ANNUAL
REPORT
2024
Unlocking regenerative
healing for everybody
ON FY23
%
12
Total
Revenue
ON FY23
%
12
Product
Revenue
ON FY23
%
73
Myriad™
Product Revenue
$23.3 M
ON FY23
%1
Gross
Margin
Completion of
first clinical pilot
study for Enivo™
2024
HIGHLIGHTS
Results in Brief
04
Chair’s Review
06
CEO’s Report
08
Board of Directors
12
Executive Leadership Team
16
Sustainability Report
19
Directors’ Report
26
Remuneration Report
31
Directors’ Responsibility Statement
41
Independent Auditor’s Report
43
Consolidated Financial Statements
51
Notes to The Consolidated Financial Statements
57
Additional Information
82
Glossary and Other Information
88
Corporate Directory
91
+ KEY DATES
23 July 2024
Annual General Meeting of Shareholders
30 September 2024
Financial Half Year End
26 November 2024*
Half Year Results Announcement
31 March 2025
Financial Year End
This Annual Report is dated 24 June 2024 and is signed
on behalf of Aroa Biosurgery Limited by Jim McLean,
Independent Chair of the Board and Brian Ward,
Managing Director and CEO.
*Indicative date
CONTENTS
Jim McLean
Independent Chair
of the Board
Brian Ward
Managing Director
and CEO
Annual Report 2024
Myriad
Sales
FY20
FY21
FY22
FY23
FY24
0
10
20
30
40
Total AROA
Product Sales
FY20
FY21
FY22
FY23
FY24
0
10
20
30
40
50
60
70
$69.1
MILLION
Total
Revenue
12%
ON FY23
85%
Product
Gross Margin
1%
ON FY23
12
YoY
Growth
%
73
YoY
Growth
%
$29.5
MILLION
Cash
Balance
RESULTS
IN BRIEF
5
Endoform
TM
Sales
0
10
20
30
40
FY20
FY21
FY22
FY23
FY24
TELA Bio
Sales
0
10
20
30
40
FY20
FY21
FY22
FY23
FY24
Sales Team
0
10
20
30
40
50
60
FY20
FY21
FY22
FY23
FY24
Endoform
Myriad
Myriad Active
Accounts
0
50
100
150
200
250
FY20
FY21
FY22
FY23
FY24
Research & Development
Spend
0
5
10
15
FY20
FY21
FY22
FY23
FY24
ENIVO
Other
Capitalised
23%
30%
21%
20%
17%
Clinical
Evidence
156
81
0
20
40
60
80
100
120
140
160
FY20
FY21
FY22
FY23
FY24
Conference Proceedings
Publications
31
YoY
Growth
%
23
YoY
Growth
%
-7
YoY
Growth
%
-2
YoY
Growth
%
% of Product Sales
Annual Report 2024
The Company’s FY24 performance
reflects consistent growth across
key metrics, with an increase in
total revenue of 12%. On behalf of
the Board, I want to thank Brian
and our people for their efforts.
As expected, Myriad has
contributed to strong growth, and
momentum continues to build
within our US sales team, with
31% year on year growth in active
Myriad accounts.
AROA’s cash position remains
strong. We will continue to invest
in building out the Company’s US
sales team, to drive further growth
and capitalise on the market
opportunities for our high-margin
Myriad products.
We understand the importance of
implementing sustainable business
practices and remain focused on
this at leadership level. Throughout
FY24, the Company has made
steady progress in this area, which
is covered in our Sustainability
Report, included within this Annual
Report.
As previously announced, Darla
Hutton joined the Board in March
2024. She brings over 25 years of
international leadership expertise in
life sciences commercial strategy,
operations, sales, marketing,
and data analytics, and is also
experienced in guiding diversity
policy. Her skills and expertise
will help guide the Company’s
expansion in North America and
beyond.
During FY24, the composition of
our permanent Board committees
was adjusted, including to
reflect the addition of Darla.
These changes as well as current
membership of each Board
committee, are included in this
Annual Report.
CHAIR’S
REVIEW
As AROA grows and
matures, the Board remains
focused on ensuring that
the Company is well placed
to deliver long term growth
that is both sustainable
and profitable.
7
Darla’s appointment does not increase the number of Directors,
as long-standing Board Member Steve Engle retired from the
Company’s Board in March 2024. Over the past nine years,
Steve’s insight and knowledge have helped to shape the Company’s
direction. On behalf of the Board, I would like to thank Steve for
his significant contribution to AROA and wish him well in his
future endeavours.
AROA has a diverse, talented team, strong corporate strategy, and
the fundamentals in place to deliver long term value to shareholders.
We highly value the confidence of our shareholders in AROA as the
company continues to grow and reach new milestones.
Jim McLean
Independent Chair
of the Board of Directors
“Myriad sales continue to drive
consistent growth, with our US
sales team delivering a strong
31% year-on-year increase in
active accounts, demonstrating
continued momentum for the
product portfolio.”
Annual Report 2024
Last year brought a mix of
successes and challenges for
AROA.
The Myriad portfolio of products
performed well, with our US sales
team delivering 73% year-on-year
sales growth. This growth was
driven by expansion within existing
accounts and growth in new
accounts.
TELA Bio’s OviTex/OviTex PRS
sales continued to perform
strongly, increasing 41% on the
previous year. During the first half
of FY24, TELA Bio implemented
inventory management
improvements to minimise
obsolescence which significantly
reduced stockholding from
approximately 33% of revenue
in FY23, to around 22% in FY24.
This initially dampened TELA
Bio’s demand for the products,
contributing to a 7% decline in
AROA’s full-year OviTex/OviTex
PRS revenue compared
to the prior year. Demand
recovered in the second half to
deliver a 19% increase in AROA’s
H2 FY24 OviTex/OviTex PRS
revenue. With these adjustments
now behind us, we are confident
that FY25 will see a return to our
previous growth trajectory. We also
expect TELA Bio’s optimised stock
portfolio to smooth demand and
bring both parties’ sales into closer
alignment going forward.
+ Commercial operations
As noted above, Myriad sales
were the key growth driver and
contributed to 34% of total
product sales. This result was
delivered by our expanded field
sales team, which increased from
~40 in 2023 to ~50 in 2024 whilst
yielding improved productivity
across all categories of tenure.
Sales efficiency remains a critical
focus, and we will be launching
further initiatives to continue
that upwards trend. This includes
leveraging our sales success
in lower limb procedures and
continuing to extend usage in
We are continuing to
build clinical evidence
demonstrating the efficacy
of our products in specific
procedures, including
how they compare with
standard of care and
alternative products. These
studies provide a basis
for promotional activities,
clinical engagement,
and inform our
commercial strategy.
We also expect to leverage
that data to demonstrate the
financial benefits of using
Myriad within hospitals,
which may include shorter
hospital stays, reduced
follow up surgeries, lower
rates of complications and
reduced product costs.
CEO’S
REPORT
9
trauma, capitalising on the growing
body of clinical and financial
evidence that underpins our AROA
ECMTM portfolio. With over 95%
of US hospitals able to access
AROA products through our
contracts with group purchasing
organisations, we are well placed
for sustained growth.
+ Clinical foundations
During FY24, the Myriad
Augmented Soft Tissue
Regeneration Registry (MASTRR)
study completed its target patient
enrolments of 300. MASTRR is
AROA’s largest prospective study
to date, evaluating Myriad MatrixTM
and Myriad Morcells™ in a range of
lower limb salvage, colorectal and
trauma procedures. Activating each
site and collecting data has been
a key focus for our clinical team
over the last two years. The data is
currently being evaluated, and we
expect to report on Myriad’s use in
limb salvage in 130 patients in the
first half of FY25.
“Throughout the coming year,
we will focus on delivering
strong top line growth, while
also managing expenses to
ensure profitability in FY25.”
Annual Report 2024
Two further studies assessing
Myriad in trauma procedures are
expected to be published later
in FY25. One of these studies
will examine the use of Myriad
with negative pressure (NPWT).
Recruitment for the Symphony
Randomised Control Trial is also
well advanced with 90 out of a
total of 120 patients recruited as at
31 March 2024. Interim reporting
based on the first 60 patients is
expected during the last quarter
of this calendar year, and final
reporting in the second quarter of
next calendar year.
We are continuing to build clinical
evidence demonstrating the
efficacy of our products in specific
procedures, including how they
compare with standard of care and
alternative products. These studies
provide a basis for promotional
activities, clinical engagement, and
inform our commercial strategy. We
also expect to leverage that data to
demonstrate the financial benefits
of using Myriad within hospitals,
which may include shorter hospital
stays, reduced follow up surgeries,
lower rates of complications and
reduced product costs.
Overall, we now have 81 peer
reviewed clinical publications,
supporting the use of our AROA
ECM products.
+ Enivo
We remain focused on activities
that support commercialisation of
our second technology platform,
Enivo, which offers a unique
opportunity to address a currently
unmet market need and deliver a
step change in healing outcomes.
The Enivo platform represents
significant commercial potential,
with an estimated total addressable
market of more than US$1 billion,
and it is expected to be used
synergistically with AROA ECM
products.
In FY24, we completed a pilot
clinical study assessing the efficacy
of the Enivo platform, with
encouraging results. In FY25, we
will focus on undertaking further
clinical research necessary to
support regulatory clearance.
+ Manufacturing operations
We are continuing to invest in
increasing both process efficiency
and our tissue manufacturing
capacity. In FY24 we implemented
a number of process improvements
and took delivery of an additional
freeze dryer, which will at least
double our freeze-drying capacity.
We expect to conclude the
current program of expansion and
upgrades in the first half of FY25.
+ FY25 outlook
Throughout the coming year, we
will focus on delivering strong top
line growth, while also managing
expenses to ensure profitability
in FY25. As announced in May,
we expect to deliver FY25 total
revenue of NZ$80-87 million and
a normalised EBITDA profit of
NZ$2-6 million.1
We expect our expanded product
portfolio to drive continued
product revenue and gross margin
growth through sales of our higher
margin Myriad™ and Symphony™
products.
We are also committed to
undertaking further clinical studies
on the Enivo platform to advance
commercialisation.
+ Concluding remarks
Delivering shareholder value
remains our top priority, and we
are focused on demonstrating
that AROA is becoming a high
growth, cashflow positive
business. We have calibrated our
strategy accordingly, and our
passionate and driven team is
united in its commitment to that
outcome. AROA’s shareholders
are instrumental to our mission to
unlock regenerative healing for
everybody, and we thank you for
your continued support.
Brian Ward
Founder, Managing Director
and CEO
Annual Report 2024
BOARD OF
DIRECTORS
James McLean
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, Jim is also Chair
of Prevar 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.
BOARD RESPONSIBILITIES
Chairman and independent
non-executive director
and member of the Audit
Committee.
TERM OF OFFICE
Apointed 10 August 2011.
Last re-elected
10 August 2022.
Brian Ward
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.
BOARD RESPONSIBILITIES
Managing Director
and CEO.
TERM OF OFFICE
First appointed
21 September 2007.
13
John Diddams
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.
BOARD RESPONSIBILITIES
Independent non-executive
director and Chair of
the Audit Committee
and Member of the
Remuneration & Nomination
Committee.
TERM OF OFFICE
First appointed
21 November 2019.
Last re-elected
3 August 2023.
Darla Hutton
Darla is a resident of the US
and has been a director of Aroa
Biosurgery since March 2024.
She has more than 25 years of
medical technology experience,
including global leadership
expertise in commercial strategy,
operations, sales, marketing,
healthcare analytics, lean and
enterprise consulting.
Darla is currently Vice President,
Asia Commercial Operations and
Marketing at Intuitive, pioneers in
the field of robotic-assisted surgery
and maker of the da Vinci surgical
and ION diagnostic robot systems.
Throughout her tenure at Intuitive,
Darla has held commercial roles
of increasing responsibility
including Regional Sales Director,
Vice President of Corporate
Accounts-US, and Vice President
Marketing, Market Access &
Custom Hospital Analytics. In these
roles, she has contributed to the
expansion of Intuitive’s commercial
operations capabilities and range
of global offerings. In addition,
Darla has served as a member of
Intuitive’s Inclusion and Diversity
Executive Council.
Prior to Intuitive, Darla held
commercial positions at other
successful medical technology,
pharmaceutical, and biotech
companies, including Boston
Scientific and GlaxoSmithKline,
and spent her early professional
career in the cardiac-thoracic
nursing field.
Darla holds a Bachelor of Science
and Master of Science from the
University of Tampa.
BOARD RESPONSIBILITIES
Independent non-executive
director and Member of the
Risk Committee since
1 April 2024
TERM OF OFFICE
First appointed
22 March 2024.
Annual Report 2024
Philip McCaw
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 currently
the Executive Chair and CEO of
Author-IT Software Corporation,
a software company that delivers
component authoring solutions,
enabled by AI, for the largest
global pharmaceutical companies.
He was also the Chair of the 2023
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 the development of the
entrepreneurial and early-stage
investment eco-system in New
Zealand and was the past Chair
of the Angel Association of
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.
BOARD RESPONSIBILITIES
Non-executive director
and member of the
Remuneration & Nomination
Committee
TERM OF OFFICE
First appointed 5 March
2008. Last re-elected
20 July 2021.
Dr. Catherine Mohr
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.
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.
BOARD RESPONSIBILITIES
Independent non-executive
director and member of the
Risk Committee. Chair of the
Remuneration & Nomination
Committee since 1 April 2024
TERM OF OFFICE
First appointed 1 November
2022. Last re-elected
3 August 2023.
15
John Pinion
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.
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.
Steven Engle
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.
BOARD RESPONSIBILITIES
Independent non-executive
director, Chair of the
Remuneration & Nomination
Committee and member of
the Risk Committee until
31 March 2024.
TERM OF OFFICE
First appointed 1 April 2015.
Retired 31 March 2024.
Annual Report 2024
Brian Ward
James Agnew
Chief Executive Officer,
Founder and Managing Director
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
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.
In 2011, James was a finalist in the
Young Financial Manager of the
year at the Annual CFO Awards.
Prior to this role, he was the VP
of Finance & Operations for MXM
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.
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.
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.
James holds a Bachelor of Laws
and Bachelor of Commerce from
the University of Auckland.
EXECUTIVE
LEADERSHIP
TEAM
17
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.
Yasmin Winchester
Vice President 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 from the
University of Waikato.
Rod Stanley
Chief Technology Officer
Rod joined AROA in 2013 and has
over 15 years’ experience in medical
device design and manufacturing.
Rod is responsible for managing
the technical operations of the
organisation and providing
technical direction related to
product development, project
management, manufacturing,
and distribution.
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 sterilisation 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 a Bachelor of Science
and a Master of Science from the
University of Otago.
19
SUSTAINABILITY
REPORT
We are pleased to provide an update on our sustainability journey through
this year’s Sustainability Report.
At AROA, we continue to focus on contributing to a more sustainable
future for everybody. Throughout FY24, we have made steady progress
towards embedding sustainable business practices into the Company.
We recognise that we are at the start of a long and very important journey
and look forward to reaching key milestones over the coming years.
At AROA we are focused
on contributing to a
more sustainable future
for everybody.
Throughout FY24 we have
made steady progress
towards embedding
sustainable business
practices into the Company.
+ We support the following United Nations Sustainable Development Goals
Annual Report 2024
Our Sustainability Actions
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 helps us
measure our environmental impact,
providing data to drive continuous
improvements in our sustainability
performance. Over the past
financial year, we continued to
collect and analyse this data,
laying the groundwork for future
+ Environmental Sustainability
development of reduction targets
for our emissions.
Method Recycling Bins
To encourage good waste disposal
habits in the workplace, in
September 2023 we introduced
centralised communal recycling
stations containing several waste
streams to separate landfill from
paper and recyclable items.
Bike to work
Cycling to work not only has health and fitness benefits but is also an
environmentally sustainable travel method.
To support and encourage this, in April 2024, AROA set up a bike shed for
team members to store their bikes safely and securely. In addition to the
bike shed, we have also purchased bike repair tools and safety vests to
increase visibility while cycling.
Cycling to work is gaining popularity, and in 2023, we had 20 of our
Auckland based team members (around 10%) participate in the Aotearoa
Bike Challenge.
Some of AROA’s bike to
work enthusiasts
21
The table below shows the ratio of women to men among our Board members, executives, senior leadership, and
all employees as at 31 March 2024 across New Zealand and North America.
AROA is te reo Māori for understanding, and with this in mind, we are
committed to fostering a diverse and inclusive culture across all levels
of the Company.
Gender diversity
AROA is committed to reaching
40:40:20 gender representation
(40% women, 40% men and 20%
open) by 2033. During 2023 we
developed the following objectives
to address gender diversity.
• A minimum of 30% gender
diversity at Senior Leadership
level by FY26
• 20% gender diversity at Board
Level by FY27
+ Diversity, Equity and Inclusion
• Achieve minimum of 40%
gender diversity at Manager and
Supervisor level by FY27
• Over the next two years, work
towards achieving a minimum of
30% gender diversity in senior
management by FY26
We will evaluate progress regularly
and report yearly on this in the
Annual Report.
Women
Men
Women %
Men %
Board
2
5
29%
71%
Senior Leadership Team
4
10
29%
71%
Supervisors and Managers
16
40
29%
71%
All Employees
139
147
49%
51%
AROA is a proud member
of Diversity Works, New
Zealand’s national body
for workplace diversity
and inclusion.
Employees in
New Zealand
Employees in
North America
69.7%
Women in Senior
Leadership roles
29%
Women in our
Employee Population
49%
Ethnicities Self-identified
by Team Members
20+
287
EMPLOYEES
30.3%
Annual Report 2024
+ Eid
+ Diwali
+ International
Women’s Day
+ Lunar New Year
+ Matariki
+ Mental Health
Awareness Week
Celebrating diversity
Since establishing the AROA Women’s
Network in 2022, the employee-led
committee has worked to foster
diversity and inclusion through regular
events and forums.
In line with our Diversity policy, we
have created a calendar of key events
and held regular, well attended
employee led celebration events
throughout the year which help to
foster diversity and inclusion across
the organisation.
International Women’s Day
celebrations
Team members
make pedal powered
smoothies during
Mental Health
Awareness Week
KEY EVENTS
23
Supporting our objective of being a great place to work, AROA offers permanent team members a range of
employee benefits.
We continue to review employee benefits and look forward to continuing to add to the existing offering.
+ People and Culture
Health and Safety
To support the safety and
wellbeing of our people at AROA,
in April 2023 we appointed our first
Health and Safety Advisor.
Since this appointment, several
key milestones have been reached.
These include: the implementation
of Health and Safety Management
System, development of a Health
and Safety intranet site, review and
enhancement of Health and Safety
policies, implementation of health
and safety subcommittees for each
business area, and the purchase
and installation of an Automatic
External defibrillator (AED) at the
Auckland head office site.
Employee
Referral
Programme
Birthday
Leave
Employee
Assistance
Programme
(EAP)
Onsite
gym and
facilitated
classes
Remote
Working
and Flexible
Working*
Summer
hours*
*For eligible roles
*For eligible roles
Annual Report 2024
24
KidzFirst Christmas Party
Every December, Middlemore
Foundation and BBM Foundation
team up to give the families of
more than 200 South Auckland
children living with long-term
health conditions a day to
celebrate with entertainment,
gifts, and fun.
Over 600 food parcels and 6000
gifts were provided at the popular
community event.
For the second year running, AROA
was proud to be a key supporter
of the KidzFirst Christmas party,
contributing a $10,000 donation
as well as AROA team members
volunteering at the event.
+ Community
Internship Programme
AROA has a proud history of
supporting students in the Science
and Engineering fields, with several
student placements over the years.
Since 2022 AROA has run a formal
internship programme each year,
spanning 10 weeks. In 2023, 10
engineering students participated
in AROA’s internship programme.
“I liked so many things about
my internship at AROA.
The culture is relaxed, and the
environment is great for learning
– you can approach anyone and
they’re willing to help.”
Victoria Reyes
Fostering interest in STEM careers
At AROA, we are proud to support initiatives that foster an interest in science, technology, and Engineering (STEM)
careers. During FY24, AROA developed partnerships with two purpose led organisations focused on encouraging
interest and participation in STEM careers.
The Wonder Project
The wonder project is Engineering New Zealand’s not-for-profit, free
programme for schools, designed to inspire young people (rangatahi)
with STEM. The Wonder Project provides hands on immersive STEM
learning experiences for school aged children in New Zealand. AROA is
proud to be a silver sponsor of The Wonder Project.
Robogals
Robogals is a global, student run organisation that aims to inspire and
empower young women to consider studying engineering and related
fields by hosting events and workshops. AROA is proud to be a gold
sponsor of Robogals.
Annual Report 2024
FY24
NZ$000
H2 FY24
NZ$000
H1 FY24
NZ$000
FY23
NZ$000
YoY%
Product sales
67,966
36,780
31,186
60,512
12
Other revenue
1,100
415
685
1,090
1
Total revenue
69,066
37,195
31,871
61,602
12
Gross profit
58,973
32,165
26,808
51,718
14
Product gross margin %
85%
86%
84%
84%
100 bps
Other income
1,664
694
970
1,734
(4)
Normalised selling and administrative expenses*
(58,968)
(31,486)
(27,482)
(45,132)
31
Research and development
(9,159)
(4,057)
(5,102)
(10,612)
(14)
Total normalised operating expenses
(68,127)
(35,543)
(32,584)
(55,744)
23
Normalised EBIT
(7,490)
(2,684)
(4,806)
(2,292)
236
Add back: depreciation & amortisation
4,395
2,256
2,139
3,834
15
Normalised EBITDA
(3,095)
(428)
(2,667)
1,542
(314)
Normalised net finance income*
1,390
687
703
1,394
-
Normalised loss before income tax
(6,100)
(1,997)
(4,103)
(898)
602
+ 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
The Directors present their
report on the Group for
the financial year ended
31 March 2024.
DIRECTORS
REPORT
*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’.
27
Product Revenue
Product revenue for the year was
NZ$68.0 million representing
12% growth on the previous
year (10% in constant currency).
Myriad performed well, with a
73% increase to NZ$23.3 million
(70% on a constant currency
basis). As expected, although
TELA Bio’s CY23 sales increased
by 41%, their focus on inventory
management measures dampened
demand for OviTex/OviTex PRS in
FY24, to deliver product revenue
of NZ$32.6 million (a 7% and
8% reduction from FY23, on a
reported and constant currency
basis respectively). The overall
impact of these initiatives was
confined, as TELA Bio’s demand
for the products re-aligned with
their sales in H2 FY24 to deliver
a 19% increase in OviTex/OviTex
PRS revenue compared to H1 FY24.
Endoform sales were in line with
FY23, with a modest contribution
from Symphony.
Ex-USA product revenue continued
its strong year-on-year growth,
with a 58% increase on FY23 to
NZ$2.8 million (FY23 revenue was
NZ$1.7m, reflecting 60% growth on
the prior year).
Normalised Other Revenue
Normalised other revenue for the
year was constant with FY23,2
at NZ$1.1 million. This represents
project fee income received for
product development projects
undertaken with TELA Bio.
Product Gross Margin %
Full-year product gross margin
increased by 1%, on both a reported
and constant currency basis,
to 85%. This primarily resulted
from sales growth of AROA’s
high-margin Myriad products and
ongoing manufacturing
efficiency improvements. Product
gross margin increased from 84%
during H1 FY24 to 86% in H2 FY24.
Other Income
Other income was constant with
FY23, at ~NZ$1.7 million. This
comprised of tax credits valued at
NZ$1.7 million under the Research
& Development Tax Incentive
program (compared to NZ$1.6
million previously).
Normalised Operating Expenses
& EBITDA
Selling and administrative expenses
were NZ$59.0 million, representing
a 31% increase from NZ$45.1 million
in FY23. This was driven by the
continued expansion of AROA’s
US-based sales operations, growth
in aggregate commission payments
to US sales staff for increased
Myriad sales, and increased clinical
development activities. The
latter reflects a larger investment
(NZ$3.6 million) into the
Symphony RCT during FY24 than
anticipated, due to faster patient
recruitment. The Symphony RCT
(n=120) is an 18-month multi-centre
study assessing the product’s
efficacy in treating diabetic foot
ulcers. The data from the study,
which is expected to be published
in FY25, will be an important
catalyst in driving Symphony sales.
Research and development
expenses were NZ$9.2 million,
compared to NZ$10.6 million
in FY23. This was largely due
to the reduced expenditure on
the Company’s second platform
technology (Enivo), decreasing
from approximately NZ$7 million in
FY23 to NZ$5 million in FY24. As
previously communicated, AROA
has received US Food and Drug
Administration (FDA) clearance
for two (of three) components of
the Enivo system and is engaging
with the FDA to confirm the design
of clinical and pre-clinical studies
to support a further clearance to
commercialise the Enivo system.
We will provide a further update on
this in due course.
The Company capitalised
NZ$2.8 million of development
costs in FY24, compared with
NZ$1.3 million in FY23.3 These
development costs primarily
represent investments made into
existing product line extensions
and manufacturing process
improvements, where AROA
has certainty of the investments
generating future economic
benefits.
The Company generated a
normalised EBITDA loss of NZ$3.1
million in FY24, compared to a
NZ$1.5 million profit in FY23. The
normalised loss before income
tax was NZ$6.1 million (NZ GAAP
Loss before income tax of NZ$10.4
million) compared to a loss of
NZ$0.9 million in FY23 (NZ GAAP
Loss before income tax of NZ$0.4
million). In the absence of the Enivo
development investment in FY24,
AROA would have delivered
a normalised EBITDA profit of
NZ$1.2 million.
Cashflows
Quarterly cashflows from operating
activities progressed towards
breakeven during the year, with
the Company posting positive net
cash inflows from operations in the
fourth quarter. On a full-year basis,
net cash outflows from operating
activities were NZ$7.4 million
(compared to previous outflows of
NZ$3.8 million), resulting from the
Company’s increased investment
into its US commercial operations
and clinical development activities.
Purchases of property plant
and equipment reduced from
NZ$6.0 million in FY23 to NZ$3.5
million for FY24. This continued
investment was into additional
manufacturing capacity which is
expected to be complete by Q3
FY25.
Capitalised development costs
were NZ$2.8 million (compared to
NZ$1.3 million in FY23) reflecting
investment into product line
extensions and manufacturing
process improvements.
AROA ended FY24 with a strong
cash balance of NZ$29.5 million,
compared to NZ$44.7 million as
at 31 March 2023. The Company
remains debt-free.
Annual Report 2024
Reconciliation to NZ GAAP profit or loss
Reported
2024
NZ$000
Reported
2023
NZ$000
Normalised loss before income tax
(6,100)
(898)
Other revenue
-
1,759
Unrealised foreign currency (losses) / gains
(1,146)
1,333
Share based payment expenses
(3,181)
(2,578)
Loss before income tax (NZ GAAP)
(10,427)
(384)
Other Revenue
Other revenue of NZ$1.8 million in
the prior year represents receipt of
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 reflects the
three-year grant of share options
+ 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/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 that to the extent permitted by applicable law, the directors and officers will not incur monetary losses as
a result of actions undertaken by them in that capacity. Certain actions are specifically excluded, for example the
incurring of penalties and fines which may be imposed in respect of breaches of the law.
+ Director updates
John Diddams and Dr. Catherine Mohr were re-elected and elected (respectively) as non-executive directors at the
Company’s annual general meeting on 3 August 2023.
Steven Engle, the Company’s long-standing non-executive director retired with effect from 31 March 2024, and
seasoned global commercial operations executive, Darla Hutton, was appointed to the Board from 22 March 2024.
In accordance with the Board’s rotation policy, John Pinion and Philip McCaw are offering themselves up for
re-election at the Company’s upcoming annual general meeting on 23 July 2024. Under ASX Listing Rule 14.4, a
director appointed by the board must not hold office (without election) past the next annual meeting following the
director’s appointment. Darla Hutton is accordingly also offering herself up for election at that meeting.
issued to employees between
July 2020 and March 2024.
During FY24, NZ$0.5 million in
prior year share based payments
expense was reversed through
retained earnings (2023: $Nil).
Share based expenses of NZ$0.6
million incurred during FY24 were
subsequently reversed through
retained earnings after 31 March
2024 (during FY25), as a result of
performance-based share options
not vesting to management.
Unrealised FX Gains
Unrealised FX gains are non-cash
(losses) or gains that reflect the
(loss)/gain on US$ denominated
transactions that have not been
completed as at the reporting date.
29
Name
Board of Directors
Audit Committee
Risk Committee
Remuneration &
Nomination Committee
Eligible
Attended
Eligible*
Attended
Eligible*
Attended
Eligible*
Attended
Jim McLean
10
10
3
3
-
-
-
-
Brian Ward
10
10
-
3
-
2
-
3
Steve Engle
10
9
-
-
2
1
3
3
Phil McCaw
10
9
-
-
-
-
3
2
John Pinion
10
10
3
2
2
2
-
-
John Diddams
10
8
3
3
-
-
3
3
Dr. Catherine Mohr
10
9
-
-
2
2
-
-
Darla Hutton**
1
1
-
-
-
-
-
-
Description of services
Fees (NZ$)
Review of interim consolidated financial statements
NZ$55,000
+ 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 2024 was
NZ$159,000 (2023:NZ$145,500).
During the year ended 31 March 2024, BDO Auckland, or entities associated to it, provided the following non-audit
services to the Group.
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.
+ Board and Committee meetings
The table below shows attendances by each director at Board and Committee meetings during the financial year.
* 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.
** Darla Hutton joined the Board from 22 March 2024
NB: Table above does not include unscheduled calls held during the year.
REMUNERATION
REPORT
Annual Report 2024
+ Overview
Our remuneration and nomination policies and practices are ultimately
designed to deliver shareholder value by facilitating and encouraging a
high level of performance, with AROA’s long-term success in mind. The
Remuneration & Nomination Committee supports the Board in formulating
and overseeing these policies, with input from external specialists as
appropriate to ensure impartial guidance and expertise.
Remuneration is integral to building a high-growth profitable business,
and this is reflected in AROA’s approach. Our remuneration framework
is structured to be competitive within industry, encourage a high level
of performance and align our people’s interests with those of our
shareholders. This reinforces AROA’s commitment to excellence and
achievement and instils a sense of ownership amongst our people,
fostering a culture of decision-making focused on generating
shareholder returns.
Our remuneration programme for FY24 comprised 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 short-term incentive (STI), providing the potential
for an annual cash bonus based on pre-determined company and
individual performance targets. Our STI plans are in place for those at
a senior manager level and above, along with critical specialist roles.
• A discretionary long-term incentive (LTI) variable remuneration in
the form of share options. Our LTI plan applies to our executive and
senior management teams. We operated two LTI plans in FY24; 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 AROA at the specified
exercise price. An overview of share options granted to the Company’s
directors during FY24 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 18 to
the consolidated financial statements.
In accordance with corporate governance best practice, the structure of
our non-executive director remuneration is separate and distinct from that
of our CEO and senior leadership.
The Remuneration & Nomination Committee is focused on ensuring
that our compensation policies keep pace with the evolving recruitment
environment, market conditions and our growing size & maturity.
We undertake remuneration benchmarking exercises both formally,
through participation in Aon Radford salary surveys, and informally
through partnerships with recruitment agencies and industry surveys.
We are continuing to refine our approach to LTI, and from FY25 will
be conditioning 100% of our Executive Management Team’s LTI on
performance-based metrics linked to long term financial objectives and
shareholder returns. We will also be shifting from share options as our sole
LTI mechanism to a broader range of equity awards, including restricted
shares and performance share rights. This is reflected in our equity award
proposals for Darla Hutton, our newest non-executive director, as well as
for our CEO’s FY25 LTI. These are on the agenda for AROA’s 2024
annual general meeting and will bedetailed in the accompanying Notice
of Meeting.
This Remuneration
Report, which forms part
of the Directors’ Report,
outlines our approach
to remuneration for the
financial year ended
31 March 2024.
33
+ Employee remuneration
This table outlines remuneration
totalling NZ$100,000 or more
received by our employees or
former employees during the
financial year ended 31 March
2024. The table includes salary,
wages and STI annual variable
remuneration paid during the 2024
financial year. This does not include
information for our CEO, who is
also a director of the Company,
or the share-based expense
valuation of LTI.
Offshore remuneration amounts
(including commission paid to
US sales representatives for
delivering increased Myriad sales)
have been converted into
New Zealand dollars.
We had previously extended an
interest-free loan facility to our
people (not directors) who had an
interest in shares issued under a
legacy employee incentive share
plan that was wound up prior to
AROA’s admission to the ASX in
July 2020. Following updates over
recent years, the facility was due
to expire on 28 February 2024.
However, noting that the loan
balance was relatively modest
(~NZ$220,000) and considering
factors including retention of
employees, many of whom have
been with us for more than eight
years, the Board approved an
extension of the loan term with
interest charged of 6% p.a.
Remuneration range (NZ$)
Number of employees
100,000 - 110,000
12
110,001 - 120,000
16
120,001 - 130,000
10
130,001 - 140,000
7
140,001 - 150,000
5
150,001 - 160,000
3
160,001 - 170,000
6
170,001 - 180,000
2
180,001 - 190,000
5
190,001 - 200,000
6
200,001 - 210,000
3
210,001 - 220,000
3
220,001 - 230,000
4
230,001 - 240,000
5
240,001 - 250,000
9
250,001 - 260,000
2
260,001 - 270,000
5
290,001 - 300,000
1
300,001 - 310,000
2
320,001 - 330,000
2
330,001 - 340,000
1
340,001 - 350,000
2
350,001 - 360,000
3
360,001 - 370,000
1
370,001 - 380,000
2
380,001 - 390,000
3
400,001 - 410,000
1
420,001 - 430,000
3
440,001 - 450,000
1
530,001 - 540,000
2
540,001 - 550,000
1
570,001 - 580,000
2
580,001 - 590,000
1
600,001 - 610,000
1
610,001 - 620,000
1
630,001 - 640,000
1
640,001 - 650,000
1
660,001 - 670,000
1
670,001 - 680,000
1
720,001 - 730,000
1
770,001 - 780,000
1
Annual Report 2024
+ 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 in FY24.
Component
Description
Link to strategy &
performance
Fixed remuneration
• Base salary
• Legislative superannuation
Annual reviews take into
account individual factors
such as performance and
behaviours
STI
• At-risk component paid in cash
• Designed to remunerate senior leadership relative
to AROA’s performance targets and individual
performance targets that are aligned with AROA’s
performance objectives
• Company performance targets comprise both
financial and non-financial objectives, including
revenue, profitability, development, clinical, and
people metrics
• 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
Rewards delivery of
key strategic and
financial objectives in
line with AROA’s annual
business plan.
LTI
• 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 continued employment (unless
the Board determines otherwise), so provides a
longer-term employee benefit
• In CY22/23 the Company refined its LTI design
principles, moving to an annual award structured as
follows:
• 50/50 mix (at target value) of service and
performance-based conditions; and
• performance conditions relate to shareholder
returns (detailed below)
This was reflected in the structure of options provided
to Brian Ward from FY23, and to senior leadership from
FY24.
Rewards delivery against
longer term strategy
and provides alignment
between shareholder
and senior leadership
outcomes
35
+ Overview of CEO remuneration
Brian Ward’s remuneration
structure is consistent with the
senior leadership structure outlined
above. His remuneration target
and maximum total remuneration
mix for the 2024 financial year is
set out in this section. Please refer
to the remainder of this report
for further details. Brian does not
receive additional remuneration in
his capacity as a director of
the Company or any other
Group company.
Current LTI performance
conditions
Considering performance against
these metrics, all performance
options scheduled for vesting on
31 March 2024 will be forfeited.
This relates to 1,826,330 share
options, with an aggregate value
of ~NZ$734,000.
Performance Conditions4
Total % of
performance options
eligible to vest
Entry
50+ percentile company TSR
against a comparator group
comprising the top 50 (by
market capitalisation) ASX-listed
healthcare companies (TSR
Ranking)
25%
Target
75+ percentile TSR Ranking
50%
Stretch
1. 75+ percentile TSR Ranking;
and
2. Threshold 20-day VWAP as
at the applicable vesting date.
These are as follows:
• 31 March 2024 vesting,
A$1.50 (112% growth on 31
March 2022 20-day VWAP)
• 31 March 2025 vesting,
A$1.85 (162% growth on 31
March 2022 20-day VWAP)
• 31 March 2026 vesting,
A$2.25 (219% growth on 31
March 2022 20-day VWAP)
100%
Fixed Remuneration
STI
LTI
Fixed
Remuneration
Target Total
Remuneration
Maximum Total
Remuneration
$0
$200,000.00
$400,000.00
$600,000.00
$800,000.00
$1,000,000.00
$1,200,000.00
$1,400,000.00
Annual Report 2024
+ Overview of non-executive director remuneration
Our non-executive directors receive cash fees, and until FY24, were also granted equity in the form of share
options. Please refer to the remainder of this report for further details. To maintain objectivity in decision-making,
we do not offer our non-executive directors performance-based compensation.
As approved by shareholders last year, the maximum aggregate annual cash-based remuneration payable to all
our non-executive directors for their services as a director is NZ$750,000. Individual director’s fees are determined
based on the time commitment and responsibilities of their role, with our Board and Committee Chairs receiving
a higher fee commensurate to their additional workload. Each non-executive director is also entitled to be
reimbursed for all reasonable travel, accommodation and other expenses they incur for attending AROA meetings
or on other company business. We do not provide our non-executive directors with superannuation arrangements
or retirement allowances.
The Board sees value in promoting share ownership among our non-executive directors as it appropriately aligns
their interests with those of our shareholders. As noted above, whilst we have until FY24 structured this as share
options, we are with input from external specialists considering alternative structures and expect to confirm this
in time for AROA’s 2025 annual general meeting. In the meantime, to ensure parity with the other non-executive
directors, we are proposing to issue restricted shares to Darla Hutton, our newest Board member (details will be
included in the Notice of Meeting for our 2024 annual general meeting).
+ Director remuneration details
Aggregated
Our directors’ remuneration (in NZ$) for the year ended 31 March 2024 is set out below.
Short term benefits
Post-employment benefits
LTI
Cash salaries
and fees
(NZ$)*
STI (NZ$)
Superannuation
(NZ$)
Share based
payments
expense** (NZ$)
Total (NZ$)
Jim McLean
$135,000
-
-
$77,194
$212,194
Steven Engle*****
$136,057
-
-
$17,797
$153,854
Philip McCaw
$79,214
-
-
$51,463
$130,677
John Pinion
$136,057
-
-
$51,463
$187,520
John Diddams
$107,894
-
-
$51,463
$159,357
Dr. Catherine Mohr
$111,429
-
-
$66,594
$178,023
Darla Hutton*****
$4,729
-
-
-
$4,729
Brian Ward
$583,440
***$59,618
$22,200
**** $413,361
$1,078,619
TOTAL
$1,293,820
$59,618
$22,200
$729,335
$2,104,973
* Fees for directors who are not based in NZ are fixed in their local currency, and converted
into NZ$ 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 approved by shareholders.
No cash payments are made in relation to these. The amounts are calculated based on NZ IFRS 2 –
Share-based Payment.
*** Brian Ward achieved 26% against target for AROA’s FY24 performance. He had received
discretionary annual variable remuneration of NZ$156,555 for AROA’s performance in the previous
financial year (representing 71% achievement against targets).
**** 625,842 performance-based share options granted to Brian Ward in FY23 did not reach their
31 March 2024 vesting conditions, so will be forfeited. The share options, with a share-based
expense valuation of ~NZ$200,000 in FY24, are therefore not included in this table. The options
were included in Brian’s remuneration disclosure in the 2023 annual report, reflecting a share-
based expense valuation of ~NZ$132,000. Share based expense remuneration of $413,361 in FY24
includes an amount of ~NZ$192,000 attributable to performance based share options due to vest
on 31 March 2025 and 2026.
***** Steven Engle retired from the Board at the end of FY24 and Darla Hutton joined the Board
from 22 March 2024.
NB: Table above does not include reimbursement of reasonable travel, accommodation and other
expenses incurred by directors for attending AROA meetings or on other company business.
37
+ Equity instrument disclosures
Options holdings
Please see below an overview of the share options held by each director (or their nominee) during the 2024
financial year. Further details regarding the options that vested or which were forfeited, during that year, are
contained in the subsequent sections of this report.
The table does not include Darla Hutton, who joined the Board from 22 March 2024, and does not hold any
share options.
Share-based compensation
Please see below information on share options issued to our directors during the 2024 financial year. In accordance
with the requirements of ASX Listing Rule 10.14, the options were issued following shareholder approval received at
our 2023 annual general meeting.
Balance as at
1 April 2023
Granted as
compensation
Exercised
Forfeited
Balance at
the end of the
year
Vested and
exercisable
Unvested
Jim McLean
361,329
-
(50,000)
-
311,329
141,943
169,386
Steven Engle*
1,051,620
-
(633,225)
(112,925)
305,470
305,470
-
Philip McCaw
254,545
-
-
-
254,545
141,620
112,925
John Pinion
1,051,620
-
-
-
1,051,620
938,695
112,925
John Diddams
193,072
-
-
-
193,072
80,147
112,925
Dr Catherine Mohr
-
210,686
-
-
210,686
84,259
126,427
Brian Ward
5,708,008
-
-
-
5,708,008
2,418,374
3,289,634
TOTAL
8,620,194
210,686
(683,225)
(112,925)
8,034,730
4,110,508
3,924,222
Effective grant
date
Number granted
Performance
hurdle (Y/N)
Exercise price
per option (A$)
Vesting date
Last exercise
date
Dr Catherine Mohr
14 November
2022
84,259
N
$0.87, being
the volume-
weighted
average price
of AROA
shares on
the five days
preceding
grant
31 March 2024
13 November
2027
64,311
31 March 2025
62,116
31 March 2026
*In recognition of Steven Engle’s valuable and long-standing contribution to the Company,
the Board exercised its discretion under the share option plan rules to permit Steven,
following his retirement from the Board, to retain 305,470 of his share options which had
already vested. The termination date of these options remains unchanged, so they will
lapse unless he exercises them prior.
Annual Report 2024
FY24 option vestings
The following share options previously granted to the directors or their nominees vested in the 2024 financial
year. There is no disclosure for Darla Hutton, who joined the Board from 22 March 2024 and does not hold any
share options.
FY24 option forfeitures
112,925 share options granted to Steven Engle in CY23 lapsed upon his retirement at the end of the financial year.
As noted in the sub-section headed ‘Current LTI performance conditions’, 625,842 share options issued to Brian
Ward in FY23 did not meet their 31 March 2024 vesting conditions and will be forfeited.
Shareholdings
The number of ordinary shares in the Company held by each director or their personally related parties during the
2024 financial year is set out below.
Director
Financial year in which
granted
Number of
options vested
Exercise price (A$)
Option expiry
Jim McLean
FY23
89,543
1.083
29 February 2028
Steven Engle
FY23
59,695
1.083
29 February 2028
Philip McCaw
FY23
59,695
1.083
29 February 2028
John Pinion
FY23
59,695
1.083
29 February 2028
John Diddams
FY23
59,695
1.083
29 February 2028
Dr Catherine Mohr
FY24
84,259
0.87
13 Nov 2027
Brian Ward
FY23
330,024
1.165
13 Nov 2027
Director
Financial year in which
granted
Number of options
vested
Exercise price (A$)
Option expiry
Jim McLean5
2,777,108
50,000*
-
2,827,108
Steven Engle
226,553
633,225*
-
859,778
Philip McCaw6
19,751,154
-
326,000
20,077,154
John Pinion
472,500
-
-
472,500
John Diddams7
1,192,550
-
-
1,192,550
Dr Catherine Mohr
-
-
-
-
Darla Hutton
-
-
-
-
Brian Ward8
33,125,800
-
-
33,125,800
* Shares issued to Jim McLean and Steven Engle upon the exercise of 50,000 share options (exercise price of A$0.75 each) and 633,225
share options (exercise price of NZ$0.098 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.
39
+ End of Remuneration Report
This Directors’ Report, incorporating the Remuneration Report,
is signed in accordance with a resolution of the Board.
Jim McLean
Independent Chair of the Board
Annual Report 2024
41
For the year ended 31 March 2024
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 2024 and the results of their
operations and cash flows for the
year ended 31 March 2024.
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 21 May 2024
Jim McLean - Chairman
Brian Ward – CEO
The Directors are pleased
to present the consolidated
financial statements of Aroa
Biosurgery Limited and the
Group (“Group”) for the year
ended 31 March 2024.
DIRECTORS’
RESPONSIBILITY
STATEMENT
INDEPENDENT
AUDITOR’S
REPORT
Annual Report 2024
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 2024, and the 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 material accounting policy information.
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 2024, 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 IFRS®
Accounting Standards.
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
eventually sold and the price that it is sold at,
are uncertain.
•
We 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 obtained Management’s
calculations and accounting paper
prepared for the revenue share accrual
and evaluated the reasonableness of
key inputs and assumptions. The key
inputs included sales history, revenue
45
BDO Auckland
Recognition of revenue – TELA Bio revenue share
Key Audit Matter
How The Matter Was Addressed in Our Audit
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
2024, Management changed their accounting
estimate for the TELA Bio revenue share by
revising the assumptions 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 $15.14m.
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.
growth factors, expiry dates of
inventory held, and average selling
prices achieved by TELA Bio.
•
We 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 2024.
•
We 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 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.
Intangible assets impairment assessment
Key Audit Matter
How The Matter Was Addressed in Our Audit
The Group has recognised goodwill, customer
relationships and reacquired rights intangible
assets on a historical acquisition. The goodwill
of $5.54m, customer relationships of $1.85m
and reacquired rights of $6.52m at 31 March
2024 are 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 the
intangible assets are 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.
•
We assessed the accuracy of previous
forecasts to actual performance to
form a view on the reliability of
Annual Report 2024
BDO Auckland
Intangible assets impairment assessment
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 12 Intangible assets of the
consolidated financial statements.
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 Assets, 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 alternative
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 reviewed the disclosures in Note 12
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 2024. 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 payment arrangements in
accordance with NZ IFRS 2 – Share-
based Payment.
•
We agreed the terms of the share-
based payment arrangements issued
during the year to offer letters and
rules of the share option plan.
•
We assessed, in conjunction with our
internal valuation experts, the
appropriateness of the valuation
methodology used by Management's
47
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 2024 is $3.40m
resulting in a share-based reserve of $10.27m
as at 31 March 2024. Details of these share-
based payment arrangements are disclosed in
Note 4 Employee benefit expenses and Note 18
Share based payments reserve of the
consolidated financial statements.
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 i
relation to the probability of achievin
non-market based vesting conditions.
•
We recalculated the share-based
payments expense recorded in the
profit or loss over the relevant vesting
periods.
•
We reviewed the disclosures in Note 4
and 18 in relation to the share-based
payment arrangements to the
requirements of the accounting
standard.
Capitalisation of internally generated intangible assets
Key Audit Matter
How The Matter Was Addressed in Our Audit
The Group has recognised internal
development costs of $2.82m as an intangible
asset during the year ended 31 March 2024.
The Group incurs significant expenditure in
researching and developing medical devices for
wound and soft tissue repair. The Group
capitalises expenditure incurred in the
development of products and processes when
certain criteria are met as disclosed in Note 12
to the consolidated financial statements. Costs
that do not meet the criteria for capitalisation
are expensed to profit or loss as incurred.
There is judgement involved in determining
whether expenditure incurred can be
capitalised as an intangible asset and the costs
directly attributable to create, produce, and
prepare the asset to be capable of operating in
the manner intended by management.
We consider this to be a key audit matter
because of the judgement involved in
determining expenditure able to be capitalised
and the quantum of the amount of the amount
capitalised of $2.82m.
Refer to Note 12 intangible assets of the
consolidated financial statements.
•
We evaluated Management’s
assessment on the treatment of the
capitalised development costs in
accordance with NZ IAS 38 - Intangibl
Assets to determine if they met the
recognition criteria.
•
We assessed whether expenditure
capitalised was directly attributable t
creating, producing, and preparing th
asset to be capable of operating in th
manner intended by Management.
•
We agreed a sample of costs
capitalised to appropriate supporting
documentation.
•
We reviewed the disclosures in Note 1
in relation to the internally generated
intangible assets to the requirements
of the accounting standard.
Annual Report 2024
BDO Auckland
Other Information
The directors are responsible for the other information. The other information comprises the Aroa
Biosurgery FY24 Results and FY25 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 Accounting Standards,
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.
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/.
49
BDO Auckland
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
21 May 2024
For the year ended 31 March 2024
CONSOLIDATED
FINANCIAL
STATEMENTS
Annual Report 2024
Consolidated Statement of Profit or Loss and other
Comprehensive Income
For the year ended 31 March 2024
The above consolidated statement of profit or loss and other comprehensive income should be
read in conjunction with the accompanying notes.
Note
2024
$000
2023
$000
Revenue
3
69,066
63,360
Cost of sales
(10,093)
(9,884)
Gross profit
58,973
53,476
Other income
3
1,664
1,734
Selling and administrative expenses
(62,149)
(47,709)
Research and development expenses
(9,159)
(10,612)
Loss from operations before net financing income
4
(10,671)
(3,111)
Finance income
5
2,002
3,111
Finance expenses
5
(1,758)
(384)
Net finance income
244
2,727
Loss before income tax
(10,427)
(384)
Income tax expense
6
(201)
(12)
Loss for the year attributable to shareholders
(10,628)
(396)
Other comprehensive income
Items that will or may be reclassified to profit or loss
Exchange gain / (loss) arising on translation of foreign operations
836
(1,328)
Items that will or may be reclassified to profit or loss
Changes in the fair value of equity investments at fair value through other
comprehensive income
8
(557)
21
Total other comprehensive income /(loss)
279
(1,307)
Total comprehensive loss for the year attributable to shareholders
(10,349)
(1,703)
Earnings per share during the year:
Basic earnings per share (cents)
19
(3.09)
(0.12)
Diluted earnings per share (cents)
19
(3.09)
(0.12)
53
Note
2024
$000
2023
$000
Current assets
Cash and cash equivalents
7
11,522
9,540
Term deposits
7
18,000
35,134
Derivative assets
-
192
Trade and other receivables
9
13,437
14,329
Inventories
10
8,104
4,831
Prepayments
1,816
1,439
Contract assets
3(a)
15,140
11,071
Tax receivable
313
339
Financial assets at fair value through other comprehensive income
8
703
1,260
Total current assets
69,035
78,135
Non-current assets
Property, plant, and equipment
11
15,769
14,234
Prepayments
104
126
Right of use assets
15
6,447
6,403
Intangible assets
12
19,702
17,623
Total non-current assets
42,022
38,386
Total assets
111,057
116,521
Current liabilities
Trade and other payables
13
3,741
3,607
Derivative liabilities
1,061
Employee benefits
14
3,708
3,745
Lease liabilities
16
1,004
559
Total current liabilities
9,514
7,911
Non-current liabilities
Provisions
174
171
Lease liabilities
16
6,431
6,548
Total non-current liabilities
6,605
6,719
Total liabilities
16,119
14,630
Net assets
94,938
101,891
Equity
Share capital
17
146,798
146,491
Accumulated losses
(62,152)
(51,524)
Foreign currency translation reserve
(679)
(1,515)
Equity investment reserve
8
703
1,260
Share based payment reserve
18
10,268
7,179
Total equity
94,938
101,891
Consolidated Statement of Financial Position
As at 31 March 2024
The above consolidated statement
of financial position should be read in
conjunction with the accompanying notes.
On behalf of the Board 21 May 2024
Jim McLean - Chairman
Brian Ward – CEO
Annual Report 2024
Note
Share
Capital
$000
Accumu-
lated
Losses
$000
Foreign
Currency
Transla-
tion
Reserve
$000
Equity
Invest-
ment
Reserve
$000
Share
Based
Payments
Reserve
$000
Total
Equity
$000
Balance as at 1 April 2023
146,491
(51,524)
(1,515)
1,260
7,179
101,891
Comprehensive income
Loss for the year
-
(10,628)
-
-
-
(10,628)
Other comprehensive income for
the year
-
-
836
(557)
-
279
Total comprehensive income for
the year
-
(10,628)
836
(557)
-
(10,349)
Transactions with shareholders
Share based payment expenses
18
-
-
-
3,404
3,404
Forfeiture of unvested employee
share options
18
-
-
-
-
(223)
(223)
Employee shares exercised
17/18
196
-
-
-
(92)
104
Issue of shares to employees
17
111
-
-
-
-
111
Total transactions with shareholders
307
-
-
-
3,089
3,396
Balance as at 31 March 2024
146,798
(62,152)
(679)
703
10,268
94,938
Balance as at 1 April 2022
145,755
(51,128)
(187)
1,239
4,812
100,491
Comprehensive income
Loss for the year
-
(396)
-
-
-
(396)
Other comprehensive income for
the year
-
-
(1,328)
21
-
(1,307)
Total comprehensive income for
the year
-
(396)
(1,328)
21
-
(1,703)
Transactions with shareholders
Share based payment expenses
18
-
-
-
-
2,676
2,676
Forfeiture of unvested employee share
options
18
-
-
-
-
(98)
(98)
Employee shares exercised
17/18
564
-
-
-
(211)
353
Issue of shares to employees
17
172
-
-
-
-
172
Total transactions with shareholders
736
-
-
-
2,367
3,103
Balance as at 31 March 2023
146,491
(51,524)
(1,515)
1,260
7,179
101,891
Consolidated Statement of Movements In Equity
For the year ended 31 March 2024
The above consolidated statement of movements in equity should be read
in conjunction with the accompanying notes.
55
Consolidated Statement of Cash Flows
For the year ended 31 March 2024
The above consolidated statement of cash flows should be read
in conjunction with the accompanying notes.
Note: The Group has term deposits of $18,000,000 as at the reporting date (2023: $35,134,000). 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 7).
Note
2024
$000
2023
$000
Cash flows from operating activities
Cash receipts from sales of goods
65,247
52,408
Cash receipts from grant income, project fees, and license fees
2,763
4,167
Cash paid to suppliers and employees
(76,831)
(60,952)
Interest received
1,726
1,170
Dividend received
1
-
Interest paid
(10)
-
Income tax paid
(271)
(565)
Net cash outflow from operating activities
24a
(7,375)
(3,772)
Cash flows from investing activities
Purchase of property, plant and equipment
11
(3,523)
(6,029)
Purchase of intangible assets
12
(644)
(250)
Capitalised development costs
12
(2,818)
(1,332)
Proceeds from term deposits
7
17,134
14,866
Net cash inflow from investing activities
10,149
7,255
Cash flows from financing activities
Proceeds from issue of options
85
348
Proceeds from issue of shares
111
172
Lease liability – principal payments
16
(740)
(645)
Lease liability – interest payments
16
(490)
(379)
Net cash outflow from financing activities
(1,034)
(504)
Net increase in cash and cash equivalents
1,740
2,979
Effect of exchange rate fluctuations on cash and cash equivalents
242
396
Cash and cash equivalents at beginning of year
9,540
6,165
Cash and cash equivalents at end of year
7
11,522
9,540
For the year ended 31 March 2024
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
Annual Report 2024
Notes to the Consolidated Financial Statements
For the year ended 31 March 2024
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 2024 comprise the Company and its two subsidiaries, Aroa Biosurgery Incorporated and
Mesynthes Nominee Limited. All subsidiary entities have a reporting date of 31 March.
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
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 “Change in accounting
estimates - Tela Bio Accrued Revenue”, as discussed below)
–
research and development tax incentive accrual (refer to note 3)
Equity holding
Principal Activity
Place of
Business
2024
%
2023
%
Aroa Biosurgery Incorporated
Sales & Distribution
US
100
100
Mesynthes Nominee Limited
Nominee Shareholder
NZ
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 21 May 2024.
59
–
the likely term of leased premises, which impacts leasehold improvements assets and right of use assets
capitalised (refer to notes 11, 15 and 16)
–
impairment assessment of intangible assets (refer to note 12)
–
the value of development expenditure capitalised (refer to note 12)
–
the value of share-based payments (refer to note 18)
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 considering the expected sale of those products by TELA Bio. Having considered TELA
Bio’s revenue guidance for calendar year 2024, the Group updated certain assumptions such as forecast
revenue growth and expiry date of inventory held used in calculating the accrued revenue for the current
period.
The change in accounting estimates has resulted in a recognition of $3,561,000 in incremental accrued
revenue in the current year. 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 2024.
Change in accounting estimates – Inventory valuation
During the year, the Company changed the allocation of overhead to inventory from hours-based cost driver
to freeze-dried weight-based cost driver method, reflecting more accurate method of allocating overhead
to inventory. The change in accounting estimates has resulted in an increase of inventory value by $928,000
with the corresponding credit in the cost of goods sold. 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 2024.
Going concern
The Group posted a net loss before tax of $10,427,000 for the year (2023: $384,000 loss). The Group posted
total operating cash outflow of $6,856,000 (2023: outflow of $3,772,000).
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 except for the below standards:
–
Disclosure of Accounting Policies (Amendments to NZ IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2 Making Materiality Judgements)
The amendments aim to make accounting policy disclosures more informative by replacing the
requirement to disclosure “significant accounting policies” with “material” accounting policy information”.
Annual Report 2024
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.
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 2024 in
relation to revenue share $15,140,000 (2023:$11,071,000), refer to note 2.
b. Project fees: Project fees received are recognised over time using the input method when the
performance obligations are fulfilled pursuant to the project development agreement. The Company’s input
methods include resources consumed, labour hours expensed and costs incurred. 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 payment 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 at a point in time upon completion of the performance obligation.
The amendments also provide guidance under what circumstance, the accounting policy information is
likely to be considered material and therefore requiring disclosure.
–
Definition of Accounting Estimates (Amendments to NZ IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors)
The amendments to NZ IAS 8, which added the definition of accounting estimates, clarify that the effects
of a change in an input or measurement technique are changes in accounting estimates, unless resulting
from the correction of prior period errors. These amendments clarify how entities make the distinction
between changes in accounting estimate, changes in accounting policy and prior period errors.
–
International Tax Reform – Pillar Two Model Rules (Amendment to IAS 12 Income Taxes)
These amendments had no effect on the consolidated financial statements of the Group.
61
2024
$000
2023
$000
Sales of goods (USA)
65,190
58,783
Sales of goods (Rest of the world)
2,776
1,729
Royalties (USA)
-
1,758
Project fees (USA)
1,100
1,090
Total revenue
69,066
63,360
Revenue recognised point in time
67,966
62,270
Revenue recognised over time
1,100
1,090
Total revenue
69,066
63,360
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 $33,746,000 (2023: $37,898,000) 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
$455,000 (2023: $550,000) for the leasehold property and property, plant and equipment of $209,000
(2023: $134,000) in the USA as of the reporting date.
Other income
4.
Loss from operations before net financing income
2024
$000
2023
$000
Research and development tax credit income
1,628
1,673
Other income
36
61
Balance at end of the year
1,664
1,734
Loss from operations before net financing income includes the following:
Note
2024
$000
2023
$000
Auditor’s fee:
Statutory audit – BDO
163
135
Half-year review – BDO
55
55
Employee benefit expenses
45,137
37,158
Employer contributions defined contribution Superannuation scheme
2,632
1,929
Employee share-based payment expenses
18
3,404
2,578
Depreciation:
Leasehold improvements
11
550
505
Plant and equipment
11
906
900
Furniture and fittings
11
72
64
Computer equipment
11
460
329
Right and use assets
15
1,024
807
Directors' fees (excluding share based payment expenses)
20
710
492
Insurance
1,462
1,187
Amortisation:
Patents
12
126
74
Customer relationships
12
618
619
Reacquired rights
12
543
542
Capitalised development costs
12
96
-
Annual Report 2024
5. Net finance income
Finance income and finance expenses have been accrued to the reporting date using the effective
interest method.
6. 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; and
–
temporary differences arising on the initial recognition of goodwill;
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.
2024
$000
2023
$000
Finance income
Interest received on bank balances – financial assets at amortised cost
1,800
1,315
Other finance income
Foreign currency gains
94
463
Unrealised foreign currency gains on derivatives
-
192
Unrealised foreign currency gains
108
1,141
Total finance income
2,002
3,111
Finance expenses
Interest expenses – lease liabilities (Note 16)
(490)
(378)
Other finance expenses
Finance costs – make good provision
(14)
(6)
Unrealised foreign currency losses on derivatives
(1,254)
-
Total finance expenses
(1,758)
(384)
Net finance income
244
2,727
63
Income tax recognised in profit or loss and other comprehensive income
Major components of tax expense
As at 31 March 2024, the Company has used all brought forward tax losses (2023: losses carried forward of
$4,604,581). 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 2024, the Group had $33,193,250 (2023: $25,524,916)
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 2024 on the basis that
large tax profits are not foreseeable in the year ending 31 March 2025. Total tax effected deferred tax asset
not recognised at 31 March 2024 $9,752,000 (2023: $5,650,000).
Reconciliation of income tax expense
2024
$000
2023
$000
Accounting loss before income tax
(10,427)
(384)
Income tax @ 28%
(2,920)
(108)
Impact of tax rates in overseas jurisdictions
(329)
(70)
Expenses not deductible for tax purposes
76
278
Tax credits received subject to tax
(21)
(84)
Income not subject to tax
-
(420)
Prior year tax over provisions
(51)
(211)
Recognition deferred tax on temporary differences and tax losses
3,446
627
Income tax expense
201
12
2024
$000
2023
$000
Current tax expense
Current period
201
12
R&D tax credit
-
-
Total current tax benefit
-
-
Deferred tax (income)
-
-
Total tax expense
201
12
2024
$000
2023
$000
Deferred tax assets/(liabilities) recognised
Accrued revenue
(4,239)
(3,100)
Deferred R&D expenditure
5,642
5,425
Intangible assets
(2,316)
(2,993)
Rights of use assets
(1,678)
(1,639)
Lease liabilities
1,947
1,834
Other temporary differences
13
81
Provision
631
392
Total deferred tax asset/(liability) recognised
-
-
2024
$000
2023
$000
Deferred tax assets unrecognised (tax effected)
Temporary differences
6,335
1,722
Deferred R&D expenditure
3,417
2,639
Unused tax losses
-
1,289
Total deferred tax asset unrecognised (tax effected)
9,752
5,650
Annual Report 2024
7.
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.
8.
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 in relation to the USA listed equity securities for Group’s investment in TELA
Bio for which the Group has elected to recognise fair value gains or losses through other comprehensive
income. TELA Bio is the Group’s largest customer and trading partner where the investment is held on a long
term basis. The Group held 74,316 (2023: 74,316 shares) shares at a value of US$5.67 per share as at
the reporting date (2023: US$10.64).
Financial assets measured at FVTOCI include the following:
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.
9.
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.
During the year, the Group entered into short-term deposit arrangements with BNZ and Westpac. The term
deposits not yet matured as of the reporting date had an average rate of 6.05% (2023: 4.96%) per annum
with a maturity of 3-12 months from the reporting date.
2024
$000
2023
$000
Bank balances
11,522
9,540
Total cash and cash equivalents
11,522
9,540
2024
$000
2023
$000
US listed equity securities
Balance at beginning of the year
1,260
1,239
Changes in fair value through other comprehensive income
(557)
21
Balance at end of the year
703
1,260
2024
$000
2023
$000
Trade receivables
11,446
12,225
Less: Provision for impairment of trade receivables
(309)
(580)
Net trade receivables
11,137
11,645
Other receivables
433
947
Other receivables – Research and Development Tax Incentive accrual
1,693
1,500
Trade and other receivables
13,263
14,092
GST receivable
174
237
Total current trade and other receivables
13,437
14,329
2024
$000
2023
$000
Term deposits
18,000
35,134
Total term deposits
18,000
35,134
65
10. 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
11. 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.
(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.
Trade receivables amounting to $11,137,000 (2023: $11,645,000) 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 2024, current trade receivables with a nominal value of $309,000 (2023: $580,000) were
impaired and provided for.
(ii) Past due but not impaired receivables
As at 31 March 2024, trade receivables of $2,140,000 (2023: $3,733,000) were past due but not impaired.
Subsequent to the reporting date, the Group received over $1,372,000 of these past due trade receivables.
The ageing analysis of trade receivables is as follows:
2024
$000
2023
$000
Current
8,997
7,912
1 - 30 days overdue
1,286
2,545
30 - 60 days overdue
377
309
60 - 90 days overdue
246
234
90 + days overdue
540
1,225
Total trade receivables
11,446
12,225
2024
$000
2023
$000
Raw materials
2,475
1,911
Work in progress
4,178
2,191
Finished goods
2,050
938
Provision for obsolescence
(599)
(209)
Total inventories
8,104
4,831
Annual Report 2024
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:
Depreciation methods, rates and residual values are reviewed at reporting date and adjusted if appropriate.
(iv) Capital commitment
Please refer to note 24e for capital commitments.
Leasehold
Improve-
ments
$000
Capital Work
In Progress
$000
Plant and
Equip-ment
$000
Fixture &
Fitting
$000
Computer
Equipment &
Software
$000
Total
$000
Cost
Balance 1 April 2022
1,631
4,165
8,566
624
1,287
16,273
Additions
46
4,889
397
152
533
6,017
Transfers in/ (out)
2,941
(3,328)
373
13
1
-
Disposals
-
-
(14)
-
-
(14)
Balance 31 March 2023
4,618
5,726
9,322
789
1,821
22,276
Accumulated Depreciation
Balance 1 April 2022
(1,076)
-
(4,204)
(256)
(714)
(6,250)
Depreciation
(505)
-
(900)
(64)
(329)
(1,798)
Disposals
-
-
6
-
-
6
Balance 31 March 2023
(1,581)
-
(5,098)
(320)
(1,043)
(8,042)
Net Book Value
Balance 1 April 2022
555
4,165
4,362
368
573
10,023
Balance 31 March 2023
3,037
5,726
4,224
469
778
14,234
Leasehold
Improve-
ments
$000
Capital Work
In Progress
$000
Plant and
Equipment
$000
Fixture &
Fitting
$000
Computer
Equipment &
Software
$000
Total
$000
Cost
Balance 1 April 2023
4,618
5,726
9,322
789
1,821
22,276
Additions
9
2,978
277
16
243
3,523
Transfers in/(out)
248
(380)
132
-
-
-
Disposals
-
-
-
-
-
-
Balance 31 March 2024
4,875
8,324
9,731
805
2,064
25,799
Accumulated Depreciation
Balance 1 April 2023
(1,581)
-
(5,098)
(320)
(1,043)
(8,042)
Depreciation
(550)
-
(906)
(72)
(460)
(1,988)
Disposals
-
-
-
-
-
-
Balance 31 March 2024
(2,131)
-
(6,004)
(392)
(1,503)
(10,030)
Net Book Value
Balance 1 April 2023
3,037
5,726
4,224
469
778
14,234
Balance 31 March 2024
2,744
8,324
3,727
413
561
15,769
Leasehold improvements
15 years
Fixtures & fittings
3 - 10 years
Plant & equipment
5-10 years
Computer equipment & software
3 years
67
12. 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
3-21 years
Customer relationships
9 years
Reacquired rights
18 years
Capitalised development costs*
5 years
*The Group commences the amortisation when the asset is completed.
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.
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 selling and administrative expenses in profit or loss.
Annual Report 2024
12. Intangible assets (continued)
On 31 March 2024, 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.
Patents &
trademarks
$000
Customer
relationships
$000
Reacquired
rights
$000
Goodwill
$000
Capitalised
development
costs
$000
Total
$000
Cost
Balance 1 April 2023
1,611
5,563
9,772
5,538
1,332
23,816
Additions
644
-
-
-
2,818
3,462
Balance 31 March 2024
2,255
5,563
9,772
5,538
4,150
27,278
Accumulated Depreciation
Balance 1 April 2023
(388)
(3,091)
(2,714)
-
-
(6,193)
Amortisation
(126)
(618)
(543)
-
(96)
(1,383)
Balance 31 March 2024
(514)
(3,709)
(3,257)
-
(96)
(7,576)
Net Book Value
Balance 1 April 2023
1,223
2,472
7,058
5,538
1,332
17,623
Balance 31 March 2024
1,741
1,854
6,515
5,538
4,054
19,702
Patents &
trademarks
$000
Customer
relationships
$000
Reacquired
rights
$000
Goodwill
$000
Capitalised
development
costs
$000
Total
$000
Cost
Balance 1 April 2022
1,354
5,563
9,772
5,538
-
22,227
Additions
257
-
-
-
1,332
1,589
Balance 31 March 2023
1,611
5,563
9,772
5,538
1,332
23,816
Accumulated Depreciation
Balance 1 April 2022
(314)
(2,472)
(2,172)
-
-
(4,958)
Amortisation
(74)
(619)
(542)
-
-
(1,235)
Balance 31 March 2023
(388)
(3,091)
(2,714)
-
-
(6,193)
Net Book Value
Balance 1 April 2022
1,040
3,091
7,600
5,538
-
17,269
Balance 31 March 2023
1,223
2,472
7,058
5,538
1,332
17,623
69
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.
2024
2023
Discount rate post tax
10.6%
10.1%
Terminal growth rate
3.5%
3.5%
Average growth rates over the forecast period
25.8%
34.4%
Average gross profit over the forecast period
89%
88%
Basis of key assumptions
–
Cash flow projections
The cashflow projections used in the recoverable amount calculations are based on management’s budget
for the year ending 31 March 2025, then applicable growth rates applied to revenue and costs from year
2-5. Management has used its past experience of revenue growth, operating costs, margin and external
sources of information where appropriate to determine their expectations for the future.
–
Growth rates
The growth rates reflect the long-term average growth rates for the product lines and health care industry
(publicly available).
–
Discount rates
The present value of the expected cash flows is determined by applying a suitable discount rate. The
discount rate was derived based on the weighted average cost of capital (WACC) for comparable entities
in the healthcare industry, based on market data. The discount rates reflect appropriate adjustments
relating to market risk.
13. 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 generally have terms of 30 days and are interest free. Trade payables of a short-term duration
are not discounted.
14. 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.
2024
$000
2023
$000
Trade payables
1,709
1,909
Accrued expenses
2,032
1,693
Other payables
-
5
Total trade and other payables
3,741
3,607
2024
$000
2023
$000
Leave and wages accrual
2,512
1,864
Bonus accrual
1,196
1,881
Employee benefits
3,708
3,745
A discounted cash flow (“DCF”) model has been based on five-year forecast cash flow projections. The key
assumptions used in calculating the recoverable amount are as follows:
Annual Report 2024
15. Right of use assets
16. Lease liabilities
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; and
–
any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis
of termination option being exercised.
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
2024
Properties Total
$000
2023
Properties Total
$000
Balance at beginning of the year
6,403
5,333
Additions during the year
1,068
1,844
Depreciation for the year
(1,024)
(807)
Modification adjustment
-
33
Balance at end of the year
6,447
6,403
2024
Properties Total
$000
2023
Properties Total
$000
Balance at beginning of the year
7,107
5,876
Additions during the year
1,068
1,844
Interest expense
490
378
Lease payments
(1,230)
(1,024)
Modification adjustment
-
33
Balance at end of the year
7,435
7,107
Current
1,004
559
Non-current
6,431
6,548
Total
7,435
7,107
71
2024
$000
2023
$000
Share capital at beginning of the year
146,491
145,755
Shares exercised under share option plan
196
564
Issue of shares to employees
111
172
Share capital at end of the year
146,798
146,491
# of shares
Ordinary
shares 2024
Ordinary
shares 2023
At beginning of year
343,109,468
342,461,133
Issue of share capital
1,098,366
648,335
At end of year
344,207,834
343,109,468
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 or 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 $12,000 outflow compared to the current period’s cash outflow of
$1,230,000 (2023: $1,024,000).
Please refer to note 21 for lease maturity analysis
17. Share capital
Ordinary shares
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 ordinary shares
have no par value.
Annual Report 2024
18. Share based payments reserve
Share option plan
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, 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.
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 recognised
as an employee expense, with a corresponding increase in equity, over the period that the employees
unconditionally become entitled to the awards. The amount recognised as an expense is 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 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 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.
Key valuation assumptions for the share option plan are:
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 employees,
options to subscribe for ordinary shares since 2017.
Grant Date
6 October 2023
Performance
6 October 2023
Non-Performance
3 August
2023
1 August
2022
14 November
2022
Share price at grant
date (AUD)
0.819
0.755
0.910
0.775
0.930
Valuation date
6 October
2023
6 October
2023
4 August
2023
1 March
2023
14 November
2022
Share price at valuation
date (AUD)
0.76
0.76
0.90
1.10
0.93
Average exercise price
(NZD)
0.97
0.97
0.92
0.64
0.94
Expected volatility*
72%
72%
69%
72%
75%
Expected life
5 years
5 years
5 years
5 years
5 years
Risk free factor
3.98%-4.06%
4.10%
3.90%
3.55%
3.24%
Valuation model
Monte Carlo
Binomial
Binomial
Binomial
Binomial
Dividend yield
0%
0%
0%
0%
0%
2024
$000
2023
$000
Balance as at 1 April
7,179
4,812
Share based payment expense
3,404
2,676
Employee shares forfeited
(223)
(98)
Total expenses recognised in consolidated statement of profit or loss
3,181
2,578
Employee shares exercised
(92)
(211)
Balance as at 31 March
10,268
7,179
73
b) Aroa Biosurgery share option plan (the “Option Plan”) – on and after IPO
On the Group’s IPO in July 2020, the share options were issued to certain employees and directors under
a new share option plan. Under this plan, the Group continue to issue options to certain employees and
directors.
Grants under the Option Plan comprised 25,348,855 (2023: 17,828,074) share options with various vesting
conditions including non-market service conditions, market conditions and non-market performance
conditions.
Summary of options granted under the Option Plan – prior to IPO
Share options outstanding at the end of the year have the following expiry dates:
2024 Average
exercise price
per option
2024
# of options
2023 Average
exercise price
per option NZ$
2023
# of options
Opening balance
0.10
2,841,450
0.10
3,085,200
Exercised during the period
0.10
(1,105,725)
0.10
(243,750)
Closing balance
0.10
1,735,725
0.10
2,841,450
Vested and exercised as at 31 March
0.10
1,735,725
0.10
2,841,450
2024 Average
exercise price
per option NZ$
2024
# of options
2023 Average
exercise price
per option NZ$
2023
# of options
Opening balance
1.09
17,828,074
1.07
12,901,575
Granted in August 2022
-
-
0.64
3,545,344
Granted in November 2022
0.93
50,000
0.94
2,093,580
Granted in August 2023
0.93
210,686
-
-
Granted in October 2023
0.97
8,978,601
-
-
Exercised during the year
0.81
(50,000)
1.23
(435,758)
Forfeited during the period
1.06
(1,668,506)
1.21
(276,667)
Closing balance
0.78
25,348,855
1.09
17,828,074
Vested and exercised as at 31 March
1.09
11,919,471
1.22
8,964,193
Grant date
Expiry date
Share options
2024
Share options
2023
1 October 2018
01 October 2028
790,725
1,339,900
1 July 2019
01 October 2028
-
228,750
1 December 2019
30 November 2029
945,000
1,272,800
Total
1,735,725
2,841,450
Annual Report 2024
Share options – on and after IPO outstanding at the end of the year have the following expiry dates:
Grant date
Expiry date
Share options
2024
Share options
2023
24 July 2020
23 July 2025
4,885,950
4,935,950
29 September 2020
28 September 2025
1,538,200
1,683,200
22 April 2021
31 March 2026
200,000
200,000
28 June 2021
28 June 2026
2,005,000
2,295,000
9 August 2021
8 August 2026
2,925,000
3,075,000
1 August 2022
29 February 2028
3,432,419
3,545,344
14 November 2022
13 November 2027
1,712,515
2,093,580
3 August 2023
13 November 2027
210,686
-
6 October 2023
30 June 2024 - 3 August
2028
8,439,085
-
Total
25,348,855
17,828,074
19. Earnings per share
Earnings per share has been calculated based on shares and share options issued at the respective
measurement dates.
2024
‘000
2023
‘000
Numerator
Loss for the year after tax (“N”) in $000
(10,628)
(396)
Denominator
Weighted average number of ordinary shares used in basic EPS (“D1”)
343,825
342,917
Effects of:
Employee share options *
24,049
18,673
Weighted average number of shares used in diluted EPS (“D2”)
343,825
342,917
Cents
Cents
Basic earnings per share (N/D1 x 100)
(3.09)
(0.12)
Diluted earnings per share (N/D2 x 100)
(3.09)
(0.12)
*As employee share options are anti-dilutive, these were not included in the calculation of diluted earnings per share above.
75
20. 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.
Executive Management Team
2024
$000
2023
$000
Short term employee benefits
2,239
2,421
Share based payment expenses
1,254
609
Total
3,493
3,030
Non-executive Directors
2024
$000
2023
$000
Short term employee benefits
710
492
Share based payment expenses
316
262
Total
1,026
754
(iii) Year end balances
There were no related party balance at year end other than loans provided to key management personnel for
acquisition of Company shares prior to IPO of $92,000 (2023: $117,000).
(iv) Transactions with related parties
There were no other related party transactions during the year.
21. 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.
Annual Report 2024
Exposure to foreign currency risk
2024
USD
$000
AUD
$000
EUR
$000
CAD
$000
Cash and cash equivalents
1,446
-
-
-
Trade and other receivables
6,763
-
68
31
Financial assets at FVTOCI
421
-
-
-
Trade and other payables
(3,796)
(30)
(1)
(4)
Lease liabilities
(289)
-
-
-
Derivatives
27,150
-
-
-
Net exposure
31,695
(30)
67
27
2023
USD
$000
AUD
$000
EUR
$000
Cash and cash equivalents
3,199
-
-
Trade and other receivables
7,683
-
19
Financial assets at FVTOCI
791
-
-
Trade and other payables
(796)
(24)
-
Lease liabilities
(351)
-
-
Derivatives
22,650
-
-
Net Exposure
33,176
(24)
19
Sensitivity analysis – underlying exposures
A 5% weakening/strengthening of the NZ dollar against the US dollar at 31 March 2024 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 $2,784,000 higher on a 5% weakening of
the NZ dollar (2023: $2,780,000 higher), and $2,519,000 lower on a 5% strengthening of the NZ dollar as at
31 March 2024 (2023: $2,515,000 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.
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 following significant exchange rates applied during the year:
Average rate
2024
Average rate
2023
Closing rate
2024
Closing rate
2023
NZD/USD
0.6101
0.6246
0.5991
0.6275
77
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.
At 31 March 2024
Note
Less than 3
months
$000
3-12 months
$000
Between 1
and 2 years
$000
Over 2
years
$000
Total
contractual
cash flows
$000
Total
carrying
amounts
$000
Financial liabilities
Trade and other
payables
13
3,741
-
-
-
3,741
3,741
Lease liabilities
16
370
1,113
1,523
6,070
9,076
7,435
Derivative liabilities
507
406
149
-
1,062
1,062
Total
4,618
1,519
1,672
6,070
13,879
12,238
At 31 March 2023
Note
Less than 3
months
$000
3-12 months
$000
Between 1
and 2 years
$000
Over 2
years
$000
Total
contractual
cash flows
$000
Total
carrying
amounts
$000
Financial liabilities
Trade and other
payables
13
3,607
-
-
-
3,607
3,607
Lease liabilities
16
202
1,024
1,261
6,380
8,867
7,107
Total
3,809
1,024
1,261
6,380
12,474
10,714
Capital adequacy
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.
22. 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
Wor 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.
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.
Annual Report 2024
(iii) Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are
subsequently remeasured to their fair value. Derivatives are carried in the consolidated statement of financial
position at fair value with the changes in fair value recognised in the consolidated statement of profit or loss
in the finance income or expenses. The Group does not apply hedge accounting for derivative contracts.
At 31 March 2024
Note
Assets at
amortised cost
$000
Assets at
fair value
through other
comprehensive
income
$000
Total
$000
Assets as per Consolidated Statement
of Financial Position
Cash and cash equivalents
7
11,522
-
11,522
Term deposits
7
18,000
-
18,000
Trade and other receivables
9
13,263
-
13,263
Financial assets at FVTOCI
8
-
703
703
Total financial assets
42,785
703
43,488
At 31 March 2023
Note
Assets at
amortised
cost
$000
Assets at
fair value
through other
comprehensive
income
$000
Assets at fair
value through
profit and loss
$000
Total
$000
Assets as per Consolidated Statement
of Financial Position
Cash and cash equivalents
7
9,540
-
-
9,540
Term deposits
7
35,134
-
-
35,134
Trade and other receivables
9
14,092
-
-
14,092
Financial assets at FVTOCI
8
-
1,260
-
1,260
Derivative assets
-
-
192
192
Total financial assets
58,766
1,260
192
60,218
At 31 March 2024
Note
Liabilities at
amortised cost
$000
Liabilities at fair
value through
profit and loss
$000
Total
$000
Liabilities as per Consolidated Statement
of Financial Position
Trade and other payables
13
1,709
-
1,709
Lease liabilities
16
7,435
-
7,435
Derivative liabilities
-
1,061
1,061
Total financial liabilities
9,144
1,061
10,205
At 31 March 2023
Note
Liabilities at
amortised cost
$000
Total
$000
Liabilities as per Consolidated Statement
of Financial Position
Trade and other payables
13
1,909
1,909
Lease liabilities
16
7,107
7,107
Total financial liabilities
9,016
9,016
79
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below.
Note
2024
$000
2023
$000
Financial assets
US listed equity securities
8
703
1,260
Derivative financial (liabilities)/assets
(1,061)
192
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 2 inputs.
(v) 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, term deposits, trade and
other receivables, and trade and other payables approximates their fair value.
23. 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.
24. Other Disclosures
a. Reconciliation of loss after income tax to cash flow from operating activities
2024
$000
2023
$000
Loss after tax
(10,628)
(396)
Add / (deduct) non-cash items:
Depreciation of property, plant and equipment
1,988
1,798
Depreciation of right of use assets
1,024
807
Gain on disposal of assets
-
13
Amortisation of intangibles
1,383
1,229
Share based payment expenses
3,181
2,578
Interest – lease liabilities
490
378
Unrealised currency losses / (gains)
1,897
(266)
Movement in working capital:
Movement in provisions
3
6
Movement in tax receivable
(26)
(387)
Movement in trade and other receivables
901
(2,235)
Movement in prepayments and contract assets
(4,424)
(6,393)
Movement in inventories
(3,273)
(2,748)
Movement in trade and other payables
109
1,844
Net cash flows from operating activities
(7,375)
(3,772)
Annual Report 2024
80
b. Reconciliation of changes in liabilities arising from financing activities.
Note
Total lease
liabilities 2024
$000
Total lease
liabilities 2023
$000
At 1 April
(7,107)
(5,876)
Cash flow
1,230
1,024
Non-cash flow
Additions during the year
16
(1,068)
(1,877)
Interest accrued during the year
16
(490)
(378)
At 31 March
(7,435)
(7,107)
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).
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 2024, the Group had equipment capital commitments of $867,500 (2023: $3,051,000).
f. Contingent liabilities
As at 31 March 2024, the Group had no significant contingent liabilities (2023: $nil).
Annual Report 2024
ADDITIONAL
INFORMATION
+ Aroa Biosurgery Limited
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, 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 2024, 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 2024.
NZ Company No. 1980577
ARBN 638 867 473
83
+ Ordinary shares
On 31 March 2024 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 2024 was 344,207,834 shares and the
total number of ordinary shares in the Company on issue as at 31 May 2024 was 344,207,834 shares.
The distribution of shareholdings as at 31 May 2024 is as shown in the table below:
Based on the closing market price of AROA’s ordinary shares on 31 May 2024, the number of shareholdings held
in less than marketable parcels is 632, representing 322,611 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.
+ Share options
As at 31 March 2024, there were 28,005,702* share options on issue (representing the same number of unissued
ordinary shares) held by 95 holders under the NZ Option Plan and US Option Plan. Share options do not carry
voting rights.
The distribution of share options as at 31 May 2024 is as shown in the table below:
*excluding the forfeited options at 31 March 2024 for accounting purposes, but not excluded from the options register.
Please refer to the Remuneration Report and note 18 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 FY24 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 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 generally 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.
Size of shareholding
Number of holders
%
Number of ordinary
shares
%
1 to 1,000
875
23.62
562,257
0.160
1,001 to 5,000
1,230
33.21
3,422,976
0.990
5,001 to 10,000
587
15.85
4,680,081
1.360
10,001 to 100,000
873
23.57
27,109,322
7.880
100,001 and over
139
3.75
308,433,198
89.610
TOTAL
3,704
100
344,207,834
100.000
Size of holding
Number of holders
%
Number of options
%
1 to 1,000
-
-
-
-
1,001 to 5,000
1
0.42
4,239
0.02
5,001 to 10,000
18
7.63
136,445
0.49
10,001 to 100,000
149
63.14
8,110,924
28.96
100,001 and over
68
28.81
19,754,094
70.54
TOTAL
236
100
28,005,702*
100
Annual Report 2024
+ Twenty largest shareholders
The names and holdings of the 20 largest registered shareholders in the Company as at 31 May 2024
was as follows:
*Share options issued prior to IPO.
Date options exercised
Number of options exercised
Average exercise price
Number of shares issued
30/08/2023
315,000*
NZ$0.0904
281,934
06/09/2023
50,000
A$0.75
50,000
13/02/2024
157,500*
NZ$0.0979
133,207
27/03/2024
633,225*
NZ$0.10
633,225
Shareholder name
Shareholding
Holding as a % of total ordinary shares on
issue as at the date above
J P MORGAN NOMINEES AUSTRALIA
PTY LIMITED
48,251,491
14.01
MR BRIAN WARD & MRS TRACEY
WARD
33,125,800
9.62
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED
32,670,040
9.49
CITICORP NOMINEES PTY LIMITED
32,037,722
9.30
PHIL MCCAW
19,597,251
5.69
RICHARD ABBOTT
13,043,020
3.78
BNP PARIBAS NOMS (NZ) LTD
10,520,679
3.05
ASPIRE NZ SEED FUND LTD
10,421,614
3.02
NATIONAL NOMINEES LIMITED
8,010,852
2.32
K ONE W ONE (NO 3) LTD
5,882,550
1.70
CUSTODIAL SERVICES LIMITED
4,532,679
1.31
SHARON BRYANT
4,372,267
1.27
HSBC CUSTODY NOMINEES
(AUSTRALIA) LIMITED - A/C 2
4,138,307
1.20
MR JOHN ANTHONY DELL
3,508,864
1.01
BNP PARIBAS NOMS PTY LTD
3,387,642
0.98
UBS NOMINEES PTY LTD
3,336,270
0.96
BARNABY MAY
3,272,775
0.95
CHRISTOPHER DAVID ASTLEY MILNE
3,213,022
0.93
K ONE W ONE LTD
3,041,226
0.88
JAMES MCLEAN
2,827,108
0.82
Total Top 20 Holders
249,191,179
72.4
Total Securities
344,207,834
85
+ Takeovers and substantial holdings
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
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 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% 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 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 shareholder approval. Compulsory acquisitions are permitted by
persons who hold or control 90% or more voting rights in a code company.
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 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 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 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 relevant interest and a person ceasing
to be a Substantial Holder.
+ Limitations on the acquisition of AROA shares
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
takeovers regime (discussed above) and if applicable, the Overseas Investment Act 2005 (NZ) and the Commerce
Act 1986 (NZ).
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 includes
(without limitation) if the relevant shares are subject to a holding lock pursuant to the ASX Settlement Operating
Rules or escrow.
+ Substantial shareholders
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 2024.
*of the Substantial Holder and their “associates” (within the meaning given to that term in
section 12 of the Corporations Act).
**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 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.
*** 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 (held by the McSyth Capital Investment Trust) expiring 23 July 2025 at an exercise
price of AU$0.75 per option.
Shareholder name
Shareholding*
Holding as a % of total
ordinary shares on issue
as at 31 May 2024
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
48,251,491
14.01
MR BRIAN WARD** & MRS TRACEY WARD
33,125,800
9.62
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
32,670,040
9.49
CITICORP NOMINEES PTY LIMITED
32,037,722
9.30
PHIL MCCAW &
***
19,597,251
5.69
Annual Report 2024
Name
Interest
James McLean
Director, Mesynthes Nominees Limited
Chairman, Prevar Limited
Chairman, R J Hill Laboratories Limited
Brian Ward
Director, Green Edge Limited
Steven Engle
Non-Executive Chairman, Prescient Therapeutics Limited (ASX: PTX)
Director, Author-IT Labs Limited, Author-IT Holdings Limited, Author IT Software
Corporation Limited and Author-IT Software Corporation
Sole Proprietor, Averigon
CEO & Director, Gradalis Inc
Philip McCaw
Director, Mesynthes Nominee Limited
Director, Author-IT Limited and Author IT Software Corporation Limited
Director, Kaynemaile Ltd
Director, Shift72 Limited
Director, Movac Limited
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
Advisory Board Member, Celestial Therapeutics, Inc
John Diddams
Non-Executive Chairman, xReality Group Limited (ASX: XRG)
Director, Surf Lakes Holdings Limited
Director, DIT AgTechnologies Limited
+ Securities subject to voluntary escrow as at 31 May 2024
As at 31 May 2024, 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 2023 which remained current as at 31 March 2024.
87
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
Name
Interest
Nature of update to the Company’s interests register
Philip McCaw
Chief Executive Officer & Board Chair,
Author-it
Added
Chair, Startup Advisors’ Council
– New Zealand Government
Removed, the Council was appointed
for a 12-month term which has expired
Darla Hutton
N/A
Director added to the register,
but no interest to declare
The following updates to the general disclosures of interests were made during the financial year ended
31 March 2024:
Details of share dealings by the directors during the 12-month period ended 31 March 2024 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 2024 totalled NZ$10,000.
+ 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 2024. They do not receive any remuneration or other benefits for their role as a director of a Company
subsidiary.
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 2024.
Dr. Catherine Mohr
Director, Carta Healthcare
Director, Avisi Therapeutics
Director, FINCA International
Director, Spark Acquisition
Annual Report 2024
GLOSSARY
AND OTHER
INFORMATION
Term
Description
AROA or the Company
Aroa Biosurgery Limited NZCN 1980577, ARBN 638 867 473
ASIC
Australian Securities and Investments Commission
ASX
Australian Securities Exchange
CC or Constant Currency
Constant currency removes the impact of exchange rate movements. This approach
is used to assess the AROA group’s underlying comparative financial performance
without any distortion from changes in foreign exchange rates, specifically the USD.
The exchange rate of US$0.62/NZ$1.00 has been used in the constant currency
analysis for FY22/FY23. Unless otherwise specified, all references in this Annual
Report to ‘constant currency’ or ‘CC’ are as set out here.
CEO
Chief Executive Officer
Companies Act
Companies Act 1993 (NZ)
Corporations Act
Corporations Act 2001 (Cth, Australia)
ECM
Extracellular matrix
EBIT
Earnings before interest and tax
EBITDA
Earnings before interest, tax, depreciation and amortisation
FDA
The Food and Drug Administration of the US
FY
Financial Year
GPO
Group purchasing organisation
Group
The group of companies comprising AROA, Aroa Biosurgery Incorporated (Delaware
File number 6560549) and Mesynthes Nominee Limited (NZBN 9429 041 350 003)
IPO
The Company’s initial public offering in July 2020 of 60,000,000 shares in the
Company at a price of A$0.75 per share
LTI or Long-Term Incentive
A discretionary long-term incentive variable remuneration in the form
of share options.
NZD
New Zealand Dollar
+ Glossary
89
+ IP notice
AROA, Aroa Biosurgery, AROA ECM, Endoform, Myriad, Myriad Matrix, Morcells, Myriad Morcells, Myriad Morcells
Fine, Symphony and Enivo are trademarks of Aroa Biosurgery Limited. All other trademarks are properties of their
respective owners. ©2024 Aroa Biosurgery Limited.
+ References
1 Guidance assumes an average NZ$/US$ exchange rate of 0.64, compared to the average rate of 0.61 in FY24,
and is subject to TELA Bio delivering on its CY24 revenue guidance of US$74.5-76.5 million.
2 The FY23 figure excludes a ‘one-off’ royalty payment of NZ$1.8 million received from TELA Bio.
3 Capitalisation in line with the NZ Equivalent to International Accounting Standard 38 (NZ IAS 38).
4 The Board reserves the right to adjust these performance conditions or vesting outcomes to ensure that the
equity award recipient is neither penalised nor provided with a windfall benefit arising from matters outside their
control.
5 As a director of Mesynthes Nominee Limited, as at 31 March 2024 Jim McLean also had an interest in 1,514,775
shares held by Mesynthes Nominee Limited on bare trust for certain AROA employees until payment is received for
such shares.
6 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 2024
Mr. McCaw also had an interest in 1,514,775 shares held by Mesynthes Nominee Limited on bare trust for certain
AROA employees until payment is received for such shares.
7 This includes interests in shares held by John Diddams’ related parties; Whitfield Investments Pty Ltd and Galdarn
Pty Ltd.
8 Brian Ward holds his interest through Arawai No. 2 Trust, of which he is one of 3 trustees and a beneficiary.
NZ GAAP
New Zealand Generally Accepted Accounting Practice
NZ IFRS
New Zealand Equivalents to International Financial Reporting Standards
NZ Option Plan
The Aroa Biosurgery Share Option Plan (NZ)
Shares
Ordinary shares in the Company
Share Plan
The Aroa Employee Incentive Share Plan 2014, which was wound up in 2020
STI or Short-term Incentive
Discretionary short-term bonus providing the potential for an annual cash bonus
based on pre-determined company and individual performance targets.
Substantial Holder
Has the meaning given to it in the Corporations Act
TAM
Estimated total addressable market
TELA Bio
TELA Bio, Inc. TELA Bio is AROA’s sales and distribution partner licensed for
abdominal wall reconstruction/hernia and breast reconstruction indications in North
America and Europe.
US
The United States of America
USD
United States Dollar
US Option Plan
The AROA Biosurgery 2021 US Share Option Plan
VWAP
The volume weighted average market price for Shares reported on the ASX
91
Directors
Jim McLean, Chair and
Independent Non-Executive
Director
Brian Ward, Founder,
Chief Executive Officer and
Managing Director
John Diddams, Independent
Non-Executive Director
Darla Hutton, Independent
Non-Executive Director
Philip McCaw, Non-Executive
Director
Dr. Catherine Mohr, Independent
Non-Executive Director
John Pinion, 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
CORPORATE
DIRECTORY
Auditor
BDO Auckland
Level 4, BDO Centre
4 Graham Street
Auckland 1010
New Zealand
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
www.aroa.com
©June 2024