, which took effect upon the initial public offering in July 2020.
Summary of options granted under the Option Plan – prior to IPO
Summary of options granted under the Option Plan – prior to IPO
Summary of options granted under the Option Plan – prior to IPO
Summary of options granted under the Option Plan – prior to IPO
2023
2023
2023
2023
Average
Average
Average
Average
exercise
exercise
exercise
exercise
price per
price per
price per
price per
option
option
option
option
NZ$
NZ$
NZ$
NZ$
0.10
0.10
0.10
0.10
2023
2023
2023
2023
# of
# of
# of
# of
options
options
options
options
3,085,200
3,085,200
3,085,200
3,085,200
2022
2022
2022
2022
Average
Average
Average
Average
exercise
exercise
exercise
exercise
price per
price per
price per
price per
option
option
option
option
NZ$
NZ$
NZ$
NZ$
0.10
0.10
0.10
0.10
2022
2022
2022
2022
# of
# of
# of
# of
options
options
options
options
3,919,575
3,919,575
3,919,575
3,919,575
Opening balance
Opening balance
Opening balance
Opening balance
Exercised during the period
Exercised during the period
Exercised during the period
Exercised during the period
0.10
0.10
0.10
0.10
(243,750)
(243,750)
(243,750)
(243,750)
0.10
0.10
0.10
0.10
(834,375)
(834,375)
(834,375)
(834,375)
Closing balance
Closing balance
Closing balance
Closing balance
0.10
0.10
0.10
0.10
2,841,450
2,841,450
2,841,450
2,841,450
0.10
0.10
0.10
0.10
3,085,200
3,085,200
3,085,200
3,085,200
Vested and exercisable as
Vested and exercisable as
Vested and exercisable as
Vested and exercisable as
at 31 March
at 31 March
at 31 March
at 31 March
0.10
0.10
0.10
0.10
2,841,450
2,841,450
2,841,450
2,841,450
0.10
0.10
0.10
0.10
1,896,450
1,896,450
1,896,450
1,896,450
86
34
34
34
34
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
Share options outstanding at the end of the year have the following expiry dates:
Grant date
Expiry date
Share
options
Share
options
31 March
2023
31 March
2022
1 October 2018
1 July 2019
1 December 2019
Total
01 October 2028
01 October 2028
1,339,900
1,339,900
228,750
307,500
30 November 2029
1,272,800
1,437,800
2,841,450
3,085,200
b) Aroa Biosurgery share option plan (the “Option Plan”) – on and after IPO
On the Group’s IPO in July 2020, the share options were issued to certain employees and directors under
a new share option plan. Under this plan, the Group continue to issue options to certain employees and
directors.
Grants under the Option Plan comprised 17,828,074 (FY22: 12,901,575) share options with various vesting
conditions including non-market service conditions, market conditions and non-market performance
conditions.
Summary of options granted under the Option Plan – on and after IPO
Opening balance
Granted in April 2021
Granted in June 2021
Granted in August 2021
Granted in August 2022
Granted in November 2022
Exercised during the year
Forfeited during the period
Closing balance
2023
Average
exercise
price per
option
NZ$
1.07
-
-
-
0.64
0.94
1.23
1.21
1.09
2023
# of
options
12,901,575
-
-
-
3,545,344
2,093,580
(435,758)
(276,667)
2022
Average
exercise
price per
option
NZ$
0.93
1.23
1.14
1.24
-
-
0.50
1.07
2022
# of
options
7,950,200
350,000
2,535,000
3,525,000
-
-
(402,425)
(1,056,200)
17,828,074
1.07
12,901,575
Vested and exercisable at 31 March
1.22
8,964,193
0.99 7,620,050
35
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
87
ANNUAL REPORT 2023
Share options – on and after IPO outstanding at the end of the year have the following
expiry dates:
Grant date
Expiry date
24 July 2020
29 September 2020
22 April 2021
28 June 2021
9 August 2021
1 August 2022
14 November 2022
Total
23 July 2025
28 September 2025
31 March 2026
28 June 2026
8 August 2026
29 February 2028
13 November 2027
20. Earnings per share
Share
options
31 March
2023
4,935,950
1,683,200
200,000
2,295,000
3,075,000
3,545,344
2,093,580
Share
options
31 March
2023
5,338,375
1,683,200
300,000
2,405,000
3,175,000
-
-
17,828,074
12,901,575
Earnings per share has been calculated based on shares and share options issued at the respective
measurement dates.
Numerator
Loss for the year after tax (“N”) in $000
Denominator
2023
(396)
2022
(8,386)
Weighted average number of ordinary shares used in basic EPS (“D1”)
342,917
342,162
Effects of:
Employee share options *
Weighted average number of shares used in diluted EPS
(“D2”)
Basic earnings per share (N/D1 x 100)
Diluted earnings per share (N/D2 x 100)
18,673
17,142
342,917
342,162
Cents
(0.12)
(0.12)
Cents
(2.45)
(2.45)
* As employee share options are anti-dilutive, these were not included in the calculation of diluted
earnings per share above.
21. Related parties
(i)
Subsidiaries
Interests in subsidiaries are set out in Note 1.
(ii)
Key management compensation
Key management includes Directors (Executive and Non-Executive) and the executive management
team.
The total compensation for the executive management team is $3,030,000 (FY22: $2,848,000),
including share based payments of $609,000 (FY2022: $594,000).
The total compensation for Non-Executive Directors is $754,000 (FY22: $584,000), including share
based payments of $262,000 (FY22: $173,000).
88
36
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
(iii)
Year end balances
There were no related party receivables and related party payables at year end (2022: $nil).
(iv)
Transactions with related parties
There were no other related party transactions during the year.
22. Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme 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 different types of risk
to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign
exchange risks and aging analysis for credit risk.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates,
will affect the Group's income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control risk exposures within acceptable parameters whilst
optimising the return on risk.
Foreign exchange risk
The Group is exposed to currency risk on sales, purchases and liabilities that are denominated in a
currency other than the respective functional currency of the Company, being NZ dollars (NZD). The
currency risk arises primarily with respect to sales and expenses.
The Group has certain net monetary assets/(liabilities) that are exposed to foreign currency risk. The
table below summarises the Group’s net exposure at reporting date to foreign currency risk, against its
respective functional currency, expressed in NZ dollars.
Exposure to foreign currency risk
2023
Cash and cash equivalents
Trade and other receivables
Financial assets at FVTOCI
Trade and other payables
Net exposure
2022
Cash and cash equivalents
Trade and other receivables
Financial assets at FVTOCI
Trade and other payables
Net exposure
USD
$000
3,199
7,683
791
(796)
10,877
USD
$000
2,473
7,367
864
(832)
9,872
AUD
$000
-
-
-
(24)
(24)
AUD
$000
-
-
-
(148)
(148)
EUR
$000
-
19
-
-
19
EUR
$000
-
-
-
-
-
37
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
89
ANNUAL REPORT 2023
The following significant exchange rates applied during the year:
NZD/USD
Average
rate
2023
0.6246
Average
rate
2022
0.6966
Closing
rate
2023
0.6275
Closing
rate
2022
0.6975
Sensitivity analysis – underlying exposures
A 5% weakening/strengthening of the NZ dollar against the US dollar at 31 March 2023 would have
increased/decreased equity and the net result for the period by the amounts shown below. Based on
historical movements a 5% increase or decrease in the NZ dollar is considered to be a reasonable
estimate. This analysis assumes that all other variables remain constant.
US dollar
The Group’s net result and equity for the period would have been $2,812,000 higher on a 5% weakening
of the NZ dollar (2022: $744,000 higher), and $2,544,000 lower on a 5% strengthening of the NZ dollar
as at 31 March 2022 (2022: $677,000 lower).
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents and
deposits with banks and financial institutions, as well as from the Group's receivables due from
customers. Only major banks are accepted for cash and deposit balances.
Payment and delivery terms are agreed to within each of the respective customers agreements. Aging
of payments due from customers are monitored on a regular basis.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets
as summarised in Note 23. The Group does not foresee losses on trade receivables over the next 12
months. The Group does not hold any collateral as security.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group's reputation.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
The tables below analyse the Group's financial liabilities into relevant maturity groupings based on the
remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows, including interest payments in respect of financial
liabilities.
90
38
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
Less than
3 months
3-12
months
Between
1 and 2
years
Over 2
years
Total
contractual
cash flows
Total
Carrying
amounts
At 31 March 2023
Note
$000
$000
$000
$000
$000
$000
Financial liabilities
Trade and other
payables
Lease liabilities
Total
14
17
3,607
202
3,809
-
1,024
1,024
-
1,261
1,261
Less
than 3
months
3-12
months
Between
1 and 2
years
-
6,380
6,380
Over 2
years
3,607
8,867
12,474
3,607
7,107
10,714
Total
contractual
cash flows
Total
Carrying
amounts
At 31 March 2022
Note
$000
$000
$000
$000
$000
$000
Financial liabilities
Trade and other
payables
Lease liabilities
Total
14
17
Capital adequacy
3,089
164
3,253
-
781
781
-
884
884
-
5,709
5,709
3,089
7,538
10,627
3,089
5,876
8,965
The Board’s aim is to maintain a strong capital base to sustain future development of the business and
to maintain investor and creditor confidence. The shareholder funds raised to date provide the Group a
sufficient capital base to continue to grow the business.
23. Financial instruments by category
(i)
Non-derivative financial liabilities
The Group recognises all other financial liabilities (including liabilities designated at fair value through
profit or loss) recognised initially on the trade date, which is the date that the Group become a party to
the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or
expire.
The Group classifies non-derivative financial liabilities into the other financial liability category. Such
financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the
effective interest method.
Other financial liabilities comprise trade and other payables.
(ii)
Non-derivative financial assets
The Group initially recognises financial assets at amortised cost on the date that they are originated.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in
transferred financial assets that is created or retained by the Group is recognised as a separate asset or
liability.
39
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2021 - CONFIDENTIAL
91
ANNUAL REPORT 2023
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to offset the amounts and intends either to
settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial assets into the following categories: financial assets at fair
value through other comprehensive income and financial assets at amortised cost.
Assets at
amortised
cost
Assets at
Fair value
through other
comprehensive
income
Total
At 31 March 2023
Note
$000
$000
$000
Assets as per Consolidated Statement of Financial
Position
Cash and cash equivalents
Term Deposit
Trade and other receivables
Financial assets at FVTOCI
Total financial assets
8
8
10
9
9,540
35,134
14,092
-
58,766
-
-
-
1,260
1,260
Liabilities at
amortised cost
9,540
35,134
14,092
1,260
60,026
Total
At 31 March 2023
Liabilities as per Consolidated Statement of
Note
$000
$000
Financial
Position
Trade and other payables
Lease liabilities
Total financial liabilities
At 31 March 2022
Assets as per consolidated Statement of Financial
Position
Cash and cash equivalents
Term Deposit
Trade and other receivables
Financial assets at FVTOCI
Total financial assets
At 31 March 2022
Liabilities as per consolidated Statement
of Financial Position
Trade and other payables
Lease liabilities
Total financial liabilities
14
17
360
7,107
7,467
360
7,107
7,467
Assets at
amortised
cost
Assets at
Fair value
through other
comprehensive
income
Total
Note
$000
$000
$000
8
8
10
9
Note
14
17
6,165
50,000
12,399
-
68,564
-
1,239
1,239
Liabilities at
amortised cost
$000
1,382
5,876
7,258
6,165
50,000
12,399
1,239
69,803
Total
$000
$000
1,382
5,876
7,258
92
40
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
(iii)
Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below.
Financial assets
US listed equity securities
Derivative financial assets
Note
9
2023
$000
1,260
192
2022
$000
1,239
-
The fair value of the listed equity securities is based on published market price (level 1 in the fair value
hierarchy) and is revalued at reporting date. The fair value of derivative assets is based on level 3 inputs.
(iv)
Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other
receivables, trade and other payables.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other
receivables, and trade and other payables approximates their fair value.
24. Events after the reporting date
There have been no significant events subsequent to reporting date which required disclosure in or
adjustment to the consolidated financial statements.
25. Other Disclosures
a. Reconciliation of loss after income tax to cash flow from operating activities
Loss after tax
Add (deduct) non-cash items:
Depreciation of property, plant and equipment
Depreciation of right of use assets
Gain on disposal of assets
Amortisation of intangibles
Share based payments
Foreign exchange loss - deferred consideration
Interest - deferred consideration
Interest – lease liabilities
Foreign currency translation
Non-Capitalised IPO costs
Movement in working capital:
Movement in provisions
Movement in tax receivable
Movement in trade and other receivables
Movement in prepayments and contract assets
Movement in inventory
Movement in trade and other payables
Movement in interest payables
Net cash flows from operating activities
2023
$000
(396)
1,798
807
13
1,229
2,578
-
-
378
(266)
-
6
(387)
(2,235)
(6,393)
(2,748)
1,844
-
(3,772)
2022
$000
(8,386)
1,134
773
4
1,224
2,966
(11)
747
403
212
50
3
90
(8,349)
(2,039)
(323)
1,320
(1,340)
(11,522)
41
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
93
ANNUAL REPORT 2023
b. Reconciliation of loss after income tax to cash flow from operating activities
Lease
liabilities
Paid up
share
capital
Note 17
$000
Note 18
$000
(5,876)
(145,755)
1,024
-
-
(1,877)
(378)
(520)
-
(216)
-
-
Total
$000
(151,631)
504
-
(216)
(1,877)
(378)
At 1 April 2022
Cash flow
Non-cash flow:
Share based payments
Lease
Interest on lease payments
At 31 March 2023
(7,107)
(146,491)
(153,598)
Deferred
Consideration
Lease
liabilities
Note 19
Paid up
share
capital
Note 18
Transaction
Cost
Total
$000
$000
$000
$000
$000
(9,952)
(6,282)
(97,316)
-
-
(113,550)
9,514
-
(155)
593
-
-
-
-
963
(50,324)
2,214
(37,633)
-
-
-
-
(154)
(403)
-
-
-
-
(283)
-
-
-
-
-
-
-
-
(155)
593
(283)
(154)
(403)
2,168
(2,214)
(46)
At 1 April 2021
Cash flow
Non-cash flow:
FX on deferred consideration
Interest - deferred
consideration
Share based payments
Lease
Interest on lease payments
Allocation of Transaction cost
At 31 March 2022
(5,876)
(145,755)
(151,631)
c. Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at reporting date
exchange rates are recognised profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined and are recognised in Other Comprehensive
Income (except on impairment in which case foreign currency differences that have been recognised in
Other Comprehensive Income are reclassified to profit or loss).
94
42
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
d. Goods and services tax (GST)
Revenues and expenses have been recognised in the financial statements exclusive of GST except that
irrecoverable GST input tax has been recognised in association with the expense to which it relates. All
items in the Statement of Financial Position are stated exclusive of GST except for receivables and
payables which are stated inclusive of GST.
e. Capital commitments
As at 31 March 2023, the Group had equipment capital commitments of $3,051,000 (2022: $337,000).
f. Contingent liabilities
As at 31 March 2023, the Group had no significant contingent liabilities (2022: $nil).
43
AROA BIOSURGERY LIMITED CONSOLIDATED FINANCIAL STATEMENTS 2023
95
ANNUAL REPORT 2023
96
ADDITIONAL INFORMATION
Aroa Biosurgery Limited
(NZ Company no. 1980577 / ARBN 638 867 473)
Aroa Biosurgery Limited is a New Zealand incorporated company and is registered with ASIC as a foreign
company. The Company is accordingly principally governed by New Zealand law, rather than Australian law.
This means that the Company’s general corporate activities (apart from any offering of securities in Australia
and certain reporting and disclosure obligations) are not regulated under the Corporations Act by ASIC. They
are instead regulated in New Zealand by New Zealand law including the Companies Act 1993, Financial Markets
Conduct Act 2013, Financial Markets Conduct Regulations 2014 and by the New Zealand Financial Markets
Authority and the Registrar of Companies.
Stock exchange information and on-market buy-backs
The Company’s shares were officially quoted on the ASX on 24 July 2020 (ASX Code: ARX). During the year
ended 31 March 2023, the Company did not seek, or rely upon, any waivers from the ASX Listing Rules. There
is no current on-market buy-back of the Company’s shares and the Company did not undertake an on-market
buy-back of its shares during the year ended 31 March 2023.
Ordinary shares
On 31 March 2023 and as at the date of this Annual Report, the Company only has one class of shares on issue,
being ordinary shares in the Company, each conferring to the registered holder the rights set out in the
Company’s constitution, including the right to vote on any resolution at a meeting of shareholders. Holders of
ordinary shares may vote at a meeting, in person or by proxy, representative or attorney.
The total number of ordinary shares in the Company on issue as at 31 March 2023 was 343,109,468 shares and
the total number of ordinary shares in the Company on issue as at 31 May 2023 was 343,109,468 shares.
The distribution of shareholdings as at 31 May 2023 is as shown in the table below:
Size of shareholding
Number of holders
%
Number of ordinary shares
%
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
TOTAL
922
1,243
564
759
121
3,609
25.55
34.44
15.63
21.03
3.35
100
583,029
3,576,550
4,530,775
23,880,312
310,538,802
343,109,468
0.17
1.04
1.32
6.96
90.51
100
Based on the closing market price of AROA’s ordinary shares on 31 May 2023, the number of shareholdings
held in less than marketable parcels is 382, representing 136,412 shares. The Company has not carried out any
issues of securities approved for the purposes of Item 7 of section 611 of the Corporations Act.
18
97
ANNUAL REPORT 2023
Share options
Twenty largest shareholders
Twenty largest shareholders
As at 31 March 2023, there were 20,712,624 share options on issue (representing the same number of unissued
ordinary shares) held by 86 holders under the NZ Option Plan and US Option Plan. Share options do not carry
voting rights.
The names and holdings of the 20 largest registered shareholders in the Company as at 31 May 2023 was as
The names and holdings of the 20 largest registered shareholders in the Company as at 31 May 2023 was as
follows:
follows:
The distribution of share options as at 31 May 2023 is as shown in the table below:
Size of holding
Number of holders
%
Number of options
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
TOTAL
-
-
-
42
44
86
-
-
-
48.84
51.16
100
-
-
-
2,283,788
18,478,836
20,762,624
%
-
-
-
11.00
89.00
100
Please refer to the Remuneration Report and note 19 to the consolidated financial statements for further details
of share options outstanding.
Shares issued on exercise of options
The table below outlines ordinary shares issued during FY23 upon exercise of share options granted under the
NZ Option Plan. No share options issued under the US Option Plan were exercised during the year.
Under the NZ Option Plan rules, at the Board’s discretion, options may be exercised by cashless settlement.
This involves issuing a reduced number of shares to the participant equivalent to: (a) an amount equal to the
difference between the current value of the Company’s shares (being the VWAP for the five trading days
immediately preceding the option exercise date) and the exercise price of the shares, multiplied by the number
of options being exercised, and divided by (b) the current value of the Company’s shares.
Date options exercised
Number of options exercised
Average exercise price
Number of shares issued
12/04/2022
12/04/2022
184,325
78,750*
14/12/2022
165,000*
03/02/2023
218,100
03/02/2023
33,333
*Share options issued prior to IPO.
A$0.75
NZ$0.0979
NZ$0.1075
A$0.075
A$1.15
184,325
78,750
165,000
218,100
2,160
Shareholder name
Shareholder name
Shareholding
Shareholding
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
MR BRIAN WARD & MRS TRACEY WARD
2 A/C>
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
NATIONAL NOMINEES LIMITED
PHIL MCCAW
PHIL MCCAW
RICHARD ABBOTT
RICHARD ABBOTT
ASPIRE NZ SEED FUND LTD
ASPIRE NZ SEED FUND LTD
BNP PARIBAS NOMINEES PTY LTD
DRP A/C>
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMS (NZ) LTD
CUSTODIAL SERVICES LIMITED
HOLDING A/C>
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMS PTY LTD
K ONE W ONE (NO 3) LTD
K ONE W ONE (NO 3) LTD
SHARON BRYANT
SHARON BRYANT
CHRISTOPHER DAVID ASTLEY MILNE
CHRISTOPHER DAVID ASTLEY MILNE
K ONE W ONE LTD
K ONE W ONE LTD
GFT 2 CO PTY LIMITED
GFT 2 CO PTY LIMITED
JAMES MCLEAN
JAMES MCLEAN
MESYNTHES NOMINEES LTD
MESYNTHES NOMINEES LTD
BARNABY MAY
BARNABY MAY
Total Top 20 Holders
Total Top 20 Holders
Total Securities
Total Securities
47,694,722
47,694,722
33,125,800
33,125,800
31,448,545
31,448,545
24,111,683
24,111,683
20,287,882
20,287,882
19,751,154
19,751,154
13,043,020
13,043,020
12,689,627
12,689,627
10,422,463
10,422,463
8,261,303
8,261,303
6,846,246
6,846,246
6,682,320
6,682,320
5,882,550
5,882,550
4,372,267
4,372,267
3,213,022
3,213,022
3,041,226
3,041,226
2,820,912
2,820,912
2,777,108
2,777,108
2,568,600
2,568,600
2,449,500
2,449,500
261,489,950
261,489,950
343,109,468
343,109,468
Holding as a % of total
Holding as a % of total
ordinary shares on issue
ordinary shares on issue
as at the date above
as at the date above
13.90
13.90
9.65
9.65
9.17
9.17
7.03
7.03
5.91
5.91
5.75
5.75
3.80
3.80
3.70
3.70
3.04
3.04
2.41
2.41
2.00
2.00
1.95
1.95
1.71
1.71
1.27
1.27
0.94
0.94
0.89
0.89
0.82
0.82
0.81
0.81
0.75
0.75
0.71
0.71
76.21
76.21
Takeovers and substantial holdings
Takeovers and substantial holdings
While the ASX Listing Rules apply to the Company, certain provisions of the Corporations Act do not. The
While the ASX Listing Rules apply to the Company, certain provisions of the Corporations Act do not. The
Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of its
Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of its
shares (including takeovers and substantial holdings). The New Zealand position under the Takeovers Code
shares (including takeovers and substantial holdings). The New Zealand position under the Takeovers Code
(as set out in the Takeovers Regulations 2000) and the Financial Markets Conduct Act 2013 is broadly
(as set out in the Takeovers Regulations 2000) and the Financial Markets Conduct Act 2013 is broadly
comparable to the Australian position in relation to the regulation of takeovers. The New Zealand takeovers
comparable to the Australian position in relation to the regulation of takeovers. The New Zealand takeovers
regime, not the Australian takeovers regime, will apply to the Company as a foreign company. A 20%
regime, not the Australian takeovers regime, will apply to the Company as a foreign company. A 20%
98
19
20
20
Share options
voting rights.
As at 31 March 2023, there were 20,712,624 share options on issue (representing the same number of unissued
ordinary shares) held by 86 holders under the NZ Option Plan and US Option Plan. Share options do not carry
Twenty largest shareholders
Twenty largest shareholders
Twenty largest shareholders
Twenty largest shareholders
The names and holdings of the 20 largest registered shareholders in the Company as at 31 May 2023 was as
The names and holdings of the 20 largest registered shareholders in the Company as at 31 May 2023 was as
The names and holdings of the 20 largest registered shareholders in the Company as at 31 May 2023 was as
follows:
The names and holdings of the 20 largest registered shareholders in the Company as at 31 May 2023 was as
follows:
follows:
follows:
The distribution of share options as at 31 May 2023 is as shown in the table below:
Size of holding
Number of holders
%
Number of options
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
TOTAL
-
-
-
42
44
86
-
-
-
48.84
51.16
100
-
-
-
2,283,788
18,478,836
20,762,624
%
-
-
-
11.00
89.00
100
Please refer to the Remuneration Report and note 19 to the consolidated financial statements for further details
of share options outstanding.
Shares issued on exercise of options
The table below outlines ordinary shares issued during FY23 upon exercise of share options granted under the
NZ Option Plan. No share options issued under the US Option Plan were exercised during the year.
Under the NZ Option Plan rules, at the Board’s discretion, options may be exercised by cashless settlement.
This involves issuing a reduced number of shares to the participant equivalent to: (a) an amount equal to the
difference between the current value of the Company’s shares (being the VWAP for the five trading days
immediately preceding the option exercise date) and the exercise price of the shares, multiplied by the number
of options being exercised, and divided by (b) the current value of the Company’s shares.
Date options exercised
Number of options exercised
Average exercise price
Number of shares issued
12/04/2022
12/04/2022
184,325
78,750*
14/12/2022
165,000*
03/02/2023
218,100
03/02/2023
33,333
*Share options issued prior to IPO.
A$0.75
NZ$0.0979
NZ$0.1075
A$0.075
A$1.15
184,325
78,750
165,000
218,100
2,160
Shareholder name
Shareholder name
Shareholder name
Shareholder name
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
MR BRIAN WARD & MRS TRACEY WARD
2 A/C>
2 A/C>
2 A/C>
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
NATIONAL NOMINEES LIMITED
NATIONAL NOMINEES LIMITED
NATIONAL NOMINEES LIMITED
PHIL MCCAW &
PHIL MCCAW
PHIL MCCAW
PHIL MCCAW
PHIL MCCAW
RICHARD ABBOTT
RICHARD ABBOTT
RICHARD ABBOTT
RICHARD ABBOTT
ASPIRE NZ SEED FUND LTD
ASPIRE NZ SEED FUND LTD
ASPIRE NZ SEED FUND LTD
ASPIRE NZ SEED FUND LTD
BNP PARIBAS NOMINEES PTY LTD
DRP A/C>
DRP A/C>
DRP A/C>
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMS (NZ) LTD
BNP PARIBAS NOMS (NZ) LTD
CUSTODIAL SERVICES LIMITED
HOLDING A/C>
HOLDING A/C>
HOLDING A/C>
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMS PTY LTD
K ONE W ONE (NO 3) LTD
K ONE W ONE (NO 3) LTD
K ONE W ONE (NO 3) LTD
K ONE W ONE (NO 3) LTD
SHARON BRYANT
SHARON BRYANT
SHARON BRYANT
SHARON BRYANT
CHRISTOPHER DAVID ASTLEY MILNE
CHRISTOPHER DAVID ASTLEY MILNE
CHRISTOPHER DAVID ASTLEY MILNE
CHRISTOPHER DAVID ASTLEY MILNE
K ONE W ONE LTD
K ONE W ONE LTD
K ONE W ONE LTD
K ONE W ONE LTD
GFT 2 CO PTY LIMITED
GFT 2 CO PTY LIMITED
GFT 2 CO PTY LIMITED
GFT 2 CO PTY LIMITED
JAMES MCLEAN
JAMES MCLEAN
JAMES MCLEAN
JAMES MCLEAN
MESYNTHES NOMINEES LTD
MESYNTHES NOMINEES LTD
MESYNTHES NOMINEES LTD
MESYNTHES NOMINEES LTD
BARNABY MAY
BARNABY MAY
BARNABY MAY
BARNABY MAY
Total Top 20 Holders
Total Top 20 Holders
Total Top 20 Holders
Total Top 20 Holders
Total Securities
Total Securities
Total Securities
Total Securities
Shareholding
Shareholding
Shareholding
Shareholding
47,694,722
47,694,722
47,694,722
47,694,722
33,125,800
33,125,800
33,125,800
33,125,800
31,448,545
31,448,545
31,448,545
31,448,545
24,111,683
24,111,683
24,111,683
24,111,683
20,287,882
20,287,882
20,287,882
20,287,882
19,751,154
19,751,154
19,751,154
19,751,154
13,043,020
13,043,020
13,043,020
13,043,020
12,689,627
12,689,627
12,689,627
12,689,627
10,422,463
10,422,463
10,422,463
10,422,463
8,261,303
8,261,303
8,261,303
8,261,303
6,846,246
6,846,246
6,846,246
6,846,246
6,682,320
6,682,320
6,682,320
6,682,320
5,882,550
5,882,550
5,882,550
5,882,550
4,372,267
4,372,267
4,372,267
4,372,267
3,213,022
3,213,022
3,213,022
3,213,022
3,041,226
3,041,226
3,041,226
3,041,226
2,820,912
2,820,912
2,820,912
2,820,912
2,777,108
2,777,108
2,777,108
2,777,108
2,568,600
2,568,600
2,568,600
2,568,600
2,449,500
2,449,500
2,449,500
2,449,500
261,489,950
261,489,950
261,489,950
261,489,950
343,109,468
343,109,468
343,109,468
343,109,468
Holding as a % of total
Holding as a % of total
Holding as a % of total
ordinary shares on issue
Holding as a % of total
ordinary shares on issue
ordinary shares on issue
as at the date above
ordinary shares on issue
as at the date above
as at the date above
as at the date above
13.90
13.90
13.90
13.90
9.65
9.65
9.65
9.65
9.17
9.17
9.17
9.17
7.03
7.03
7.03
7.03
5.91
5.91
5.91
5.91
5.75
5.75
5.75
5.75
3.80
3.80
3.80
3.80
3.70
3.70
3.70
3.70
3.04
3.04
3.04
3.04
2.41
2.41
2.41
2.41
2.00
2.00
2.00
2.00
1.95
1.95
1.95
1.95
1.71
1.71
1.71
1.71
1.27
1.27
1.27
1.27
0.94
0.94
0.94
0.94
0.89
0.89
0.89
0.89
0.82
0.82
0.82
0.82
0.81
0.81
0.81
0.81
0.75
0.75
0.75
0.75
0.71
0.71
0.71
0.71
76.21
76.21
76.21
76.21
Takeovers and substantial holdings
Takeovers and substantial holdings
Takeovers and substantial holdings
Takeovers and substantial holdings
While the ASX Listing Rules apply to the Company, certain provisions of the Corporations Act do not. The
While the ASX Listing Rules apply to the Company, certain provisions of the Corporations Act do not. The
While the ASX Listing Rules apply to the Company, certain provisions of the Corporations Act do not. The
Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of its
While the ASX Listing Rules apply to the Company, certain provisions of the Corporations Act do not. The
Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of its
Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of its
shares (including takeovers and substantial holdings). The New Zealand position under the Takeovers Code
Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of its
shares (including takeovers and substantial holdings). The New Zealand position under the Takeovers Code
shares (including takeovers and substantial holdings). The New Zealand position under the Takeovers Code
(as set out in the Takeovers Regulations 2000) and the Financial Markets Conduct Act 2013 is broadly
shares (including takeovers and substantial holdings). The New Zealand position under the Takeovers Code
(as set out in the Takeovers Regulations 2000) and the Financial Markets Conduct Act 2013 is broadly
(as set out in the Takeovers Regulations 2000) and the Financial Markets Conduct Act 2013 is broadly
comparable to the Australian position in relation to the regulation of takeovers. The New Zealand takeovers
(as set out in the Takeovers Regulations 2000) and the Financial Markets Conduct Act 2013 is broadly
comparable to the Australian position in relation to the regulation of takeovers. The New Zealand takeovers
comparable to the Australian position in relation to the regulation of takeovers. The New Zealand takeovers
regime, not the Australian takeovers regime, will apply to the Company as a foreign company. A 20%
comparable to the Australian position in relation to the regulation of takeovers. The New Zealand takeovers
regime, not the Australian takeovers regime, will apply to the Company as a foreign company. A 20%
regime, not the Australian takeovers regime, will apply to the Company as a foreign company. A 20%
regime, not the Australian takeovers regime, will apply to the Company as a foreign company. A 20%
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ANNUAL REPORT 2023
threshold applies (under which a person (together with their associates) is prevented from increasing the
threshold applies (under which a person (together with their associates) is prevented from increasing the
percentage of voting rights held or controlled by them in excess of that 20% threshold or from increasing an
percentage of voting rights held or controlled by them in excess of that 20% threshold or from increasing an
existing holding of more than 20% of the voting rights), subject to certain exceptions (including, but not limited
existing holding of more than 20% of the voting rights), subject to certain exceptions (including, but not limited
to, full and partial takeover offers, 5% creep over 12 months in the 50% to 90% range, and acquisitions with
to, full and partial takeover offers, 5% creep over 12 months in the 50% to 90% range, and acquisitions with
shareholder approval). Compulsory acquisitions are permitted by persons who hold or control 90% or more
shareholder approval). Compulsory acquisitions are permitted by persons who hold or control 90% or more
voting rights in a code company.
voting rights in a code company.
Under New Zealand law, there is no requirement for a shareholder of the Company to issue a substantial
Under New Zealand law, there is no requirement for a shareholder of the Company to issue a substantial
holding notice of holdings above 5%, and because the Company is a New Zealand company the Corporations
holding notice of holdings above 5%, and because the Company is a New Zealand company the Corporations
Act provisions regarding substantial shareholder notices do not apply to the Company. However, a
Act provisions regarding substantial shareholder notices do not apply to the Company. However, a
shareholder may voluntarily disclose such information if it chooses to do so and a number of New Zealand
shareholder may voluntarily disclose such information if it chooses to do so and a number of New Zealand
companies listed on ASX experience shareholders lodging notices similar to a substantial shareholder notice
companies listed on ASX experience shareholders lodging notices similar to a substantial shareholder notice
that is required under the Corporations Act notwithstanding there is no requirement to do so. Separately, the
that is required under the Corporations Act notwithstanding there is no requirement to do so. Separately, the
Company has undertaken to ASX that it will inform the market immediately on becoming aware of a person
Company has undertaken to ASX that it will inform the market immediately on becoming aware of a person
becoming a Substantial Holder, a movement of at least 1% of shares in which the Substantial Holder has a
becoming a Substantial Holder, a movement of at least 1% of shares in which the Substantial Holder has a
relevant interest and a person ceasing to be a Substantial Holder.
relevant interest and a person ceasing to be a Substantial Holder.
Limitations on the acquisition of AROA shares
Limitations on the acquisition of AROA shares
In general under applicable law, securities in the Company are freely transferrable and the only significant
In general under applicable law, securities in the Company are freely transferrable and the only significant
restrictions or limitations in relation to the acquisition of AROA shares are those imposed by the New Zealand
restrictions or limitations in relation to the acquisition of AROA shares are those imposed by the New Zealand
takeovers regime (discussed above) and if applicable, the Overseas Investment Act 2005 (NZ) and the
takeovers regime (discussed above) and if applicable, the Overseas Investment Act 2005 (NZ) and the
Commerce Act 1986 (NZ).
Commerce Act 1986 (NZ).
AROA’s constitution also permits the directors to (in their absolute discretion) refuse or delay the registration
AROA’s constitution also permits the directors to (in their absolute discretion) refuse or delay the registration
of any transfer of AROA shares if permitted to do so by the Companies Act or the ASX Listing Rules. This
of any transfer of AROA shares if permitted to do so by the Companies Act or the ASX Listing Rules. This
includes (without limitation) if the relevant shares are subject to a holding lock pursuant to the ASX Settlement
includes (without limitation) if the relevant shares are subject to a holding lock pursuant to the ASX Settlement
Operating Rules or escrow.
Operating Rules or escrow.
Substantial shareholders
Substantial shareholders
Set out below is, to the best of the Company’s knowledge, details relating to all Substantial Holders in the
Set out below is, to the best of the Company’s knowledge, details relating to all Substantial Holders in the
Company as at 31 May 2023.
Company as at 31 May 2023.
Shareholder name
Shareholder name
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
Mr Brian Ward** & Mrs Tracey Ward
Mr Brian Ward** & Mrs Tracey Ward
J P Morgan Nominees Australia Pty Limited
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
National Nominees Limited
Phil McCaw &
Phil McCaw
Phil McCaw
***
Shareholding*
Shareholding*
47,694,722
47,694,722
33,125,800
33,125,800
31,448,545
31,448,545
24,111,683
24,111,683
20,287,882
20,287,882
19,751,154
19,751,154
Holding as a % of total
Holding as a % of total
ordinary shares on issue
ordinary shares on issue
as at 31 May 2023
as at 31 May 2023
13.90
13.90
9.65
9.65
9.17
9.17
7.03
7.03
5.91
5.91
5.75
5.75
*of the Substantial Holder and their “associates” (within the meaning given to that term in section 12 of the Corporations
*of the Substantial Holder and their “associates” (within the meaning given to that term in section 12 of the Corporations
Act).
Act).
** Brian Ward also holds 3,132,525 unlisted options expiring 23 July 2025 at an exercise price of NZ$0.75 per option;
** Brian Ward also holds 3,132,525 unlisted options expiring 23 July 2025 at an exercise price of NZ$0.75 per option;
1,217,610 unlisted options expiring 13 November 2027 at a nil exercise price; 649,695 unlisted options expiring 13
1,217,610 unlisted options expiring 13 November 2027 at a nil exercise price; 649,695 unlisted options expiring 13
November 2027 at an exercise price of AU$1.165; 453,206 unlisted options expiring 29 February 2028 at a nil exercise
November 2027 at an exercise price of AU$1.165; 453,206 unlisted options expiring 29 February 2028 at a nil exercise
price; and 254,972 unlisted options expiring 29 February 2028 at an exercise price of AU$1.165.
price; and 254,972 unlisted options expiring 29 February 2028 at an exercise price of AU$1.165.
100
21
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*** The shareholding referenced above reflects holdings by the McSyth Capital Investment Trust as well as the McSyth
Charitable Foundation Trust, the latter being a registered charity of which Phil is one of 2 trustees. He also holds
172,620 unlisted options expiring 29 February 2028 at an exercise price of AU$1.083 and has an interest in 81,925
unlisted options expiring 23 July 2025 at an exercise price of AU$0.75 per option held by the McSyth Capital
Investment Trust.
Securities subject to voluntary escrow as at 31 May 2023
As at 31 May 2023, there were no AROA securities subject to voluntary escrow.
General disclosure of interests by Directors
AROA maintains an interests register in accordance with the Companies Act. The following are general
disclosures of interests (pursuant to section 140(2) of the Companies Act) noted in the Company’s interests
register as at 1 April 2022 which remained current as at 31 March 2023.
Name
Interest
Director, Mesynthes Nominees Limited
James McLean
James McLean
Chairman, Prevar Limited
Chairman, R J Hill Laboratories Limited
Brian Ward
Brian Ward
Director, Green Edge Limited
Non-Executive Chairman, Prescient Therapeutics Limited (ASX: PTX)
Director, Author-IT Labs Limited, Author-IT Holdings Limited, Authorit Software Corporation
Steven Engle
Steven Engle
Limited and Author-IT Software Corporation
Sole Proprietor, Averigon
CEO & Director, Gradalis Inc
Chair, Startup Advisors’ Council – New Zealand Government
Director, Mesynthes Nominee Limited
Director, Toha Foundry Limited
Director, Author-IT Limited and Authorit Software Corporation Limited
Director, Kaynemaile Ltd
Director, Shift72 Limited
Director, Nutcracker Limited
Director, Movac Limited
Philip McCaw
Philip McCaw
Director, Movac Fund 4 Custodial Limited
Director, Movac Fund 5 Custodial Limited
Director, Movac Fund 5 General Partner Limited
Director, Movac Fund 4 General Partner Limited
Director, CAVOM Nominee No 1 Limited
Director, Calcium Investments Limited
Director, Calcium Investment Trustee Limited
Director, PJM Management Limited
John Pinion
John Pinion
Advisory Board Member, Celestial Therapeutics, Inc
Non-executive Chairman, xReality Group Limited (ASX: XRG)
John Diddams
John Diddams
Director, Surf Lakes Holdings Limited
Director, DIT AgTech Limited
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ANNUAL REPORT 2023
The following updates to the general disclosures of interests were made during the financial year ended 31
March 2023:
Name
Interest
Nature of update to the
Company’s interests register
John Diddams
John Diddams
Director, Volpara Health Technologies Limited (ASX:VHT)
Removed
Dr. Catherine Mohr
Dr. Catherine
Mohr
Director, Carta Healthcare
Director, Avisi Therapeutics
Director, FINCA International
Director, Spark Acquisition
Added
Details of share dealings by the directors during the 12-month period ended 31 March 2023 are set out in the
Remuneration Report.
Use of company information
AROA did not receive notice from any director requesting to use company information received in his capacity
as a director of any Group company, which would not otherwise have been available to him.
Donations
Donations made during the year ended 31 March 2023 totalled NZ$20,000.
Subsidiary company information
All subsidiary companies in the Group are wholly owned by AROA.
The persons listed below held office as a director of the Company’s subsidiaries during the year ended, and as
at, 31 March 2022. They do not receive any remuneration or other benefits for their role as a director of a
Company subsidiary.
Company
Directors
Aroa Biosurgery Incorporated (Delaware File number 6560549)
Brian Ward, John Pinion
Mesynthes Nominee Limited (NZBN 9429 041 350 003)
Jim McLean, Phil McCaw
Other than as disclosed in the Company’s interests register, no entries were made in the interests register of
any Company subsidiary during the year ended 31 March 2023.
102
23
GLOSSARY AND IMPORTANT
GLOSSARY AND OTHER
GLOSSARY AND IMPORTANT
INFORMATION
INFORMATION
INFORMATION
Glossary
Glossary
Term
Description
Term
Term
AROA or the Company
AROA or the Company
ASIC
ASIC
ASX
CC or Constant Currency
ASX
CC or Constant Currency
CEO
CEO
Companies Act
Companies Act
Corporations Act
Corporations Act
ECM
EBIT
ECM
EBIT
EBITDA
EBIT
EBITDA
ECM
EBITDA
FDA
FDA
FY
FY
GPO
GPO
Group
Group
IPO
IPO
NZD
NZD
NZ GAAP
NZ GAAP
NZ IFRS
NZ IFRS
NZ Option Plan
NZ Option Plan
Shares
Shares
Share Plan
Share Plan
Substantial Holder
Substantial Holder
TAM
TAM
TELA Bio
TELA Bio
US
US
USD
USD
US Option Plan
US Option Plan
VWAP
VWAP
Description
Description
Aroa Biosurgery Limited NZCN 1980577, ARBN 638 867 473
Aroa Biosurgery Limited NZCN 1980577, ARBN 638 867 473
Australian Securities and Investments Commission
Australian Securities and Investments Commission
Australian Securities Exchange
Constant currency removes the impact of exchange rate movements. This
Australian Securities Exchange
approach is used to assess the AROA group’s underlying comparative
Constant currency removes the impact of exchange rate movements. This
financial performance without any distortion from changes in foreign
approach is used to assess the AROA group’s underlying comparative
exchange rates, specifically the USD. The exchange rate of
financial performance without any distortion from changes in foreign
US$0.62/NZ$1.00 has been used in the constant currency analysis for
exchange rates, specifically the USD. The exchange rate of
FY22/FY23. Unless otherwise specified, all references in this Annual Report
US$0.62/NZ$1.00 has been used in the constant currency analysis for
to ‘constant currency’ or ‘CC’ are as set out here.
FY22/FY23. Unless otherwise specified, all references in this Annual Report
Chief Executive Officer
to ‘constant currency’ or ‘CC’ are as set out here.
Chief Executive Officer
Companies Act 1993 (NZ)
Companies Act 1993 (NZ)
Corporations Act 2001 (Cth, Australia)
Corporations Act 2001 (Cth, Australia)
Extracellular matrix
Earnings before interest and tax
Extracellular matrix
Earnings before interest and tax
Earnings before interest, tax, depreciation and amortisation
Earnings before interest and tax
Earnings before interest, tax, depreciation and amortisation
Extracellular matrix
Earnings before interest, tax, depreciation and amortisation
The Food and Drug Administration of the US
The Food and Drug Administration of the US
Financial Year
Financial Year
Group purchasing organisation
The group of companies comprising AROA, Aroa Biosurgery Incorporated
Group purchasing organisation
(Delaware File number 6560549) and Mesynthes Nominee Limited (NZBN
The group of companies comprising AROA, Aroa Biosurgery Incorporated
9429 041 350 003)
(Delaware File number 6560549) and Mesynthes Nominee Limited (NZBN
The Company’s initial public offering in July 2020 of 60,000,000 shares in
9429 041 350 003)
the Company at a price of A$0.75 per share
The Company’s initial public offering in July 2020 of 60,000,000 shares in
New Zealand Dollar
the Company at a price of A$0.75 per share
New Zealand Dollar
New Zealand Generally Accepted Accounting Practice
New Zealand Generally Accepted Accounting Practice
New Zealand Equivalents to International Financial Reporting Standards
New Zealand Equivalents to International Financial Reporting Standards
The Aroa Biosurgery Share Option Plan (NZ)
The Aroa Biosurgery Share Option Plan (NZ)
Ordinary shares in the Company
Ordinary shares in the Company
The Aroa Employee Incentive Share Plan 2014, which was wound up in 2020
The Aroa Employee Incentive Share Plan 2014, which was wound up in 2020
Has the meaning given to it in the Corporations Act
Has the meaning given to it in the Corporations Act
Estimated total addressable market
TELA Bio, Inc. TELA Bio is AROA’s our sales and distribution partner
Estimated total addressable market
licensed for abdominal wall reconstruction/hernia and breast reconstruction
TELA Bio, Inc. TELA Bio is AROA’s our sales and distribution partner
indications in North America and Europe.
licensed for abdominal wall reconstruction/hernia and breast reconstruction
The United States of America
indications in North America and Europe.
The United States of America
United States Dollar
United States Dollar
The AROA Biosurgery 2021 US Share Option Plan
The AROA Biosurgery 2021 US Share Option Plan
The volume weighted average market price for Shares reported on the ASX
The volume weighted average market price for Shares reported on the ASX
24
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103
ANNUAL REPORT 2023
IP Notice
AROA, Aroa Biosurgery, AROA ECM, Endoform, Myriad, Myriad Matrix, Morcells, Myriad Morcells, Myriad
Morcells Fine, Symphony and Enivo are trademarks of Aroa Biosurgery Limited. All other trademarks are
properties of their respective owners. ©2023 Aroa Biosurgery Limited
References
1 Normalised EBITDA is non-conforming financial information, as defined by the NZ Financial Markets Authority,
and has been provided to assist users of financial information to better understand and assess the Group’s
comparative financial performance without any distortion from one-off transactions. The impact of royalties,
non-cash share-based payments expense and unrealized foreign currency gains or losses has also been removed
from the Profit or Loss. This approach is used by Management and the Board to assess the Group’s comparative
financial performance. All references in this Report to normalised EBITDA is as set out in this footnote.
2 Smith MJ, et al. Journal of Biomaterials Applications. 2022 Jan;36(6): 996-1010 2) Prosdocimi M, Bevilacqua C.
Panminerva Med. 2012 Jun;54(2):129-35.
3 Estimate of potential market size only. Idata, Soft Tissue Repair Market 2022; DRG Millennium Research data;
Hernia Repair Devices, 2020; AROA management estimates; DRG Millennium Research, Breast Implants &
Reconstructive devices, 2018.
4 Aggregate sales by AROA and TELA Bio to customers. AROA receives ~ 27% of TELA Bio’s net product sales
of OviTex/OviTex PRS.
5 Management estimates.
6 Represents accounts to which sales were made at the end of the applicable period.
7 Mason, I. T., et al. (2022). Evaluation of Tissue Apposition and Seroma Prevention in an Ovine Model
of Surgical Dead Space Using a Novel Air-Purged Vacuum Closure System. Eplasty, 22. https://www.
hmpgloballearningnetwork.com/site/eplasty/original-research/evaluation-tissue-apposition-and-seroma-
prevention-ovine-model
8 All guidance is presented on a constant currency basis using a NZ$/US$ exchange rate of 0.65, compared to
the average exchange rate of 0.62 in FY23. Constant currency removes the impact of exchange rate movements.
Guidance is also subject to there being no material decline in US medical procedure numbers or sustained
disruption to AROA’s manufacturing or transportation activities and TELA Bio delivering on its CY23 revenue
guidance of US$60-65 million.
9 The Board reserves the right to adjust these performance conditions or vesting outcomes to ensure that Mr.
Ward is neither penalised nor provided with a windfall benefit arising from matters outside his control.
10 As a director of Mesynthes Nominee Limited, as at 31 March 2023 Jim McLean also had an interest in 2,568,600
shares held by Mesynthes Nominee Limited on bare trust for certain AROA employees until payment is received
for such shares.
11 Phil McCaw holds his interest through McSyth Capital Investment Trust, of which he is one of 3 trustees and
a beneficiary. Mr McCaw also has an interest in shares held by the McSyth Charitable Foundation Trust, a
registered charity of which he is one of 2 trustees. As a director of Mesynthes Nominee Limited, as at 31 March
2023 Mr McCaw also had an interest in 2,568,600 shares held by Mesynthes Nominee Limited on bare trust for
certain AROA employees until payment is received for such shares.
12 This includes interests in shares held by John Diddams’ related parties; Whitfield Investments Pty Ltd and
Galdarn Pty Ltd.
13 Brian Ward holds his interest through Arawai No. 2 Trust, of which he is one of 3 trustees and a beneficiary.
104
ANNUAL REPORT 2023
CORPORATE DIRECTORY
New Zealand Legal
Adviser
Chapman Tripp
Level 34, PwC Tower
15 Customs Street West Auckland CBD
Auckland 1140
New Zealand
Australian Legal Adviser
Mills Oakley
Level 7, 151 Clarence Street
Sydney NSW 2000
Australia
Share Registry
Boardroom Pty Limited
Level 8, 210 George Street
Sydney NSW 2000
Contact number if calling from inside
Australia 1300 737 760
Contact number if calling from outside
Australia +61 2 9290 9600
Website
www.aroa.com
Directors
Jim McLean,
Chair and independent non-executive
director
Brian Ward,
Founder, Chief Executive Officer and
Managing Director
Dr. Catherine Mohr,
Independent non-executive director
Steven Engle,
Independent non-executive director
Philip McCaw,
Non-executive director
John Pinion,
Independent non-executive director
John Diddams,
Independent non-executive director
Joint Company
Secretaries
James Agnew,
Chief Financial Officer and Joint
Company Secretary
Tracy Weimar,
Joint Company Secretary
NZ Registered Office
64 Richard Pearse Drive, Mangere,
Auckland 2022, New Zealand
Telephone: + 64 9 869 3035
Australian Registered
Office
Level 1, 357 Military Road,
Mosman NSW 2088
Australia
Telephone: + 61 3 9692 7222
Auditor
BDO Auckland
Level 4, BDO Centre
4 Graham Street
Auckland 1010
New Zealand
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