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Fitbit Inc.Inspiring the world to move well
ANNUAL REPORT 2014
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dorsaVi Ltd
ACN 129 742 409
Contents
01 Chairman’s Review
02 Highlights
04 CEO’s Report
12 Financial Summary
13 Corporate Governance
Statement
20 Directors’ Report
39
Auditor’s Independence
Declaration
40 Financial Statements
44 Notes
68 Directors’ Declaration
69 Auditor’s Opinion
71 Shareholder Information
Clinical
dorsaVi’s wearable sensor
technology enables many aspects
of detailed human movement and
position to be accurately captured,
quantified and assessed outside
a biomechanics lab, in real-time
and real situations for
up to 24 hours.
dorsaVi has three ground
breaking products:
Occupational health
and safety
Elite and professional
sports clubs
CHAIRMAN’S
REVIEW
Dear Shareholders,
On behalf of the Board and Management
of dorsaVi, I’m pleased to present the
annual report for the Financial Year
2013-2014.
Herb Elliott AC MBE
Chairman
It is particularly pleasing to present this Annual Report,
our first since becoming a public company. In December,
we completed an Initial Public Offering raising $18 million
and listing on the ASX. This is a tremendous achievement
and the support we received from some of Australia’s
leading institutional funds and private investors is a
testament to the revolutionary technology and products
we’ve developed.
dorsaVi has an opportunity to establish a new status quo
in how physicians assess movement, whether that is in
the context of aiding treatment and recovery from injury
or preventing it. Whilst we are in the infancy of the global
roll out of our three products: ViMove, ViPerform, and
ViSafe, the pace of uptake and the ground swell of
support from key opinion leaders is very encouraging.
An important focus since the IPO has been on the
substantial expansion of our sales and marketing team
and I’m pleased to report that we have personnel
established in Australia, the UK and the US. This team
is highly unique with a valuable hybrid of clinical, elite
sport and medical device experience. The appointment
of our US dorsaVi President John Kowalczyk, a highly
experienced medical device specialist, expands
an already strong senior management team.
Our US market entry plans were supported with ViMove
receiving 510K clearance by the US Food and Drug
Administration (FDA) for measuring, recording, and
reporting movement and muscle activity of the lower
back / lumbar spine. We signed our first US client,
a highly regarded pain specialist Dr. Mehul J. Desai,
who is now offering assessments using ViPerform.
In the UK, the team has signed a number of new
ViPerform and ViMove customers with three English
Premier League Teams now on board: Manchester
United, West Bromwich Albion and Sunderland
Association FC, British Gymnastics, and physio clinics
from London to Edinburgh.
The wearable technology industry is booming and
we hold a unique and exclusive position in offering
technology that is not only mobile and highly versatile
but also able to deliver information that is meaningful,
immediate, easy to understand and highly sensitive.
Our ability to quickly adapt our technology allows
us to stay ahead of the curve in product innovation for
professional and consumer use in this fast moving space.
The future is bright for dorsaVi and whilst we’ve made
solid progress in the first six months since listing, the
challenge remains on how rapidly we can expand our
global footprint. All our efforts will be focused on this
in the coming 12 months.
On behalf of the board, I’d like to thank CEO Andrew
Ronchi and his team. Andrew and Dan Ronchi are the
‘brains trust’ of the dorsaVi technology and it’s their
vision that we as a company are now fulfilling.
Leadership is the sum of a good CEO and team and
we are incredibly pleased at dorsaVi to have attracted
exceptionally talented, committed and hard working
people to contribute to this business.
Finally, to our shareholders who invested at the IPO
or since, we thank you for your choice in supporting
our company and look forward to communicating our
progress throughout this coming year.
01
dorsaViAnnual Report 2014
2013-2014
HIGHLIGHTS
Clinical
FDA clearance and launch in the USA
USA launch following 510K clearance by the US Food
and Drug Administration (FDA) for measuring, recording,
and reporting on movement and muscle activity of the
lower back / lumbar spine.
Medsafe approval in New Zealand
Regulatory approval for the use and sale of ViMove
received from Medsafe, the New Zealand Medicines and
Medical Devices Safety Authority. ViMove is now available
in medical and allied health clinics in the US, Australia,
NZ, UK and Europe.
Occupational health and safety
Acquisition of Australian Workplace
Compliance (AWC)
The AWC acquisition expands dorsaVi’s service offering
and client base in the occupational health and safety
(OH&S) market. AWC provides OH&S operational and
procedural audits, supporting the development of
strategic compliance and risk mitigation solutions to
a variety of clients in industries including manufacturing,
outdoor adventure, logistics and distribution.
Elite and professional sports clubs
First US customer
Leading pain specialist Dr. Mehul J. Desai offers
assessments at the Metro Orthopaedics and Sports
Therapy in Maryland marking the first US sale.
Corporate
Appointment of new US president
Former Medtronic senior executive John Kowalczyk was
appointed as dorsaVi President to lead US operations.
Greater adoption by various healthcare
professionals
More than 60 clinics globally are now using ViMove
(including neurosurgeons, pain medicine specialists,
physiotherapists, chiropractors, exercise physiologists,
and osteopaths) to assess and treat patients with low
back pain and other musculoskeletal conditions. The
device is also being used at universities and teaching
schools such as Monash University (Melbourne), KU
Leuven in Belgium and the University of Southern
Denmark for research and educational activities.
Launch of ViMove for running
Launch of ViMove for running in order to help runners
measure technique and improve performance.
The product is now available at 17 practices across
Victoria, New South Wales and Queensland, following
a successful pilot program undertaken at Melbourne’s
Olympic Park Sports Medicine Centre. Internationally
the running application has also been taken up by two
clinics in London (Lido Spinal Clinic in Jersey and
Kensington Physio).
Relationships with insurers
dorsaVi is working with several of the leading global
insurance companies to help reduce injuries for
workers and cut occupational health and safety
costs for employers.
Australian AFL and NRL Premiers adopt
ViPerform
The 2013 AFL and NRL Premiers, Hawthorn Football
Club and the Sydney Roosters are now using ViPerform
to optimise training, injury prevention and player
rehabilitation programs.
Major overseas sporting clubs and
associations adopt ViPerform
Prominent sporting clubs and associations overseas
have adopted ViPerform including three English Premier
League Teams: Manchester United, West Bromwich
Albion and Sunderland AFC, as well as the first Brazilian
football club Sao Paulo and British Gymnastics.
Establishment of international sales and
marketing team
Recruitment of senior sales roles in the UK/Europe and
the United States completed. Recruitment in the UK is
ahead of schedule with five sales executives appointed,
with the team coming from strong clinical and elite sports
backgrounds. The company has also expanded its sales
force in Australia.
Initial Public Offer (IPO) and ASX listing
dorsaVi raised $18 million in an oversubscribed IPO in
December 2013 with strong interest from domestic and
international institutions and Australian retail investors.
02
03
dorsaViAnnual Report 2014 CEO’S
REPORT
Establishing
an international
business
The establishment of dorsaVi USA Inc, is the third
major international division with our other locations
in Australia and the UK (dorsaVi Europe Ltd).
Creating an international sales and marketing team
was a key priority for us and we’ve made significant
progress in this regard. The company has recruited
its most senior sales roles in the UK/Europe and
the United States. Recruitment in the UK is ahead
of schedule with new hires from strong clinical and
elite sports backgrounds employed by the company.
The company has also expanded its sales force
in Australia.
dorsaVi Europe Ltd
In the UK, we have recruited a new
European Chief Operating Officer,
Zoë Whyatt, and four clinical and
sports sales people trained.
dorsaVi’s Chief Operating Officer,
Zoë Whyatt, has strong experience
in driving high growth technology
businesses globally having previously
worked at Cogstate. She provides an
important interface between customers
and the technical team, and helps
create business growth in new markets.
It is with pleasure that I present my
first Annual Report as CEO of dorsaVi
following our successful Initial Public
Offer and ASX listing in December where
we raised $18 million. It has been an
incredibly busy time in the six months
since our listing and I’m pleased to be in
a position to report substantial progress.
Dr Andrew Ronchi
Chief Executive Officer
dorsaVi USA Inc.
In the US, medical device expert John
Kowalczyk, joined our team to lead dorsaVi
USA. His past experience includes 19 years
at Medtronic, where he was involved in
bringing new products to market and
expanding existing product penetration.
He is joined by five sales executives.
dorsaVi Ltd
In Australia, dorsaVi welcomed Jerome
Whelan as global Chief Financial Officer,
who most recently held the position
of CFO of SapientNitro, the marketing,
commerce and technology division
of Sapient Corp.
04
05
dorsaViAnnual Report 2014 CEO’S REPORT (cont.)
Driving
adoption
of three
revolutionary
products
Clinical
Case Study / UK / Wearing away back pain
We achieved two important regulatory
milestones with 510K clearance of ViMove
by the FDA for measuring, recording,
and reporting on movement and muscle
activity of the lower back / lumbar spine
allowing us to commence sales in the US.
We also received approval for the use
and sale of ViMove from Medsafe, the
New Zealand Medicines and Medical
Devices Safety Authority.
ViMove is being used by several leading pain and
physiotherapy clinics in Australia, including, Olympic Park
Sports Medicine, Metro Pain Clinic, Physiosports Brighton,
and Epworth Health Care.
Product distribution has also expanded internationally, as
we continue to broaden our offering in the UK, with clinics
on board in London, Birmingham, Edinburgh and Jersey.
Educating the next generation of physiotherapists is an
important strategy in driving the professional adoption
of ViMove and the company has made substantial inroads
in this area over the last 12 months. Monash University’s
Faculty of Medicine Nursing and Health Sciences have
employed the system as part of its ongoing physiotherapy
research to examine the causes of back pain, management
and prevention. Public health provider Austin Health is
using ViMove as a teaching aid and Melbourne University
for knee research. In Belgium a leading Rheumatologist is
guiding research using the ViMove system to understand
complex movement patterns in and outside the clinical
domain. University of Southern Denmark has selected
to use ViMove as the sensors of choice in a series of
pioneering clinical trials.
In March, dorsaVi launched ViMove for running, which
is now available in physiotherapy and sports medicine
clinics across Australia using the same technology and
algorithms being used by Elite Sports Clubs around the
world. The device provides important information that
can assist in determining the causes of musculoskeletal
conditions and injuries often associated with running.
The device’s wireless features enable analysis outside the
clinic, over long-distances, with healthcare professionals
able to better understand the impact of fatigue and
different terrains on a person’s running style.
The most commonly cited reason for people visiting
a physiotherapist is low back pain (33%), followed by knee
(13%), shoulder (12%) and neck (10%). ViMove technology
is being used to understand the role of movement for
patients who present with these conditions.
06
The problem
David’s low back pain had been
constant for 2 years. His most
provocative symptom was
standing, which he could not do
for more than 15 minutes without
getting an ache. Every day was
uncomfortable for David. A keen
cyclist, David had been advised
to stop riding by a surgeon and
previous physiotherapy had not
made a difference. His low back
pain was having a constant and
pervasive effect on his life, bringing
his social life and hobbies to a
standstill and affecting his work.
The ViMove
approach
I used ViMove with David because
my initial observations showed
an apparent altered pattern
of movement and I wanted to
quantify it. The brilliance of ViMove
is that it gives me objective data,
putting absolute numbers to what
previously I could only eyeball.
This helps direct my treatment.
ViMove Live Assessment in the
clinic showed flexion patterning
issues, David was typically held in
extension on this movement. The
out of clinic Monitoring session
showed that over an 8 hour period
he was constantly off to the left,
a bit of lateral flexion, in sitting and
standing. It also showed that he
was sitting slouched for most of
his seated time, and sitting for a lot
of his day. Back in the in the clinic
I used Live Training to help David
work on his pelvic tilt over 4
sessions. When I judged David
to be ready, I sent him out of the
clinic on 2 Biofeedback sessions.
I set these up to prompt him to
adjust or move when he was
spending too much time in left
lateral flexion or in too much pelvic
anterior tilt. We repeated the
Monitoring once again and the
change was significant. David now
spent less time sitting over an
8 hour period, he was doing more
dynamic movement in the day and
his sitting posture was significantly
better. He was also moving with a
normal flexion pattern. The final
Live Assessment showed normal
movement patterns. What did
these changes mean for David?
He was now able to stand at work
with no pain, stand at events and
parties with no pain, & sit in his car
with no pain.
The result
We achieved these results
together after just 6 weeks. And
throughout the program David felt
like a rock star! He felt “like Usain
Bolt getting world class
treatment!” For me, the best part
is the out of clinic Monitoring and
Biofeedback. In a usual 30 minute
appointment you can only get a
snap shot of what someone does
in a normal day based on
self-reporting. The Monitoring
session gives you data and
therefore knowledge about what
a patient is really doing all day.
We just cannot know this unless
we were to follow our patients
around or sit and watch them in
their office. The reports are also
a major strength as they enable
the patient to track their own
progress through the program,
they can see their improvement
over time – it’s a great way
to communicate.
Using ViMove has taken my
practice to another level and
keeps my work interesting.
I believe that ViMove is changing
the way we look at backs. We are
constantly trying to search for
objective markers to explain
low back pain. The way people
move is gaining more and more
acceptance as a reliable way of
understanding low back pain, and
now we are able to measure it.
Scott Tindal – Clinical Director
at Kensington Physio, London
07
dorsaViAnnual Report 2014 CEO’S REPORT (cont.)
Driving
adoption
of three
revolutionary
products
The opportunity
Orora, the demerged
Australasian packaging
and distribution business
of Amcor, used ViSafe
at its South Australian
manufacturing plant
to improve worker safety
and welfare when using
Asitrade, a high-performance
machine for corrugation
of packaging materials.
The ViSafe
approach
The arrangement was
conducted in collaboration
with Sano Health,
who assist in the
development of
solutions based on
the data from ViSafe.
The result
The project work with
Orora achieved the highly
acclaimed Global CEO
Outperformance award
with the international Orora
community. Orora joins
Coles, Woolworths, Toll,
Toyota, Crown and BHP
Billiton as other major
corporations using ViSafe
independently.
Occupational health and safety
Case Study / Australia / Orora
According to Safe Work Australia, in 2010-11
there were 132,570 workers’ compensation
claims for serious work-related injuries
or illnesses, with 20% of serious claims
involving a back injury. Furthermore,
work-related injuries are a major source
of economic burden for Australia, costing
$60.6 billion in 2008-09 or 4.8% of GDP.
dorsaVi’s product for the OH&S market,
ViSafe, tracks worker movements that
increase risk of injury, and can point
to solutions which improve efficiency
and increase safety in the workplace.
In July 2014, dorsaVi acquired Australian Workplace
Compliance Pty Ltd (AWC). As part of the acquisition,
AWC CEO Mark Heaysman joined dorsaVi.
The acquisition plays a part in the expansion of dorsaVi’s
OH&S offering, by providing operational and procedural
analysis, and supporting the development of strategic
compliance and risk mitigation solutions. AWC’s clients
include businesses in industries as diverse as manufacturing,
outdoor adventure, logistics and distribution.
dorsaVi now has four staff dedicated to the OH&S sector,
which will help drive ViSafe further into this market. ViSafe
has been used by major corporations across mining,
transport, manufacturing, health and gaming industries
to help reduce injury rates through workplace and work
task redesign.
In addition, dorsaVi announced in March a partnership
with one of the largest global insurers Allianz Insurance.
Reducing workplace incidents will not only benefit
employers but see fewer claims on insurers and help
employers manage the cost of their insurance premiums.
The relationship with Allianz signals a strong endorsement
for the technology and its benefits. One referral through
Allianz is Victorian health services provider Monash
Health, which has commenced a biomedical assessment
program of its workers.
08
09
dorsaViAnnual Report 2014 CEO’S REPORT (cont.)
Driving
adoption
of three
revolutionary
products
Elite and professional sports clubs
Case Study / USA / A crucial role in anterior cruciate (knee) ligament injury prevention
ViPerform has been adopted by elite
sporting clubs around the world, a signal
of growing adoption of wearable sensors
to provide an edge for sports performance
and highlights the unique qualities and
benefits of our technology.
It has been an important year for ViPerform as the elite
sporting technology diversifies across sporting codes
and geographies.
Ahead of the commencement of respective AFL and NRL
seasons, 2013 Premiership teams Hawthorn Football
Club and the Sydney Roosters both introduced ViPerform
into their training schedules ahead of the 2014 season.
They join an Australian tally of seven AFL clubs, the
Australian and Victorian Institutes of Sport, the
Queensland Academy of Sport and Cricket Australia,
and the North Queensland Cowboys.
ViPerform allows sporting clubs to create personalised
and effective injury recovery programs, and assists in the
prevention of injuries, which is of course critical in the
competitive world of elite sports.
A dedicated UK-based sales and marketing team
has allowed dorsaVi to expand sales of ViPerform.
Sunderland Association Football Club has recently
signed on to become the third English Premier League
team to use ViPerform, following Manchester United
and West Bromwich Albion. British Gymnastics is also
using ViPerform to assist their athletes.
“ As a practitioner who has specialized in this area for almost two
decades, it can be heart breaking to see an athlete go through the
initial injury, the process of surgery, rehab, and post rehab/return
to sport. However, it becomes equally rewarding to provide a service
that not only helps to prevent these types of injuries, but also guides
the plan and helps return the athlete to their sport of choice. Using
the ViPerform system enables me to have an objective measurement
to assist with the full spectrum of this process.”
Loren Landow
The ViPerform
approach
dorsaVi’s ViPerform Knee
Control test objectively
measures valgus/varus
motion by examining and
tracking knee control
through different
movement tests, including
squat and hop.
The result
Current medical research
on the incidence of ACL
injuries does not always
take into account the level
of an athlete’s fatigue. No
matter an athlete’s sport,
the fatigue factor through
the duration of the activity
always plays an important
role. Loren Landow has
incorporated a standardised
fatigue test that can be
used for all athletes in his
ViPerform assessments.
Loren Landow is an elite
level Sports Performance
Trainer in Denver, Colorado
USA. Loren has trained
thousands of athletes of all
ages and abilities, including
over 400 professional
athletes in the NFL, NHL,
MLB, UFC, WNBA as well
as several Olympic medalists.
Most recently he lectured
at the 2014 National
Strength and Conditioning
Conference in Las Vegas,
USA on his ACL Prevention
Training and how he
incorporates dorsaVi’s
ViPerform system into his
assessments and training.
The problem
ACL injury prevention and
rehab/return to play post
ACL injury are hot topics
currently and have become
areas of great emphasis
in elite level performance
training. Loren Landow’s
goal is to be able to identify
low-risk versus high-risk
athletes for ACL injury, then
to train them through a
specific program to lower
their inherent risk for injury.
10
11
dorsaViAnnual Report 2014 CEO’S REPORT (cont.)
Corporate Governance Statement
dorsaVi
Annual
Report
2014
Financial Summary
Full year revenue was $767,000 up from $398,000 the
previous financial year with a loss after tax of $3.5 million
which was in-line with expectations and reflects the
investment in the international sales and marketing team,
regulatory affairs, and other operational and product
development. The company has a strong cash position
of $13.9 million.
Outlook
With our international team established and major
regulatory approval of our products received, our focus
will be on driving product adoption and sales across
our three key geographies and three primary markets.
We will continue to keep you updated on our progress.
The Board of Directors of the Company is responsible for the governance of the Company and its controlled entities.
Good corporate governance is a fundamental part of the culture and business practices of the Company. The key
aspects of the Company’s corporate governance framework and governance practices, which have been in place
since the Company listed on the ASX in December 2013 are outlined below.
The Board of directors confirms that the Company’s corporate governance framework complies in almost all respects
with the ASX’s Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations with 2010
Amendments (2nd Edition)’, ‘the ASX Corporate Governance Recommendations’, and, where it does not comply, this
is due to its recent listing, the current relative size of the Company and scale and nature of its operations. The ASX
Corporate Governance Council has recognised that the range in size and diversity of companies listed on the ASX is
significant and that smaller companies (such as dorsaVi) may face particular issues in attaining all its recommendations
at the outset. The Company provides below a review of its corporate governance framework using the same numbering
as adopted for the principles set out in the ASX Corporate Governance Recommendations.
Copies of the Company’s charters, codes and policies may be downloaded from the corporate governance section
of the Company’s website at www.dorsavi.com
Principle 1: Lay Solid Foundations for Management and Oversight
Recommendation 1.1:
Establish the functions reserved to the Board and those delegated to senior executives and disclose
those functions.
The Board’s responsibilities are defined in the Board Charter and there is a clear delineation between the functions
reserved to the Board and those conferred upon the CEO and certain other officers of the Company for the day-to-day
management of operations.
The responsibilities of the Board include:
• overseeing the company, including its control and accountability systems;
• appointing and removing the CEO;
• monitoring the performance of the CEO;
• where appropriate, ratifying senior executive appointments, organisational changes and senior management
remuneration policies and practices;
• approving succession plans for management;
13 Corporate Governance Statement
20 Directors’ Report
39 Auditor’s Independence Declaration
40 Consolidated Statement of Comprehensive Income
FINANCIAL
REPORT
for the year ended
30 June 2014
41 Consolidated Statement of Financial Position
• monitoring senior executives’ performance and implementation of strategy, and ensuring appropriate resources
42 Consolidated Statement of Changes in Equity
43 Consolidated Statement of Cash Flows
44 Notes to the Financial Statements
68 Directors’ Declaration
69
Independent Auditor’s Report
71 Shareholder Information
are available;
• providing input into and approving management’s corporate strategy and performance objectives;
• determining and financing dividend payments;
• approving and monitoring the progress of major capital expenditure, capital management, acquisitions
and divestitures;
• approving and monitoring financial and other reporting;
• reviewing and ratifying systems of risk management, internal compliance and control.
The functions reserved for the Board include:
• appointment of a Chair;
• appointment and removal of the CEO;
• appointment of directors to fill a vacancy or add additional directors;
• establishment of Board committees, their membership and delegated authorities;
• approval of dividends;
• review of corporate codes of conduct;
• approval of budgets, major capital expenditure, acquisitions and divestitures in excess of authority levels delegated
to management;
• calling of meetings of shareholders.
A copy of the Company’s Board Charter is available on the Company’s website at www.dorsavi.com.
12
13
Corporate Governance Statement
Corporate Governance Statement
Recommendation 1.2:
Disclose the process for evaluating the performance of senior executives.
In accordance with the Board Charter, the directors’ responsibilities include monitoring the performance of senior
executives (including the CEO) and ensuring succession plans are in place. The Board has established a Nomination
and Remuneration Committee which is responsible for reviewing executive remuneration and incentive policies and
practices, and ensuring that the policies and practices are performance based and aligned with the Company’s vision,
values and overall business objectives.
The Nomination and Remuneration Committee annually reviews the performance of the CEO and recommends
to the Board the key performance targets of the CEO.
All senior executives of the company are subject to an annual performance review. Their key performance targets are
aligned to the performance targets set by the Board and are aligned to the overall business goals and the company’s
requirements. In the case of the CEO, these targets are negotiated between the Nomination and Remuneration
Committee and the CEO and signed off by the Board. Remuneration incentives are dependent on the outcome
of these evaluations.
Further information regarding executive compensation can be found in the Remuneration Report in this Annual Report.
Recommendation 1.3:
Disclosure of information indicated in the Guide to reporting on Principle 1 of the ASX Governance
Recommendations.
The Board and Nomination and Remuneration Committee ensure that an evaluation of the senior management team
is undertaken at least annually.
The Company complied with Recommendations 1.1 to 1.3 from the date of its listing on the ASX to the end of its
30 June 2014 financial year.
A copy of the Nomination and Remuneration Committee Charter is available on the Company’s website at
www.dorsavi.com.
Principle 2: Structure the Board to Add Value
Recommendation 2.1:
A majority of the Board should be independent directors.
The Company has assessed the independence of its directors regarding the requirements for independence,
which are set out in Principle 2 of the ASX Corporate Governance Principles and Recommendations. Each of
Mr Herb Elliott, Mr Ash Attia and Mr Greg Tweedly are independent directors of the Company under the ASX
Corporate Governance Principles.
Accordingly, the majority of the Company’s Board is comprised of independent directors.
The current composition of the Board of directors and length of tenure of each member is as follows:
Position
Date appointed
Independent
Name
Herbert Elliott
Ashraf Attia
Chairman (non-executive)
Oct 2013
Director (non-executive)
Jul 2008
Michael Panaccio
Director (non-executive)
May 2008
Gregory Tweedly
Director (non-executive)
Oct 2013
Andrew Ronchi
Executive Director
Feb 2008
Recommendation 2.4:
The Board should establish a nomination committee.
YES
YES
NO
YES
NO
dorsaVi Ltd established a Nomination and Remuneration Committee on 30 October 2013.
The current members of the Nomination and Remuneration Committee are: Mr Herb Elliott (Chair), Dr Michael Panaccio
and Mr Greg Tweedly.
Recommendation 2.5:
Disclose the process for evaluating the performance of the board, its committees and individual directors.
There was no formal performance review conducted of the Board, its committees and individual directors in FY2014
as the Company only listed on the ASX in December 2013 and the Board only came together in its current form in
October 2013.
A formal process however has been established to review amongst other matters, the Board’s performance, conduct
at meetings and quality of board papers at each meeting of the Board. Consideration in relation to the establishment
of a process to evaluate the performance of individual directors will be given in due course.
Recommendation 2.6:
Companies should provide the information indicated in the Guide to reporting on Principle 2.
The Company did not comply with all aspects of Recommendation 2.5 but it is planning to do so in the 2015 financial
year. It did comply with Recommendations 2.1, 2.2, 2.3, 2.4 and 2.6 from the date of its listing on the ASX to the end
of its 30 June 2014 financial year.
Principle 3: Promote Ethical and Responsible Decision-Making
Recommendation 3.1:
Companies should establish a code of conduct and disclose the code or a summary of the code as to:
•
•
the practices necessary to maintain confidence in the company’s integrity;
the practices necessary to take into account their legal obligations and the reasonable expectations
of their stakeholders; and
the responsibility and accountability of individuals for reporting and investigating reports
of unethical practices.
The roles of Chairman and CEO are exercised by two separate individuals. The Company’s Chairman is an
independent director.
•
The Board, having regard to the Company’s stage of development and the collective expertise of the directors,
considers the current composition of the Board is appropriate.
Recommendation 2.2:
The Chairman should be an independent director.
Mr Herb Elliott is an independent director.
Recommendation 2.3:
The same individual should not exercise the roles of Chairman and Chief Executive Officer.
Dr Andrew Ronchi is the CEO.
The names of the directors and their qualifications and experience are stated in the Directors’ Report.
A director is independent if he or she is a non-executive director, not a member of management and free of any
business or other relationship that could materially interfere with (or be perceived to materially interfere with) the
independence of his or her judgement. Mr Herb Elliott, Mr Ash Attia and Mr Greg Tweedly are independent directors
of the Company. However, Dr Andrew Ronchi and Dr Michael Panaccio are not. Dr Ronchi is the CEO and
Dr Michael Panaccio is a director and founder of Starfish Ventures Pty Ltd, which is the manager of Starfish
Technology Fund, which is a substantial shareholder in the Company.
The Company has adopted a Code of Conduct, which applies to all directors and employees of the Company, as well
as a Share Trading Policy.
Copies of the Code of Conduct and the Share Trading Policy are available on the Company’s website at www.dorsavi.com.
Recommendation 3.2:
Establish a policy concerning diversity and disclose it. The policy should include requirements for the
Board to establish measurable objectives for achieving gender diversity and for the Board to assess
annually both the objectives and progress in achieving them.
The Company has adopted a Diversity Policy. The Diversity Policy confirms that the Board, after taking into account
the Company’s size, stage of development, the business operating environment and the industry in which it operates,
will set measurable objectives.
The Company’s operations are currently at the development and initial commercialisation stage and it has only a small
number of employees.
As the Company moves closer to achieving its commercialisation goals and increases its number of employees, it will
build and develop a broad range of measurable objectives for achieving gender diversity and report on the Company’s
progress in achieving them.
14
A copy of the Diversity Policy is available on the Company’s website at www.dorsavi.com.
15
dorsaViAnnual Report 2014 Corporate Governance Statement
Corporate Governance Statement
Recommendation 3.3:
Disclose the measurable objectives for achieving gender diversity set by the Board in accordance with
the diversity policy and progress towards achieving them.
As stated above, as the Company moves closer to achieving its commercialisation goals and increases its number of
employees, it will further develop and build its measurable objectives for achieving gender diversity and report on the
Company’s progress in achieving them.
The basic measurable objectives for achieving gender diversity, which have been set by the Board in accordance with
the Company Diversity Policy, are set out below:
• the Company will seek to have at least one female potential candidate for each vacant position; and
• as part of any future Board member selection process, the professional consultant or Board committee assisting
the Board, will seek to provide at least one credible and suitably experienced female candidate.
Recommendation 3.4:
Recommendation 4.3:
The audit committee should have a formal charter.
The Audit and Risk Committee has adopted a formal Charter.
The responsibilities of the Committee include:
• assessing the appropriateness and application of the company’s accounting policies and principles and any
changes to them;
• obtaining an independent judgment from the external auditor;
• assessing any significant estimates or judgments in the financial reports; and
• reviewing any half-yearly and annual financial reports with management, advisers and the external auditors
(as appropriate) as recommending their adoption by the Board.
A copy of the Audit and Risk Committee Charter is available on the Company’s website at www.dorsavi.com.
Disclose the proportion of women employees in the whole organisation, women in senior executive
positions and women on the Board.
Recommendation 4.4:
Provide the information indicated in the Guide to reporting on Principle 4.
As at the date of the report, the proportion of women in the company as a percentage of its total employees was
9 out of 27, or 33%.
The Company has complied with Recommendations 4.1 to 4.4 from the date of its listing on the ASX to the end of its
30 June 2014 financial year.
The proportion of women as a total of the senior executive positions was 3 out of 8 or 38%.
There were no women on the Board.
Recommendation 3.5:
Provide the information indicated in the Guide to reporting on Principle 3.
As detailed above, the Company’s Code of Conduct, Share Trading Policy and Diversity Policy are available on the
Company’s website at www.dorsavi.com.
The Company did not comply with all aspects of Recommendation 3.3 but it did comply with Recommendations 3.1,
3.2, 3.4 and 3.5 from the date of its listing on the ASX to the end of its 30 June 2014 financial year.
Principle 4: Safeguard Integrity in Financial Reporting
Recommendation 4.1:
The Board should establish an audit committee.
dorsaVi Ltd has established an Audit and Risk Committee on 30 October 2013. The principal functions of the Audit
and Risk Committee include:
• helping the Board to achieve its objectives in relation to financial reporting, the application of accounting policies,
business policies and practices, legal and regulatory compliance, and internal control and risk management systems;
• promoting a culture of compliance; and
• ensuring effective and external audit functions and communications between the Board and the external auditors.
The Audit and Risk Committee is also responsible for overseeing the establishment and implementation of risk
management and internal compliance and control systems.
Recommendation 4.2:
The audit committee should be structured so that it:
• consists only of non-executive directors;
• consists of a majority of independent directors;
•
is chaired by an independent chair, who is not chair of the board; and
• has at least three members.
Currently, the Audit and Risk Committee consists of three non-executive directors: Mr Greg Tweedly, Mr Ash Attia,
and Dr Michael Panaccio. The Audit and Risk Committee is comprised of a majority of independent directors. The
Chairman of the Audit and Risk Committee, Mr Greg Tweedly, is an independent director. Two separate individuals
exercise the Chairman of the Audit and Risk Committee and the Chairman of the Board.
Principle 5: Make Timely and Balanced Disclosure
Recommendation 5.1:
Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements
and to ensure accountability at a senior executive level for that compliance and disclose those policies or
a summary of those policies.
The Company has adopted a Continuous Disclosure Policy. This Policy sets out the standards, protocols and the
detailed requirements expected of all directors, officers, senior management and employees of the Company for
complying with the Listing Rules and Corporations Act relating to continuous disclosure.
The Continuous Disclosure Policy is designed to provide equal access to information and to promote quality
communications between the Company and third parties such as shareholders, the investment community,
the media and ASX.
In addition, the Board assesses its continuous disclosure obligations at each Board meeting.
A copy of the Company’s Continuous Disclosure Policy is available on the Company’s website at www.dorsavi.com.
Recommendation 5.2:
Companies should provide the information indicated in the Guide to reporting on Principle 5.
The Company has complied with Recommendations 5.1 to 5.2 from the date of its listing on the ASX to the end of its
30 June 2014 financial year.
Principle 6: Respect the Rights of Shareholders
Recommendation 6.1:
Companies should design a communications policy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or
a summary of that policy.
The Company has adopted a Shareholder Communications Policy for shareholders wishing to communicate with the
Board. All shareholders are invited to attend dorsaVi’s annual general meeting, either in person or by representative,
being the forum in which to discuss issues relevant to the Company. The Board accordingly encourages full
participation by shareholders. Shareholders will have an opportunity to submit questions to the Board and auditors
at the November 2014 meeting of shareholders.
A copy of the Company’s Shareholder Communications Policy is available on the Company’s website at
www.dorsavi.com.
Recommendation 6.2:
Companies should provide the information indicated in the Guide to reporting on Principle 6.
The Company has complied with Recommendations 6.1 to 6.2 from the date of its listing on the ASX to the end of its
30 June 2014 financial year.
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dorsaViAnnual Report 2014 Corporate Governance Statement
Corporate Governance Statement
Recommendation 8.2:
The Remuneration Committee should be structured so that it:
• consists of a majority of independent directors;
•
is chaired by an independent Chair; and
• has at least three members.
Currently, the Nomination and Remuneration Committee consists of three non-executive directors: Mr Herb Elliott,
Dr Michael Panaccio and Mr Greg Tweedly. Mr Herb Elliott is Chairman of the Committee and as stated above, he is an
independent director. The Nomination and Remuneration Committee is comprised of a majority of independent directors.
Recommendation 8.3:
Companies should clearly distinguish the structure of non-executive directors’ remuneration from that
of executive directors and senior executives.
The Company has a clear distinction between the structure of non-executive directors’ remuneration and that of
executive directors and senior executives. Disclosure of the directors’ and executives’ remuneration can be found
in the Remuneration Report in this Annual Report.
Recommendation 8.4:
Companies should provide the information indicated in the Guide to reporting on Principle 8.
The Company has complied with Recommendations 8.1 to 8.4 from the date of its listing on the ASX to the end of its
30 June 2014 financial year.
Principle 7: Recognise and Manage Risk
Recommendation 7.1:
Establish policies for the oversight and management of material business risks and disclose a summary
of those policies.
In conjunction with the Company’s other corporate governance policies, the Company has adopted policies and
processes to assist the Company to identify, evaluate and mitigate technological, economic, operational and other
risks. dorsaVi has established a Risk Management Policy. A copy of the Risk Management Policy is available on the
Company’s website at www.dorsavi.com.
Recommendation 7.2:
The Board should require management to design and implement the risk management and internal
control system to manage the Company’s material business risks and report to it on whether those risks
are being managed effectively. The Board should disclose that management has reported to it as to the
effectiveness of the Company’s management of its material business risks.
The Board is responsible for reviewing and ratifying the risk management structure, processes and guidelines, which
are developed and maintained by management.
The Board has confirmed that management is responsible for designing and implementing risk management and
internal compliance and control systems, which identify material risks for the Company. The Board has overseen
the development by management of a process to identify and manage the Company’s material business risks.
Management has reported to the Board as to the effectiveness of the Company’s management of its material
business risks.
Recommendation 7.3:
The Board should disclose whether it has received assurance from the CEO (or equivalent) and the Chief
Financial Officer (or equivalent) that the declaration provided in accordance with section 295A of the
Corporations Act is founded on a sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to financial reporting risks.
The CEO and the Chief Financial Officer have, in accordance with section 295A of the Corporations Act, declared in
writing to the Board that the financial reporting, risk management and associated compliance and controls have been
assessed and found to be operating efficiently and effectively during the year. All risk assessments covered the whole
financial year and the period up to the signing of the annual financial report for all material operations of the Company.
The Board is responsible for the overall internal control framework, but recognises that no cost-effective internal
control system will preclude all errors and irregularities. The Company places considerable reliance on the skill,
experience and judgement of its employees to make decisions within the policy framework and to communicate
openly on all risk related matters.
Recommendation 7.4:
Companies should provide the information indicated in the Guide to reporting on Principle 7.
The Company has complied with Recommendations 7.1 to 7.4 from the date of its listing on the ASX to the end of its
30 June 2014 financial year.
Principle 8: Remunerate Fairly and Responsibly
Recommendation 8.1:
The Board should establish a Remuneration Committee.
The Board established a Nomination and Remuneration Committee on 30 October 2013.
The objective of the Nomination and Remuneration Committee is to help the Board achieve its objective to ensure dorsaVi:
• has a Board of an effective composition, size and commitment to adequately discharge its responsibilities and duties;
• has coherent remuneration policies and practices to attract and retain executives and directors who will create
value for shareholders; and
• fairly and responsibly rewards executives having regard to the performance of dorsaVi, the performance of the
executives and the general pay environment.
The Nomination and Remuneration Committee is responsible for matters including identifying and recommending to
the Board nominees for membership of the Board including the CEO and ensuring succession plans are in place to
maintain an appropriate balance of skills on the Board and reviewing those plans.
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dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
The directors present their report together with the financial report of the consolidated entity consisting of dorsaVi Ltd
and the entities it controlled, for the financial year ended 30 June 2014 and auditor’s report thereon. This financial
report has been prepared in accordance with Australian Accounting Standards.
Directors
The names of directors in office at any time during or since the end of the year are:
Herbert James Elliott – Non-executive Chairman:
Chairman of dorsaVi Ltd and chairs the Nomination and Remuneration Committee. He was appointed to the Board
on 29 October 2013.
Ashraf Attia – Non-executive Director:
Mr Attia serves on the Audit & Risk Committee. He was appointed to the Board on 14 July 2008.
Michael Panaccio – Non-executive Director:
Dr Panacccio serves on the Audit & Risk Committee and the Nomination and Remuneration Committee. He was
appointed to the Board on 16 May 2008.
Gregory John Tweedly – Non-executive Director:
Mr Tweedly chairs the Audit & Risk Committee and serves on the Nomination and Remuneration Committee. He was
appointed to the Board on 29 October 2013.
Andrew Ronchi – Chief Executive Officer, Director:
Dr Ronchi was appointed to the Board on 18 February 2008.
The directors have been in office since the start of the year to the date of this report unless otherwise stated.
Principal Activities
The principal activity of dorsaVi Ltd and its controlled entities during the financial year was distribution of innovative
motion analysis technologies. These technologies are commercialised via license or fixed fee consultancy methods.
There has been no significant change in the nature of these activities during the financial year.
Results
The consolidated loss after income tax attributable to the members of dorsaVi Ltd was $3,562,000 (2013: $1,659,000).
Review of Operations
Initially incorporated as a proprietary company in February 2008, dorsaVi, was converted to a public company on
17 October 2013. dorsaVi Ltd was listed on the ASX in December 2013.
At balance date, 30 June 2014, the Group consisted of three entities:
• dorsaVi Ltd, the listed Parent company
• dorsaVi Europe Ltd, a wholly owned subsidiary incorporated on 3 February 2014 and domiciled in the UK
• dorsaVi USA, Inc, a wholly owned subsidiary incorporated on 19 May 2014 and domiciled in the USA.
Revenue for the 2014 financial year was $767,000 (2013: $539,000) driven by 33% growth in sales revenue to
$529,000 (2013: $399,000) and a $223,000 growth in interest income to $227,000 (2013: $4,000). The growth in
sales and interest income was partially offset by the $125,000 decrease in grant income to $11,000 (2013: $136,000).
The loss from continuing operations after income tax for the 2014 financial year was $3,562,000 (2013: $1,659,000).
These results were in line with expectations as dorsaVi Ltd has invested and will continue to invest in both cultural
and physical assets in moving its operations from a research & development focus to one of sales & marketing. While
sales revenue grew by 33% year on year, the employee benefits expense grew by 69%. This was mainly due to the
investment in key staff in sales across Australia, Europe and the US. These foundation hires were made ahead of the
revenue curve. There were no sales in the US preceding the appointment of our US sales team but sales will begin to
flow from the 1st quarter of the 2015 financial year. Furthermore, dorsaVi Ltd’s product development and marketing
teams were also strengthened by a number of significant hires in both departments.
During the 2014 financial year dorsaVi Ltd began to transition its sales method from outright sale, where the goods
are transferred to the customer, to a license agreement where the customer leases the goods. These licenses will
automatically renew for a 12-month period upon expiry of the initial term. From March 2014 all commercial contracts
were made under a license agreement. Previously, 100% of the revenue could be realised in the month in which the
goods were sold via an outright sale. Under the license agreement, however, the revenue can only be realised via the
straight-line method over the term of the license. This has and will produce a like for like decrease in revenue over the
first 12 months of the license-only revenue period from March 2014 to February 2015. The significant long term benefit
is that it produces an ongoing annuity revenue stream.
By 30 June 2014 the Group had 101 devices in market globally. Of these, 51 were in market under outright sale and
50 were in market via license. This 101 represented a 110% increase over the 48 in market at 30 June 2013 and,
significantly, a 525% increase in the 8 devices under license at 30 June 2013.
Employee benefits expense for the 2014 financial year was $2,334,000 (2013: $1,377,000), which represented a 69%
increase year on year. The employee headcount at 30 June 2014 was 23 (2013: 12), which represented a 92% increase
year on year. Salaries and benefits represented 48% of the total expenses for the Group for the 2014 financial year.
Consultancy expense for the 2014 financial year was $592,000 (2013: $257,000), which represented a 130%
increase year on year. A significant expense in the 1st half of the year was fees incurred to support the Group in the
areas of public relations, investor relations, strategic relationships. A significant expense in the 2nd half of the financial
year was for consultants used in setting up the Group’s US infrastructure and operations. Expenses that flowed
throughout the 2014 financial year were to financial consultants in preparing for the IPO and for the subsequent
ASX reporting requirements.
The parent, dorsaVi Ltd, and its wholly owned subsidiaries, dorsaVi Europe Ltd and dorsaVi USA, Inc, are the entities
that generate revenue for the Group. The three companies have two primary sources of revenue: they enter into
agreements to place the ViMove, ViPerform and ViSafe devices with customers; and they provide OH&S Consultancy
Services that utilise the ViSafe technology.
Under the licensing agreements for the devices, dorsaVi retains the title to the device and carries it in property, plant
and equipment, depreciating it over five years. As the US, European and Australian markets scale up, investment in the
devices is expected to have some impact on the working capital needs of the Group, which are expected to be offset
by future sales.
Additional revenue is generated when customers purchase adhesives that hold the devices’ sensors when performing
readings. This additional revenue from consumables is not material in the 2014 financial year but as new license sales
increase and their resultant agreements renew this additional revenue stream will become a material factor in both
sales volume and profitability.
Australian revenue from the licensing and sales of devices was up 3% in the 2014 financial year over the 2013 financial
year. In Europe over the same period revenue from devices was down 25%. Incorporation of the European entity,
dorsaVi Europe Ltd, establishment of the subsidiary’s headquarters in London and the appointment of Europe’s
management and sales staff occurred between February and April 2014.
The Group’s push into the United States began with the incorporation of dorsaVi USA, Inc and the appointment of the
subsidiary’s President in April and May 2014. The sales team was appointed subsequent to the end of the 2014
financial year and dorsaVi USA, Inc signed its first three ViPerform leases in July and August 2014.
A major milestone for the Group’s US operations was achieved in July 2014 when the ViMove received 510K clearance
by the US Food and Drug Administration (FDA) for measuring, recording and reporting on movement and muscle
activity on the lower back/lumbar spine.
Australian revenue for OH&S Consultancy utilising ViSafe technology was up 84% in the 2014 financial year over the
2013 financial year. Subsequent to the end of the 2014 financial year, dorsaVi acquired sole ownership of the OH&S
consultancy firm Australian Workplace Compliance Pty Ltd to increase the Company’s service offering and client base
in the OH&S market. dorsaVi will introduce OH&S Consultancy Services into the U.S. and European markets in the
2015 financial year.
Final analysis of the clinical study “A multi-centre, cluster randomised, placebo-controlled open-label pilot study of the
Back Strain Monitor (BSM) with feedback compared with the BSM without feedback in subjects with moderate lower
back pain” has been completed. Results show the treatment group (BSM with biofeedback) was associated with
significant improvements over time in functional ability, as measured by the Roland Morris Disability Questionnaire
(RMDQ-23), the Patient-Specific Functional Scale (PSFS), the Patients’ Global Impression of Change (PGIC) and
severity of pain, as measured by the Quadruple Visual Analogue Scale (QVAS). The final report was completed and
submitted to the FDA as part of the ViMove 510K. Leading epidemiologist, Dr Peter Kent, PhD, GradDipManipPhysio,
BAppSc(Physio), BAppSc(Chiro), who is the leader of the Quality Assurance and Database unit at the Spine Centre
of Southern Denmark is lead author of the manuscript and the final publication is expected before March 2015.
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dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
dorsaVi continued to expand on its IP portfolio in the 2014 financial year through both the lodgement of a new patent
in September 2013 and the registration of three trademarks in March 2014. dorsaVi currently has six patent families
at various stages of grant and five trademarks.
The directors expect revenue in Australia, Europe and the US to grow year on year. Factors impacting and driving this
growth include; the roll out of a new global marketing plan, sales from our newly established sales team in the US,
product line focus, and customer-focused software development.
The material business risks that are likely to have an effect on the financial prospects of the Group include:
• dorsaVi relies on its ability to develop and commercialise its movement monitoring intellectual property. A failure
to successfully develop and commercialise that intellectual property would lead to a loss of opportunities and
adversely impact on the operating results and the financial position of dorsaVi
• Over time, dorsaVi may be subjected to increased competition if potential competitors develop new technologies
or make scientific or systems advances that compare with or compete with dorsaVi’s products
• In the medical sector (but not the Elite Sports or OH&S sectors), sales and adoption rates of dorsaVi’s system are,
in part, likely to be influenced by the availability and level of reimbursement from government and/or insurance payers.
Whilst dorsaVi’s products already benefit from reimbursement in some circumstances, there is no guarantee that
the use of dorsaVi’s products will receive further reimbursement
• General economic conditions, movements in interest and inflation rates and currency exchange rates may have an
adverse effect on dorsaVi’s activities, as well as on its ability to fund those activities. In particular, much of its future
income is expected to come from the US and European markets and therefore dorsaVi’s activities will be affected
by currency exchange fluctuations
• dorsaVi is not currently profitable. Proceeds from the float were and are primarily being used to fund the commercial
rollout of the dorsaVi’s products. There is no guarantee that the commercial rollout will result in profitability for the
Company. If the commercial roll out is lower or less successful than planned, dorsaVi may need to raise capital
in the future.
Significant Changes in the State of Affairs
Cash and cash equivalents increased to $13.9 million at 30 June 2014 (2013: $0.3 million) due to capital raising
activities during the year. Net cash used in operating activities during the 2014 financial year was $3.2 million, an
increase of $1.9 million (2013: $1.3 million).
Cash flow from financing activities generated $17.1 million in the 2014 financial year (2013: $1 million) from the issuance
of convertible notes in August, October and December 2013, and the issuance of ordinary shares in December 2013.
Issued capital increased to $23.4 million at 30 June 2014 (2013: $5.8 million). Total equity increased to $14.6 million
at 30 June 2014 (2013: $0.0 million). Total liabilities decreased to $0.7 million at 30 June 2014 (2013: $1.4 million).
The following outlines the capital raised during the years ended 30 June 2014 and 30 June 2013:
• $1 million on 27 February 2013 through the issue of convertible notes to Starfish Technology Fund at an issue price
of $1 for each note
• $0.25 million on 14 August 2013 through the issue of convertible notes to Starfish Technology Fund at an issue
price of $1 for each note
• $0.25 million on 30 October 2013 through the issue of convertible notes to Starfish Technology Fund at an issue
price of $1 for each note
• $1.5 million on 29 November 2013 through the issue of convertible notes to Starfish Technology Fund at an issue
price of $1 for each note
• $15.1 million, net of transaction costs, on 11 December 2013 through the issue of 41,250,000 fully paid ordinary
shares at an issue price of $0.40 per share.
After Balance Date Events
On 3 July 2014, dorsaVi Ltd entered into a contract to acquire 100% of the issued capital of Australian Workplace
Compliance Pty Ltd. This increased the Group’s service offering and client base in the occupational health and safety
(OH&S) market. The purchase price was $120,000 in cash and is not considered a material transaction for financial
reporting purposes. As part of the acquisition the founder of Australian Workplace Compliance, Mark Heaysman,
joined dorsaVi Ltd in the capacity as a full time employee. If his employment ceases within 12 months, Mark Heaysman
grants to dorsaVi Ltd a put option to sell the shares and the business name back to Mark Heaysman. As at the date
of the financial report, acquisition accounting for the business combination had not been finalised.
On 3 July 2014, dorsaVi Ltd announced the issue of 250,000 fully paid ordinary shares under the Employee Share
Ownership Plan. The Company provided Mark Heaysman with a non-recourse interest free loan to assist the executive
to subscribe for the shares. These shares were issued at a market price of 46 cents. These shares carry a full
entitlement to dividends and capital returns. There is no ability for the company to offset dividends paid against the
non-recourse loan. These shares are subject to restriction agreements such that Mr Heaysman is not able to trade
them within 12 months of issuance. After 12 months, 1/3rd of the issued shares can be traded. Shares become
available for trading at a rate of 1/36th of the issued shares over the remaining 24 months, contingent upon his
continued employment with the Company.
On 8 July 2014, the Group announced that regulatory approval was received from Medsafe, the New Zealand
Medicines and Medical Devices Safety Authority, for the use and sale of ViMove in New Zealand.
On 15 July 2014, the Group announced the US launch following 510K clearance by the US Food and Drug Administration
(FDA) for measuring, recording, and reporting on movement and muscle activity of the lower back/lumbar spine.
On 23 July 2014, the Group announced its first US customer with support from leading pain specialist Dr Mehul J. Desai.
Dr Desai offers ViPerform assessments at the Metro Orthopaedics and Sports Therapy practice in Maryland.
On 2 September 2014, dorsaVi Ltd issued 200,000 options with an expiry date of 1st September 2019, to newly hired
US sales staff. The strike price per Option is $0.40 which is equal to the closing price of dorsaVi Ltd’s ordinary shares
on the date of grant (2 September 2014). The options granted will vest over a three-year period, with one-third of the
shares subject to vesting one year from 2nd September 2014 and the remaining shares vesting monthly over the
following two years; contingent upon the option holders’ continued employment with the Group.
Likely Developments
The following likely developments in the business of the Group are expected to influence its financial results in the near
term:
The Group expects an increase in revenue growth, year on year, in the US market from new license agreements
of ViMove devices following 510K clearance by the US Food and Drug Administration (FDA).
As new license agreements for ViMove and ViPerform are signed so will the resulting revenue from adhesives
associated with use of the devices. The Group expects an increase in revenue growth, year on year, in all markets
for ViMove and ViPerform products.
The Group expects an increase in revenue growth, year on year, in the Australian and US markets from its OH&S
consultancy revenue stream following the acquisition of Australian Workplace Compliance Pty Ltd.
Environmental Regulation
The consolidated entity’s operations are not subject to any significant environmental Commonwealth or State
regulations or laws.
Dividend Paid, Recommended and Declared
No dividends were paid, declared or recommended since the start of the financial year.
Share Options
Options over unissued ordinary shares granted by dorsaVi Ltd during or since the financial year end to executives were
as follows:
Executives
Options granted
John Kowalczyk
1,000,000
There were no options over unissued ordinary shares granted to directors during or since the financial year end.
Further details regarding options granted as remuneration are provided in the Remuneration Report below.
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dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
Shares Under Option
Unissued ordinary shares of dorsaVi Ltd under option at the date of this report are as follows:
Date options granted
Number of unissued ordinary
Shares under option
Issue price of Shares
Expiry date of the options
8 April 2014
1,000,000
2 September 2014
200,000
$0.51
$0.40
7 April 2019
1 September 2019
Greg is a director of the Emergency Services and Telecommunications Authority and was a director and CEO of
the Victorian WorkCover Authority (WorkSafe) from 2003 to 2012. Prior to joining WorkSafe Greg was an executive
with the Transport Accident Commission from 1996 to 2002 in various senior roles including Chief Operating
Officer. He was formerly a director of the Institute of Safety Compensation and Recovery Research, a director of the
Personal Injury Education Foundation, a director and Chair of the Victorian Trauma Foundation, Chair of the Heads
of Workers’ Compensation Authorities of Australia and New Zealand and Member of SafeWork Australia and its
predecessor organisation.
No other directorships of listed companies were held during the three years to 30 June 2014.
No option holder has any right under the options to participate in any other share issue of the company.
Andrew Ronchi, B.App.Sci (Physio), PhD (RMIT Eng), GAICD – Chief Executive Officer, director
Shares Issued on Exercise of Options
To the date of this report, there have been no shares issued during or since the end of the year as a result of the
exercise of an option over unissued shares.
Information on Directors and Company Secretary
Andrew Ronchi was appointed to the Board on 18 February 2008.
Before co-founding dorsaVi, Andrew was a practising physiotherapist both at an AFL club and in private practice. He is
a founding partner in two physiotherapy centres, the largest of these employing 28 staff (including 13 physiotherapists).
Prior to the formation of dorsaVi, Andrew undertook a PhD in Computer and Systems Engineering, investigating
the reliability and validity of transducers for measuring lumbar spine movement. As CEO of dorsaVi Ltd, Andrew
is responsible for all aspects of the Group’s operations.
Herbert James Elliott, AC MBE, MA (Cantab) – Non-executive Chairman
No other directorships of listed companies were held during the three years to 30 June 2014.
Herb Elliott is the Chairman of dorsaVi Ltd and chairs the Nomination and Remuneration Committee. He was
appointed to the Board on 29 October 2013.
Herb is the Deputy Chairman and an independent director of Fortescue Metals Group Limited (ASX: FMG). He has
been a director of Fortescue since October 2003 and was company chairman from 2007 to 2011. He has been
a chairman of Telstra Foundation Limited (March 2002 to December 2010). No other directorships of listed companies
were held during the three years to 30 June 2014. Herb is a former director of Ansell Limited (February 2001 to
October 2006).
Brendan Case, MComLaw (Melb), BEc, CPA, Grad Dip App Fin, Dip FP, FCIS
Brendan Case has served as dorsaVi Ltd’s secretary since October 2013 and has more than 20 years of company
secretarial, corporate governance and finance experience. He is a former Associate Company Secretary of National
Australia Bank Limited (NAB), former secretary of NAB’s Audit and Risk Committees and has held senior management
roles in risk management and regulatory affairs.
Directors’ Meetings
Herb was the inaugural chairman of the National Australia Day Committee, a Commissioner of the Australian
Broadcasting Commission and deputy chairman of the Australian Sports Commission.
The number of meetings of the Board of directors and of each board committee held during the financial year and the
numbers of meetings attended by each director were:
Herb was also a director of the World Olympians Association and was a gold medallist (1500 metres athletics) at the
Rome 1960 Olympics. Previous executive roles include president of PUMA North America. Herb is an honorary Doctor
of the Queensland University of Technology.
Ashraf Attia, BSc (Eng)(Hons), MSc (Biomed. Eng), Dip (Mktg), FAICD – Non-executive director
Ash Attia serves on the Audit & Risk Committee. He was appointed to the Board on 14 July 2008.
Ash has had senior management experience in multinational operations for over 20 years within the medical devices,
biotechnology and diagnostics industries. He is the Managing Director, Asia Pacific of Thoratec Corporation,
a company with global revenues of over US$500 million, which manufactures and sells heart assist devices for use by
patients with heart failure. Ash has consulted to several organisations in the areas of business development, strategic
marketing, sales and marketing management, and distribution strategies.
No other directorships of listed companies were held during the three years to 30 June 2014.
Michael Panaccio, BSc (Hons), MBA, PhD, FAICD – Non-executive director
Michael Panaccio serves on the Audit & Risk Committee and the Nomination and Remuneration Committee. He was
appointed to the Board on 16 May 2008.
Michael is one of the founders of Starfish Ventures Pty Ltd, an Australian based venture capital manager. He was
formerly an Investment Manager with JAFCO Investment (Asia Pacific). Prior to joining JAFCO, Michael was Head of the
Department of Molecular Biology at the Victorian Institute of Animal Sciences. Michael has been a director of numerous
technology businesses in Australia and the USA including SIRTeX Medical Ltd and Energy Response Pty Ltd.
He is currently a director of ImpediMed Ltd (ASX:IPD) since January 2007. No other Directorships of listed companies
were held during the three years to 30 June 2014. Michael is also a director of Protagonist Inc, MuriGen Pty Ltd,
NeuProtect Pty Ltd and Ofidium Pty Ltd.
Gregory John Tweedly, B.Com, CPA, GAICD – Non-executive Chairman
Greg Tweedly chairs the Audit & Risk Committee and serves on the Nomination and Remuneration Committee.
He was appointed to the Board on 29 October 2013.
Mr Herb Elliott
Mr Ashraf Attia
Dr Michael Panaccio
Mr Greg Tweedly
Dr Andrew Ronchi
Mr Herb Elliott
Mr Ashraf Attia
Dr Michael Panaccio
Mr Greg Tweedly
Dr Andrew Ronchi
Board of Directors
Audit & Risk Committee
Eligible to attend
Attended Eligible to attend
Attended
8
9
9
8
9
8
8
9
8
9
–
1
1
1
–
–
1
1
1
–
Nomination &
Remuneration Committee
Eligible to attend
Attended
–
–
–
–
–
–
–
–
–
–
24
25
dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
Directors’ interest in shares or options
Names of Holders
Michael Panaccio
Andrew James Ronchi
Ashraf Attia
Herbert James Elliott
Gregory John Tweedly
Ordinary Shares
of dorsaVi Ltd
80,543,119
8,246,482
189,491
75,000
62,500
(a) Amounts paid and payable to Pitcher Partners Melbourne
for non-audit services
Investigating Accountants Report
Taxation & Compliance Services
Total remuneration for non-audit services
2014
$000
2013
$000
39
36
75
-
6
6
The directors have no interests in options over shares in dorsaVi Ltd as at the date of this report.
Directors’ Interest in Contracts
Starfish Ventures Pty Ltd is a related party of dorsaVi Ltd, as it is connected with a director of dorsaVi Ltd. During the year,
Starfish Ventures Pty Ltd on-charged rent, incidentals and car parking to dorsaVi Ltd. Total value of these transactions were
$51,145 (2013: $34,858). Increase due to dorsaVi requesting additional office space. The rent was charged to dorsaVi
Ltd on normal terms and conditions. The balance outstanding at balance date was $NIL (2013: $3,490).
Indemnification and Insurance of Directors and Officers
The Group has insured its directors, secretary and executive officers for the financial year ended 30 June 2014. Under
the Group’s Directors and Officers Liability Insurance Policy, the Group cannot release to any third party or otherwise
publish details of the nature of the liabilities insured by the policy or the amount of the premium.
The Group also indemnifies every person who is or has been an officer of the Group against any liability (other than
for legal costs) incurred by that person as an officer of the Group where the Group requested the officer to accept
appointment as director.
To the extent permitted by law and subject to the restrictions in section 199A and 199B of the Corporations Act 2001,
the Group indemnifies every person who is or has been an officer of the Group against reasonable legal costs incurred
in defending an action for a liability incurred by that person as an officer of the Group.
Indemnification and Insurance of Auditors
No indemnities have been given or insurance premiums paid during or since the end of the financial year for any
auditors of the consolidated entity.
Proceedings on Behalf of the Consolidated Entity
No person has applied for leave of Court to bring proceedings on behalf of the consolidated entity.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001
in relation to the audit for the financial year is provided with this report.
Non-Audit Services
Non-audit services are approved by resolution of the audit committee and approval is provided in writing to the Board
of directors. Non-audit services were provided by the auditors of entities in the consolidated group during the year,
namely Pitcher Partners Melbourne, network firms of Pitcher Partners, and other non-related audit firms, as detailed
below. The directors are satisfied that the provision of the non-audit services during the year by the auditor is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001.
26
27
dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
Remuneration Report (Audited)
Remuneration Strategy
The Directors present the consolidated entity’s 2014 Remuneration Report, which details the remuneration information
for dorsaVi Ltd’s Non-Executive Directors, Executive Directors, and other Key Management Personnel.
A. Details of the Key Management Personnel
Appointed 7 May 2014
Chief Financial Officer
Non-Executive Director Remuneration Structure
Independent, Non-Executive Director
• Provide strong linkage between individual and Company performance and rewards;
Directors
Herb Elliott
Ashraf Attia
Michael Panaccio
Greg Tweedly
Executive Director
Andrew Ronchi
Executives
Daniel Ronchi
Jerome Whelan
Jarrod Sculli
Sarah Riseley
Zoë Whyatt
Period of Responsibility
Position
Appointed 29 October 2013
Chairman, Non-Executive Director
Full Year
Full Year
Director
Appointed 29 October 2013
Independent, Non-Executive Director
Full Year
Full Year
Chief Executive Officer/Director
Chief Technical Officer
Appointed 16 September 2013
National Sales Manager
Full Year
Marketing Director
Appointed 17 March 2014
Chief of Operations of dorsaVi Europe
Meagan Blackburn
Full Year
Global Clinical & Sports Innovation
John Kowalczyk
Appointed 8 April 2014
President of dorsaVi USA
The following changes occurred after 30 June 2014 and the date the financial report was authorised for issue:
• Jarrod Sculli’s (National Sales Manager) employment terminated effective 3 July 2014.
• Mark Heaysman (Head of Occupational Health & Safety) was appointed 1 July 2014.
B. Remuneration Policies
Nomination & Remuneration Committee
The Nomination & Remuneration Committee of the Board of Directors was formed on 30 October 2013 and is
responsible for making recommendations to the Board on the remuneration arrangements for each Non-Executive
Directors (NED), Executive Director/Chief Executive Officer (CEO) and Executives reporting to the CEO. Prior to this
date the Board along with the CEO were responsible for determining appropriate appointments, remuneration levels
and incentives. The current members of the Nomination & Remuneration Committee are: Herb Elliott, Michael Panaccio
and Greg Tweedly.
The Nomination & Remuneration Committee will assess the appropriateness of the nature and amount of remuneration
of executives on a periodic basis by reference to relevant employment market conditions with the overall objective of
ensuring maximum stakeholder benefit from the retention of high quality, high performing directors and executive
team. In determining the level and composition of executive remuneration, the Nomination & Remuneration Committee
may also engage external consultants to provide independent advice.
The primary responsibility of the Nomination & Remuneration Committee is to review and recommend to the Board:
dorsaVi Ltd’s remuneration strategy is designed to attract, motivate and retain employees, Executives and Non-Executive
Directors in Australia, the United States and Europe by identifying and rewarding high performers and recognising the
contribution of each employee to the continued growth and success of the Company.
To this end, the key objectives of the Company’s reward framework are to:
• Align remuneration with the Company’s business strategy;
• Offer an attractive mix of remuneration benchmarked against the applicable market’s region and country practices;
• Offer remuneration based on internal equity with other employees and individual skill matching the role requirements
with their experience and responsibilities;
• Align the interests of executives and shareholders and share the success of the Company with the employees; and
• Support the corporate mission statement, values and policies through the approach to recruiting, organising and
managing people.
Remuneration Structure
In accordance with best practice corporate governance, the structure of the non-executive directors and executive
remuneration is separate and distinct.
The ASX Listing Rules specify that an entity must not increase the total aggregate amount of remuneration of
Non-Executive Directors without the approval of holders of its ordinary securities.
The Board, and since its inception the Nomination & Remuneration Committee, considers the level of remuneration
required to attract and retain Directors with the necessary skills and experience for the Company’s Board. This
remuneration is reviewed with regard to market practice and Directors’ duties and accountability.
The constitution provides that the Non-Executive Directors are entitled to remuneration for their services as determined
by the Board up to an aggregate limit of $500,000 (which may be increased with Shareholder approval). The Company
has obtained advice about remuneration levels for Directors of listed companies and, based on that advice, set the
following annual non-executive Directors’ fees:
• Chairman: $76,576;
• Other Directors: $54,625; and
• Further fees for acting as Chairman of a committee: $5,462.50 per committee.
The Company determines the maximum amount for remuneration, including thresholds for share-based remuneration for
Executives, by resolution. The remuneration received by the Non-Executive Directors for the year ended 30 June 2014 is
detailed in Table 1 of this report.
Non-executive directors receive fees and do not receive options or bonus payments.
Executive Remuneration Structure
The Company provides a remuneration package that incorporates both cash based remuneration and share-based
remuneration. The contracts for service between the Company and executives are on a continuing basis the terms of
which are not expected to change in the immediate future. Share-based remuneration is conditional upon continuing
employment thereby aligning director and shareholder interests.
Remuneration consists of the following key elements:
• Fixed remuneration (base salary and superannuation); and
• Variable remuneration – short term incentives (STI) in the form of an annual incentive plan and long term equity
• Executive remuneration and incentive policies and practices;
incentive (LTI).
• The Executive Director’s total remuneration having regard to remuneration and incentive policies;
• The design and total proposed payments from any executive incentive plan and reviewing the performance hurdles
for any equity based plan;
• The remuneration and related policies of Non-Executive Directors for serving on the board and any committee
(both individually and in total); and
• Any other responsibilities as determined by the Nomination & Remuneration Committee or the Board from time
to time.
28
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dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
Fixed Remuneration
Objective
Fixed remuneration is reviewed annually by the Nomination & Remuneration Committee. The process consists of
a review of the Company and individual performance, relevant comparative remuneration from external and internal
sources and where appropriate, external advice on policies and practices.
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash and
allowances such as motor vehicle allowance. It is intended that the manner of payment chosen will be optimal
for the recipient without creating undue cost for the Company.
Variable Remuneration – short-term incentive (STI)
Objective
The key objective of the STI program is to link the achievement of the Company’s operational targets with the
remuneration received by the executives charged with meeting those targets.
Structure
Any STI payments granted depends on the extent to which specific targets set at the beginning of the financial year or on
appointment are met. The Key Milestones or Key Performance Indicators (KPIs) cover individual, team and organisational
financial measures of performance. Typically included are measures such as: achieving sales/revenue targets and/or
growth, and meeting Company compliance requirements. These measures were chosen as they represent the key
drivers for the short-term success of dorsaVi Ltd as it continues to look for growth in its niche market space.
The Company has predetermined benchmarks that must be met in order to trigger payments under the STI scheme.
Either on an annual or financial year basis, after consideration of performance against the Key Milestones or KPIs, the
Nomination & Remuneration Committee, in line with their responsibilities determines the amount, if any, of the STI to be
paid to each Executive. This process usually occurs within one month after the trigger date.
The following key management personnel have notice periods greater than one month:
Name
Notice Period
John Kowalczyk
12 months
Andrew Ronchi
6 months
Jerome Whelan
3 months
Meagan Blackburn
8 weeks notice until 3 years of continuous employment
1 additional week for each completed year of continuous employment up to a maximum
of 12 weeks notice
Zoë Whyatt
8 weeks notice until 3 years of continuous employment
After 3 completed years the Executive must give not less than 12 weeks notice
CEO Remuneration
Under Andrew Ronchi’s employment agreement his fixed remuneration is $250,000 per annum (plus superannuation
giving a total of $267,775). In addition, Andrew Ronchi is also eligible to receive a bonus of up to $100,000 per annum
where key performance indicators and targets (as agreed with the Company) are achieved. Andrew Ronchi may also
be granted options over ordinary shares, such shares not to exceed 1.5% of the issued share capital of the Company,
under the Company’s Employee Share Ownership Plan and subject to achieving the following targets:
• one third of the options (i.e. up to 0.5%) will be granted to Andrew Ronchi if the Company’s revenue (excluding any
acquired revenue) equals or exceeds $5 million in the 2014 calendar year;
• the remaining two thirds (or 1% of the 1.5% in options) will be granted to Andrew Ronchi if the Company’s revenue
equals (excluding any acquired revenue) or exceeds $15 million in the 2015 calendar year; and
• provided Andrew Ronchi remains CEO for the relevant year in which those revenue targets are met.
The annual STI payments available for executives across the Company are subject to the approval of the Nomination
& Remuneration Committee.
Any options granted to Andrew Ronchi will be subject to shareholder approval under the ASX Listing Rules at a $0.40
exercise price per share.
Variable Remuneration – long-term incentive (LTI)
Objective
The objectives of providing long term incentives are: to motivate and retain key dorsaVi’s employees; to attract quality
employees; to create commonality of purpose between dorsaVi and its employees; to add wealth for all shareholders
of the Company through the motivation of dorsaVi’s employees; and by allowing dorsaVi’s employees to share the
rewards of the success of dorsaVi through the acquisition of, or entitlements to, shares and options.
Structure
The Board offers LTIs to reward the performance of employees, which is in alignment with shareholders interests, and
the long-term benefit of the Company. LTI awards are made under the Employee Share Option Plan (ESOP) and are
delivered in the form of share options. Each option entitles the holder to one fully paid ordinary share of dorsaVi Ltd at
an exercise price to be determined in an employee’s employment agreement or by determination by the Nomination
& Remuneration Committee.
Where an LTI participant ceases employment prior to vesting in their award, the options are forfeited unless the Board
applies its discretion to allow vesting at or post cessation of employment in appropriate circumstances.
Options were granted under the ESOP plan during the financial year 2014 to John Kowalczyk (see Table B – Executives’
Remuneration) with a number of Shares being granted to executives as part of the initial listing of the Company. Shares
in accordance with the ESOP plan were also issued to Jarrod Sculli (100,000) and Jerome Whelan (100,000) during
the year at an average market price of 49 cents.
Upon termination of Andrew Ronchi’s employment contract, he will be subject to a restraint of trade for a maximum
of 12 months.
President dorsaVi USA
Under John Kowalczyk’s Employment Agreement his fixed remuneration is US$200,000 per annum.
He is eligible to receive an annual bonus of up to US$100,000, the amount of such bonus to be determined by the
Company’s CEO, in his sole discretion, based on John Kowalczyk’s achievement of milestones to be established by
the Company’s CEO; provided, however, that the Company agrees that his annual bonus for his first year of
employment shall not be less than US$50,000. The initial bonus is due to be paid on 8 April 2015.
Subject to the authorisation of such grant by the Nomination & Remuneration Committee of the Board of Directors the
Company has agreed to grant John Kowalczyk an option under the Company’s Employee Share Ownership Plan 2013
to purchase 1,000,000 ordinary shares of the Company. The option grant shall vest over a three-year period, with
one-third of the shares subject to such option vesting as of the first anniversary of effective date (being 8 April 2014)
and the remaining shares vesting monthly over the following two years, contingent upon his continued employment
with the Company.
The exercise price of the options is $0.51 that was equal to the average per share list price of the Company’s ordinary
shares on the 20 trading days prior to the date of grant. As a condition of the option grant, John Kowalczyk will be
required to execute an individual stock option agreement in the form to be provided to him by the Company at the time
such option is authorized by the Nomination & Remuneration Committee of the Board of Directors.
Employment Agreements
Chief Technical Officer
The Company has entered into Employment Agreements with all executives, including the CEO. The Company may
terminate the executive’s Employment Agreements by providing at least one month’s written notice or providing
payment in lieu of the notice period (based on the fixed component of the executive’s remuneration). The Company
may terminate the contract at any time without notice if serious misconduct has occurred.
The Company agrees to issue to Daniel Ronchi, at his request, an option to purchase 20,000 ordinary shares at the
conclusion of his employment contract at the price of $1.00 per share. The terms and conditions of these options have
not been agreed and will be supplied by the Company prior to the end of the term of the employment contract.
30
31
dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
C. Details of key management personnel remuneration
(a) Non-Executive Directors’ remuneration: Table 1
(b) Executives’ remuneration: Table 2
Short-term
Post employment
Share-
based
pay ments TOTAL
Long-
term
Total
per form-
ance
related
Options
as % of
total
Salary
fees
$
Cash
bonus
$
Non-
monet ary
$
Other
$
Super-
annu-
ation
$
Retire-
ment
benefits
$
Termin-
ation
benefits
$
Incentive
plans
$
Options
$
$
%
%
2014
Non-
Executive
Directors
Herb Elliott(i)
58,662
Ashraf Attia(ii)
44,247
Michael
Panaccio(iii)
Greg
Tweedly(iv)
30,249
42,966
176,124
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
58,662
44,247
30,249
42,966
176,124
–
–
–
–
–
–
–
–
–
–
(i) Appointed 13 October 2013.
(ii) Full year appointment. The Director’s fee increased from $2,200 per month to $4,553 per month inc. of superannuation effective
13 October 2013.
(iii) Full year appointment. No Director’s fees charged prior to 11 Dec 2014. Michael Panaccio provides his services via Starfish
Technology Fund II, LP.
(iv) Appointed 13 October 2013. Greg Tweedly provides his services via Silverlake Pty Ltd.
Short-term
Post employment
Share
based
pay-
ments
as % of
total
Total
per form-
ance
related
Share-
based
pay ments TOTAL
Long-
term
Salary
fees
$
Cash
bonus
$
Non-
monet ary
$
Other
$
Super-
annu-
ation
$
Retire-
ment
benefits
$
Term
benefits
$
Incentive
plans
$
$
$
%
%
2013
Non-
Executive
Directors
Ashraf Attia
26,400
Michael
Panaccio(i)
–
26,400
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 26,400
–
–
– 26,400
–
–
–
–
–
–
(i) Michael Panaccio did not charge any fees for his role as a Director in 2013.
Share
based
pay-
ments
as % of
total
Total
per form-
ance
related
Share-
based
pay ments TOTAL
Long-
term
Short-term
Post employment
Salary
fees
$
Cash
bonus
$
Non-
monet ary
$
Other
$
Super-
annu-
ation
$
Retire-
ment
benefits
$
Term
benefits
$
Incentive
plans
$
$
$
%
%
2014
Executive
Director
Andrew
Ronchi
Executives
219,580 50,000
Daniel Ronchi 147,729 20,000
Jerome
Whelan (i)(ix)
Jarrod
Sculli(ii)(ix)
27,461
–
92,497
2,012
Sarah Riseley(iii) 103,321
7,500
Meagan
Blackburn (iv)(v) 118,283
Zoë Whyatt(iv)(vi) 39,166
John
Kowalczyk(vii)(viii) 37,759
–
–
–
785,796 79,512
–
–
–
–
–
–
–
–
–
–
–
–
25,556
16,037
2,540
14,743
8,742
10,448 10,573
–
–
–
–
–
–
25,191 63,448
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
295,136
16.9
183,766
10.9
–
–
18,407 48,408
–
38.0
18,407 136,401
–
–
–
131,842
118,283
39,166
47,075 84,834
1.5
5.7
–
–
–
83,889 1,037,836
7.7
13.5
–
–
–
55.5
8.1
(i) Appointed 7 May 2014.
(ii) Appointed 16 September 2013.
(iii) Employed 3 days per week up to 26 August 2013. Since that date has been employed 4 days per week.
(iv) Converted into AUD from GBP at the exchange rate at 30 June 2014. (1 GBP = 1.8077 AUD)
(v) Employed 4 days per week.
(vi) Appointed 17 March 2014. Amounts include salary as a KMP from appointment date.
(vii) Non-monetary benefits for US based employees include the payment of certain health and disability related insurance premiums
as is customary in the US market. This arrangement begins in Q1 2014/2015.
(viii) Appointed 8 April 2014 in US.
(ix) Share based payments granted to Jerome Whelan & Jarrod Sculli comprise shares granted under the dorsaVi Ltd’s ESOP and
are backed by an interest free, non-recourse loan. For accounting purposes these are valued the same as options.
32
33
dorsaViAnnual Report 2014 Directors’ Report
Directors’ Report
Short-term
Post employment
Share
based
pay-
ments
as % of
total
Total
per form-
ance
related
Share-
based
pay ments TOTAL
Long-
term
Salary
fees
$
Cash
bonus
$
Non-
monet ary
$
Other
$
Super-
annu-
ation
$
Retire-
ment
benefits
$
Term
benefits
$
Incentive
plans
$
$
$
%
%
144,671
160,550
60,944
73,638
439,803
–
–
–
–
–
–
–
–
–
–
– 13,020
– 14,450
7,500
5,485
–
–
7,500 32,955
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 157,691
– 175,000
– 73,929
– 73,638
– 480,258
–
–
–
–
–
–
–
–
–
–
2013
Executive
Director
Andrew
Ronchi
Executives
Daniel
Ronchi
Sarah
Riseley(i)
Meagan
Blackburn(i)
(i) Appointed September 2012.
D. Relationship between remuneration and company performance
(a) Remuneration not dependent on satisfaction of performance condition
The non-executives remuneration policy is not directly related to company performance. The board considers
a remuneration policy based on short-term returns may not be beneficial to the long-term creation of wealth by the
company for shareholders.
(b) Remuneration dependent on satisfaction of performance condition
A portion of the executive remuneration is based on attainment of performance conditions. Performance-based
remuneration includes short-term cash bonus and long-term incentive plan.
The following table summarises the performance conditions for performance-linked bonus:
KMP
Performance conditions
Andrew Ronchi
Key Milestones as determined and at the discretion of the Board
Daniel Ronchi
Key Milestones as determined and at the discretion of the Board
John Kowalczyk
Key Milestones as determined and at the discretion of the Board
Jerome Whelan
Key Milestones: (A) delivering a budget in accordance with Board directions and deadlines
and (B) meeting all reporting requirements of the ASX at 31 December 2014.
Jarrod Sculli
Achievement of individual sales goals and sales team goals.
Sarah Riseley
Commission paid on achievement of physio sales, physio licences and medical sales.
These performance conditions were selected to promote the creation of shareholder wealth during the period
and to enable the Company’s dividend policy to be continued.
34
The following table sets out the terms and conditions of each grant of the performance-linked bonus affecting
compensation in current and future years:
2014
Andrew Ronchi
John Kowalczyk
Jerome Whelan
Jarrod Sculli
Amount included
in Remuneration
$
Awarded/
Guaranteed
%
Forfeited
%
Estimated
Maximum total
value of Bonus
100,000
108,695 (i)
40,000
40,000
50%
50%
0%
5%
0%
0%
0%
82.5%
100,000
108,695 (i)
40,000
7,000
(i) USD 100,000.
(ii) Performance linked bonuses not yet awarded/guaranteed and not yet forfeited are still eligible to be awarded
and are subject to the discretion of the board as described above.
(c) Consequences of Company’s performance on shareholder wealth
The following table summarises Company performance and key performance indicators:
Revenue (000s)
% increase in revenue
Loss before tax (000s)
% increase in loss before tax
Change in share price (%)
Dividend paid to shareholders (000s)
Return of capital (000s)
Total remuneration of KMP (000s)
Total performance based remuneration (000s)
2014
2013
$767,000
$539,000
42%
n/a
($4,122,000)
($2,173,000)
(90%)
10%
–
–
n/a
n/a
–
–
$1,204,574
$506,658
$79,512
–
E. Key management personnel’s share-based compensation
(a) Details of compensation Options
The Company has agreed to grant John Kowalczyk an Option under the Company’s Employee Share Ownership Plan
2013 to purchase 1,000,000 ordinary shares of the Company.
The exercise price of the Options is $0.51 that was equal to the average per Share list price of the Company’s ordinary
Shares on the 20 trading days prior to the date of grant. As a condition of the Option grant, John Kowalczyk will be
required to execute an individual stock option agreement in the form to be provided to him by the Company at the time
such Option is authorised by the Nomination & Remuneration Committee of the Board of Directors.
Value per
option
at grant
date
$
Vest
Number
During
the Year
Year in
which
option
may be
vested
Value
Exer cised
During
the year
Value
Lapsed
during
the year
Vest %
Grant
Date
Granted
Number
Forfeited
%
Exercise
Price $
Expiry
Date
First
Exercise
Date
Last
Exercise
Date
Terms and conditions for each grant
2014
Executives
John
Kowalczyk
8 April
2014 1,000,000 0.047075
1,000,000
2015 (i)
–
–
–
–
–
–
–
–
–
–
0.51
–
7 April
2019
–
–
–
–
–
(i): The Option grant shall vest over a three-year period, with one-third of the Shares subject to such Option vesting as of the first
anniversary of effective date (being 8 April 2014) and the remaining Shares vesting monthly over the following two years,
contingent upon his continued employment with the Company.
As at 30 June 2014, no Options have been exercised, and accordingly no Shares have been issued as a result of
compensation Options previously issued.
35
dorsaViAnnual Report 2014
Directors’ Report
Directors’ Report
No other grant of Options was provided to any KMP for the year 2014.
(b) Aggregate of loans made is greater than $100,000
F. Key management personnel’s equity holdings
(a) Number of options held by key management personnel
John Kowalczyk as at June 2014 holds an Option under the Company’s Employee Share Ownership Plan 2013
to purchase 1,000,000 ordinary Shares of the Company.
(b) Number of shares held by key management personnel (consolidated)
On 6 May 2014, Jerome Whelan and Jarrod Sculli were issued 100,000 Shares each, the subscription price for which
was funded by an interest-free non-recourse loan from the company with an exercise price of $0.49 per share. The
relevant interest of each key management personnel in the share capital of the Company at 30 June 2014 is as follows:
Received
as Remun-
eration
Exercise
of Options
Net
change
Other
Balance
30/06/14
Total
Ordinary
Shares
Post
Conver-
sion(ii)
Balance
1/07/13
ESOP
Allocation
–
–
–
–
20,000
126,991
2014
Directors
Herb Elliott
Ashraf Attia
Michael Panaccio
6,000,000(i)
– 53,097,345
Michael Panaccio
(relevant interest)
Greg Tweedly
Executive Director
–
–
–
–
–
–
Andrew Ronchi
1,078,000(ii)
185,000
7,021,814
20,000(i)
Executives
Daniel Ronchi
Jerome Whelan
Jarrod Sculli
Sarah Riseley
Meagan Blackburn
Zoë Whyatt
John Kowalczyk
20,000(i)
1,078,000(ii)
185,000
7,021,814
–
–
–
–
–
–
–
–
–
–
100,000(iv)
100,000(iv)
100,000
634,956
40,000
253,982
10,000
63,496
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75,000
75,000
62,500
189,491
– 7,872,500(iii) 60,969,845
– 19,573,274 19,573,274
–
62,500
62,500
–
1,224,668
8,246,482
–
–
–
–
–
–
–
1,224,668
8,246,482
–
–
–
–
–
–
100,000
100,000
634,956
253,982
63,496
–
8,196,000
540,000 68,220,398
200,000
– 30,095,110 98,515,508
(i) Preference Shares converted at 2.5 then at 6.349557522 for a total of 8.8495.
(ii) Ordinary Shares converted at the rate of 6.349557522.
(iii) Includes 7,500,000 Shares issued to Starfish Technology Fund following conversion of existing Convertible Notes at the
Offer Price.
(iv) Employee Loan Shares.
G. Loans to key management personnel
(a) Aggregate of loans made
The following table sets out the details of the aggregate of loans made, guaranteed or secured, directly or indirectly, by
the group and any of its subsidiaries, in the financial year to all key management personnel, their close family members
and entities related to them:
Balance 1/7/2013
Interest paid
and payable
Interest
not charged
Balance
30/6/2014
Number in group
30/6/2014
2014
–
–
Not Applicable
638,000
8
The following table sets out the details of the aggregate of loans made, guaranteed or secured, directly or indirectly, by
the group and any of its subsidiaries, in the financial year to a particular key management person, close members of
the family of the key management person and an entity related to them is greater than $100,000:
2014
Ashraf Attia (i)
Andrew Ronchi (i)
Daniel Ronchi (i)
Jerome Whelan (i)
Jarrod Sculli (i)
Sarah Riseley (i)
Meagan Blackburn (i)
Zoë Whyatt (i)
Balance
1/7/2013
$
Interest paid
and payable
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Interest not
charged
$
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
–
Balance
30/6/2014
$
Highest
indebtedness
during the year
$
20,000
185,000
185,000
49,000
49,000
100,000
40,000
10,000
638,000
20,000
185,000
185,000
49,000
49,000
100,000
40,000
10,000
638,000
(i) Pre IPO ESOP Shares were granted on 1 November 2013 with a corresponding interest-free non-recourse loan.
These arrangements have been accounted for as an Option. The fair value of these Options at grant date was $0.00.
The Company has provided each KMP named above with an interest free loan via an Employee Share Ownership
Loan Agreement to assist the KMP to subscribe for the Shares offered to the KMP by the Company. By entering this
agreement the KMP irrevocably directed the Company to apply the Loan Amount towards payment of the Offer Price
for the Shares offered. The Offer Price is the amount equal to the opening price for the Company’s fully paid ordinary
Shares quoted on the stock market of ASX as at the date of each agreement.
The KMP may pay to the Company all or any of the Principal Outstanding at any time before the date on which the
KMP ceases to be employed by the Company. If the KMP ceases to be employed by the Company before the 5th
anniversary of the date of their agreement, then upon that employment ceasing the KMP must pay to the Company
all of the Principal Outstanding.
If the Principal Outstanding has not been paid to the Company in full by the due date for repayment the KMP
irrevocably authorises the Company to sell and transfer the Shares and apply the proceeds of sale in repayment
of the Principal Outstanding.
The KMP agrees that upon the sale of the Shares by the Company the Company will apply the net sale proceeds
in repayment of the Principal Outstanding, and if there is any excess the Company must pay it to the KMP.
H. Other transactions with key management personnel
(a) Transactions with key management personnel of the entity or its parent and their personally
related entities
Pro-Active Industries Pty Ltd is a related party as Andrew Ronchi controls it.
During the year ended 30 June 2014, Pro-Active Industries Pty Ltd paid and was reimbursed for expenses incurred on
behalf of dorsaVi Ltd. Total value of these goods and services was $65,677 (2013: $26,947). The goods and services
supplied were in the normal course of business and on normal terms and conditions.
dorsaVi provided a loan of $1,000 to Pro-Active Industries Pty Ltd during the year ended 30 June 2013.
(b) Transactions with other related parties
Starfish Ventures Pty Ltd is a related party as it is connected with Michael Panaccio.
During the year ended 30 June 2014, Starfish Ventures Pty Ltd on-charged rent to dorsaVi. Total value of these rental
charges was $59,735 (2013: $34,858). The rent was charged to dorsaVi on normal terms and conditions.
I. Use of Remuneration Consultants
No remuneration consultants were engaged during the course of the 2014 or 2013 financial years.
End of Remuneration Report
36
37
dorsaViAnnual Report 2014 Directors’ Report
Auditor’s Independence Declaration
J. Rounding of Amounts
To the Directors of dorsaVi Ltd
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where
rounding is applicable) under the option available to the company under ASIC Class Order 98/0100. The Company is
an entity to which the Class Order applies.
Signed in accordance with a resolution of the directors.
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and belief
there have been:
(i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and
(ii) No contraventions of any applicable code of professional conduct.
Herb Elliott
Director & Chairman
Andrew Ronchi
Director & CEO
Melbourne
Date: 29 September 2014
Melbourne
Date: 29 September 2014
F V Russo
Partner
Melbourne
Date: 29 September 2014
PITCHER PARTNERS
Melbourne
Date: 29 September 2014
38
39
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
An independent member of Baker Tilly International
dorsaViAnnual Report 2014
Consolidated Statement
of Comprehensive Income
For the Year Ended 30 June 2014
Consolidated Statement
of Financial Position
As at 30 June 2014
Revenue
Sales revenue
Grant income
Interest income
Less: expenses
Changes in inventories
Cost of sales
Advertising expense
Conference expense
Consultancy expense
Depreciation and amortisation expense
Device development expenditure
Directors’ fees
Employee benefits expense
Finance costs
Occupancy expense
Pilot study expense
Professional fees
Travel expenses
Other expenses
Loss before income tax benefit
Income tax benefit
Loss from continuing operations
Other comprehensive income for the year
Total comprehensive income
Notes
2014
$000
2013
$000
4
4
4
5
5
5
5
5
6
529
11
227
767
4
(42)
(208)
(135)
(592)
(42)
(228)
(179)
399
136
4
539
47
(189)
(199)
(1)
(257)
(27)
(233)
(24)
(2,334)
(1,377)
(1)
(64)
(43)
(360)
(284)
(381)
(4,889)
(4,122)
560
(3,562)
–
(3,562)
(2)
(45)
(53)
(64)
(105)
(183)
(2,712)
(2,173)
514
(1,659)
–
(1,659)
Earnings per share for loss from continuing operations attributable
to equity holders of the entity:
Basic loss per share
Diluted loss per share
21
21
(3.64 cents)
(20.13 cents)
(3.64 cents)
(20.13 cents)
The above statement should be read in conjunction with the accompanying notes.
Current assets
Cash and cash equivalents
Receivables
Inventories
Other assets
Total current assets
Non current assets
Intangible assets
Plant and equipment
Total non current assets
Total assets
Current liabilities
Payables
Borrowings
Provisions
Total current liabilities
Non current liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Notes
8
9
10
11
12
13
14
15
16
16
17
18
18
2014
$000
13,938
713
190
42
14,883
258
198
456
15,339
494
–
211
705
14
14
719
14,620
23,835
84
(9,299)
14,620
2013
$000
274
691
186
27
1,178
142
76
218
1,396
261
1,017
95
1,373
9
9
1,382
14
5,751
–
(5,737)
14
The above statement should be read in conjunction with the accompanying notes.
40
41
dorsaViAnnual Report 2014
Consolidated Statement
of Changes in Equity
For the Year Ended 30 June 2014
Consolidated Entity
Balance as at 1 July 2012
Loss for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Balance as at 30 June 2013
Balance as at 1 July 2013
Loss for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners:
Conversion of convertible notes
Issue of shares
Cost of raising capital
Employee share ownership plan
Balance as at 30 June 2014
Share capital
$000
5,751
–
–
–
5,751
5,751
–
–
3,000
16,500
(1,416)
–
18,084
23,835
Reserves
$000
Accumulated
losses
$000
Total Equity
$000
–
–
–
–
–
–
–
–
–
–
–
84
84
84
(4,078)
(1,659)
(1,659)
–
(5,737)
(5,737)
(3,562)
(3,562)
–
–
–
–
–
(9,299)
1,673
(1,659)
(1,659)
–
14
14
(3,562)
(3,562)
3,000
16,500
(1,416)
84
18,168
14,620
The above statement should be read in conjunction with the accompanying notes.
Consolidated Statement
of Cash Flows
For the Year Ended 30 June 2014
Notes
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Income tax refunded
Net cash used in operating activities
19(b)
Cash flow from investing activities
Payment for plant and equipment
Payment for intangibles
Net cash used in investing activities
Cash flow from financing activities
Proceeds from share issue
Proceeds from convertible note issue
Cost of raising capital
Net loans to related parties
Net cash provided by financing activities
Reconciliation of cash
Cash at beginning of the financial year
Net increase/(decrease) in cash held
Cash at end of financial year
19(a)
The above statement should be read in conjunction with the accompanying notes.
2014
$000
707
(4,620)
220
514
(3,179)
(108)
(127)
(235)
16,500
2,000
(1,416)
(6)
17,078
274
13,664
13,938
2013
$000
537
(2,644)
4
817
(1,286)
(32)
(47)
(79)
–
1,000
–
(21)
979
660
(386)
274
42
43
dorsaViAnnual Report 2014
Notes to the
Financial
Statements
Income Tax
Note 1: Statement of Significant Accounting Policies
Note 2: Critical Accounting Estimates and Judgements
Note 3: Financial Risk Management
Note 4: Revenue and Other Income
Note 5: Loss from Continuing Operations
Note 6:
Note 7: Dividends
Note 8: Cash and Cash Equivalents
Note 9: Receivables
Note 10: Inventories
Note 11: Other Assets
Note 12: Intangible Assets
Note 13: Plant and Equipment
Note 14: Payables
Note 15: Borrowings
Note 16: Provisions
Note 17: Share Capital
Note 18: Reserves and Accumulated Losses
Note 19: Cash Flow Information
Note 20: Commitments & Contingencies
Note 21: Earnings Per Share
Note 22: Share Based Payments
Note 23: Directors’ and Executives’ Compensations
Note 24: Subsidiaries of the Group & Related
Party Disclosures
Note 25: Auditor’s Remuneration
Note 26: Parent Entity Information
Note 27: Segment Information
Note 28: Subsequent Events
45
50
50
52
53
54
54
54
55
55
55
56
56
58
58
58
58
60
60
61
62
62
64
64
65
65
66
67
Notes to the Financial Statements
Note 1: Statement of Significant Accounting Policies
The following is a summary of significant accounting policies adopted by the consolidated entity in the preparation and
presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
(a) Basis of preparation of the financial report
This financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, interpretations and other authoritative pronouncements of the Australian Accounting Standards
Board and the Corporations Act 2001.
The financial report covers dorsaVi Ltd and controlled entities as a consolidated entity. dorsaVi Ltd is a company
limited by shares, incorporated and domiciled in Australia. dorsaVi Ltd is a for-profit entity for the purpose of preparing
the financial statements.
The financial report was authorised for issue by the directors on the date of the director’s report.
Compliance with IFRS
The consolidated financial statements of dorsaVi Ltd also comply with the International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
Historical cost convention
The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value
for certain classes of assets as described in the accounting policies.
Critical accounting estimates
The preparation of the financial report requires the use of certain estimates and judgements in applying the entity’s
accounting policies. Those estimates and judgements significant to the financial report are disclosed in Note 2.
(b) Going concern
The financial report has been prepared on a going concern basis.
(c) Principles of consolidation
The consolidated financial statements are those of the consolidated entity, comprising the financial statements of the
parent entity and of all entities, which the parent entity controls. The Group controls an entity when it is exposed, or
has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using
consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies, which
may exist.
All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on
consolidation. Subsidiaries are consolidated from the date on which control is established and are de-recognised from
the date that control ceases.
Non-controlling interests in the results of subsidiaries are shown separately in the consolidated statement
of comprehensive income and consolidated statement of financial position respectively.
(d) Revenue
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods
have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured
reliably. Risks and rewards of ownership are considered to have passed to the buyer at the time of delivery of the
goods to the customer.
Revenue from grants is recognised in accordance with the recognition and measurement requirements of AASB 120
“Accounting for Government Grants and Disclosure of Government Assistance”.
Revenue from the rendering of services is recognised upon the delivery of the service to the customers.
Interest revenue is recognised when it becomes receivable on a proportional basis taking in to account the interest
rates applicable to the financial assets.
Device rental income is recognised on a straight line basis over the rental term.
All revenue is stated net of the amount of goods and services tax (GST).
44
45
dorsaViAnnual Report 2014 Notes to the Financial Statements
Notes to the Financial Statements
(e) Cash and cash equivalents
Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of three
months or less held at call with financial institutions, and bank overdrafts. Bank overdrafts are shown within borrowings
in current liabilities on the statement of financial position.
(f) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes
direct material, direct labour and a proportion of manufacturing overheads based on normal operating capacity.
(g) Plant and equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and any
accumulated impairment losses.
Plant and equipment
Plant and equipment is measured on a cost basis.
Depreciation
The depreciable amount of all fixed assets is depreciated over their estimated useful lives commencing from the time
the asset is held ready for use.
Class of fixed asset
Depreciation rates
Depreciation basis
Testing equipment at cost
10-66.67%
Diminishing value
Leased devices at cost
20%
Straight line
Office equipment at cost
10-66.67%
Diminishing value
Furniture, fixtures and fittings at cost
10-20%
Diminishing value
Tooling at cost
10%
Straight line
(h) Leases
Leases are classified at their inception as either operating or finance leases based on the economic substance of the
agreement so as to reflect the risks and benefits incidental to ownership.
Operating leases
Lease payments for operating leases are recognised as an expense on a straight-line basis over the term of the lease.
(i) Intangibles
Patents
Patents, trademarks and licences are recognised at cost and depreciated on a straight line basis over their effective lives.
(j) Impairment of non-financial assets
Assets with an indefinite useful life are not amortised but are tested annually for impairment in accordance with AASB
136. Assets subject to annual depreciation or amortisation are reviewed for impairment whenever events or
circumstances arise that indicate that the carrying amount of the asset may be impaired.
An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount.
The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use.
(k) Income tax
Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the
applicable income tax rate adjusted by changes in deferred tax assets and liabilities.
Deferred tax balances
Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rates when the assets
are expected to be recovered or liabilities are settled. No deferred tax asset or liability is recognised in relation to
temporary differences if they arose in a transaction, other than a business combination, that at the time of the
transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
(l) Provision
Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past events,
for which it is probable that an out flow of economic benefits will result and that outflow can be reliably measured.
(m) Employee benefits
(i) Short-term employee benefit obligations
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be
settled within twelve months of the reporting date are measured at the amounts based on remuneration rates which
are expected to be paid when the liability is settled. The expected cost of short-term employee benefits in the form of
compensated absences such as annual leave is recognised in the provision for employee benefits. All other short-term
employee benefit obligations are presented as payables.
(ii) Long-term employee benefit obligations
The provision for employee benefits in respect of long service leave and annual leave which, are not expected to be
settled within twelve months of the reporting date, are measured at the present value of the estimated future cash
outflow to be made in respect of services provided by employees up to the reporting date.
Employee benefit obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual
settlement is expected to occur.
(iii) Retirement benefit obligations
Defined contribution superannuation plan
The consolidated entity makes contributions to defined contribution superannuation plans in respect of employee
services rendered during the year. These superannuation contributions are recognised as an expense in the same
period when the employee services are received.
(iv) Share-based payments
The consolidated entity operates share-based payment employee share and option schemes. The fair value of the
equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting
period, with a corresponding increase to an equity account. The fair value of shares is measured at the market bid
price at grant date. In respect of share-based payments that are dependent on the satisfaction of performance
conditions, the number of shares and options expected to vest is reviewed and adjusted at each reporting date. The
amount recognised for services received as consideration for these equity instruments granted is adjusted to reflect
the best estimate of the number of equity instruments that eventually vest.
(v) Bonus plan
The consolidated entity recognises a provision when a bonus is payable in accordance with the employee’s contract
of employment, and the amount can be reliably measured.
(n) Borrowing costs
Borrowing costs can include interest expense calculated using the effective interest method, finance charges in
respect of finance leases, and exchange differences arising from foreign currency borrowings to the extent that they
are regarded as an adjustment to interest costs. Borrowing costs are expensed as incurred.
(o) Financial instruments
Classification
The company classifies its financial assets into the following categories: financial assets at fair value through profit and
loss, loans and receivables, held to maturity investments, and available for sale financial assets. The classification
depends on the purpose for which the instruments were acquired. Management determines the classification of its
financial instruments at initial recognition.
Loans and receivables
Loans and receivables are measured at fair value at inception and subsequently at amortised cost using the effective
interest rate method.
46
47
dorsaViAnnual Report 2014 Notes to the Financial Statements
Notes to the Financial Statements
Financial liabilities
(t) Adoption of new and amended accounting standards that are first operative at 30 June 2014
(a) AASB 10: Consolidated Financial Statements
The consolidated financial statements are those of the consolidated entity, comprising the financial statements of the
parent entity and of all entities which the parent controls. The Group controls an entity when it is exposed, or has
rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity.
The consolidated entity concluded that the adoption of AASB 10 did not change the consolidation status of its
subsidiaries. Therefore, no adjustments to any of the carrying amounts were required.
(b) AASB 12: Disclosure of Interests in Other Entities
AASB 12 sets new minimum disclosure requirements for interest in subsidiaries, joint arrangements, associates and
unconsolidated structured entities. Disclosures required under AASB 12 are provided in Note 24: Subsidiaries of the
Group & Related Party Disclosures.
(c) AASB 13: Fair Value Measurement
AASB 13 introduces a fair value framework for all fair value measurements as well as the enhanced disclosure
requirements. Application of AASB 13 does not materially change the Company’s fair value measurements.
(d) AASB 119: Employee Benefits
The amendments to AASB 119 revise the definitions of short-term and long-term employee benefits, placing the
emphasis on when the benefit is expected to be settled rather than when it is due to be settled. The Group has
assessed its impact and concludes that the adoption of AASB 119 has no material effect on the amounts recognised
in current or prior years.
No other new and amended accounting standards effective for the financial year beginning 1 July 2013 affected any
amounts recorded in the current or prior year.
(u) Accounting standards and interpretations Issued but not Operative at 30 June 2014
A number of new accounting standards and interpretations have been issued at the reporting date but are not yet
effective. When adopted, these standards and interpretations are likely to impact on the financial information
presented. However the assessment of impact has not yet been completed.
Financial liabilities include trade payables, other creditors and loans from third parties including inter-company
balances and loans from or other amounts due to director related entities.
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments
and amortisation.
Financial liabilities are classified as current liabilities unless the group has an unconditional right to defer settlement
of the liability for at least twelve months after the reporting period.
Impairment of financial assets
Financial assets are tested for impairment at each financial year end to establish whether there is any objective
evidence for impairment.
For loans and receivables, impairment loss is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted
at the financial asset’s original effective interest rate. The amount of the loss reduces the carrying amount of the asset
and is recognised in profit or loss. The impairment loss is reversed through profit or loss if the amount of the
impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring
after the impairment was recognised.
(p) Foreign currency translations and balances
Functional and presentation currency
The financial statements are presented in Australian dollars which is the Company’s functional and presentation currency.
Transactions and Balances
Transactions in foreign currencies of the Company are translated into functional currency at the rate of exchange ruling
at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under
foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using
the spot rate at the end of the financial period.
Except for certain foreign currency hedges, all resulting exchange differences arising on settlement or restatement are
recognised as revenues and expenses for the financial period.
Foreign subsidiaries
Entities that have a functional currency different to the presentation currency are translated as follows:
• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
• Income and expenses are translated at actual exchange rates or average exchange rates for the period,
where appropriate; and
• All resulting exchange differences are recognised as a separate component of equity.
(q) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are
shown inclusive of GST.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
(r) Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency with current
year disclosures.
(s) Rounding of amounts
The parent entity and the consolidated entity have applied the relief available under ASIC Class Order CO 98/0100
and accordingly, amounts in the consolidated financial statements and directors’ report have been rounded off to the
nearest thousand dollars, or in certain cases, to the nearest dollar.
48
49
dorsaViAnnual Report 2014 Notes to the Financial Statements
Notes to the Financial Statements
Note 2: Critical Accounting Estimates and Judgements
Certain accounting estimates include assumptions concerning the future, which, by definition, will seldom represent
actual results. Estimates and assumptions based on future events have a significant inherent risk, and where future
events are not as anticipated there could be a material impact on the carrying amounts of the assets and liabilities
discussed below:
Employee benefits
The calculation of long-term employment benefits requires estimation of the retention of staff, future wage levels and
timing of the settlement of employee entitlements. The estimates are based on historical trends.
Note 3: Financial Risk Management
The company is exposed to a variety of financial risks comprising:
(a) Currency risk
(b) Interest rate risk
(c) Credit risk
(d) Liquidity risk
The Board of Directors has overall responsibility for identifying and managing operational and financial risks.
The Company holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade receivables
Other receivables
Related party receivables
Financial liabilities
Trade payables
Related party payables
Premium finance liability
Convertible notes
Other payables
(a) Currency risk
2014
$000
13,938
82
604
27
14,651
208
1
–
–
285
494
2013
$000
274
150
514
27
965
152
6
17
1,000
103
1,278
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates.
The company does not have a material exposure to currency risk.
(b) Interest rate risk
The Company’s exposure to interest rate risk in relation to future cash flows and the effective weighted average interest
rates on classes of financial assets and financial liabilities, is as follows:
2014
Financial instruments
Financial assets
Cash
Rolling Deposit
Term Deposit
Flexi Deposit
Trade receivables
Other receivables
Related party receivables
Financial liabilities
Trade payables
Other payables
Related Party Payables
2013
Financial instruments
Financial assets
Cash
Trade receivables
Other receivables
Related party receivables
Financial liabilities
Convertible notes
Trade payables
Related party payables
Premium finance liability
Other payables
Interest bearing
$000
Non interest
bearing
$000
Total carrying
amount
$000
Weighted
average effective
interest rate
338
3,360
1,240
9,000
–
–
–
13,938
–
–
–
–
–
–
–
–
82
604
27
713
208
285
1
494
338
3,360
1,240
9,000
82
604
27
14,651
208
285
1
494
2.9% Floating
3.7% Fixed
3.0% Fixed
3.6% Fixed
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Interest bearing
$000
Non interest
bearing
$000
Total carrying
amount
$000
Weighted
average effective
interest rate
274
–
–
–
274
–
–
–
17
–
17
–
150
514
27
691
1,000
152
6
–
103
1,261
274
150
514
27
965
1,000
152
6
17
103
1,278
0.2% Floating
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
7.3% Fixed
0.0%
No other financial assets or financial liabilities are expected to be exposed to interest rate risk.
Sensitivity
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result
of changes in market interest rates.
If interest rates were to increase/decrease by 100 basis points for the year from actual rates, then the impact on loss
for the year and equity is as follows:
+/− 100 basis points
Impact on loss after tax
Impact on equity
2014
$000
98
98
2013
$000
2
2
50
51
dorsaViAnnual Report 2014 Notes to the Financial Statements
Notes to the Financial Statements
(c) Credit risk
Note 5: Loss from Continuing Operations
Losses before income tax has been determined after:
Cost of sales
Finance costs
Depreciation
– Testing equipment
– Leased devices
– Office equipment
– Furniture, fixtures & fittings
– Tooling
Amortisation of patents
Employee benefits expense
– Share based payments
– Other employee benefits
Operating lease rental
Research and development expense
2014
$000
42
1
7
4
17
1
2
31
11
84
2,250
2,334
64
1,244
2013
$000
189
2
4
–
14
–
2
20
7
–
1,377
1,377
45
1,161
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to discharge an obligation.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date of
recognised financial assets is the carrying amount of those assets, net of any provisions for impairment of those
assets, as disclosed in the Statement of Financial Position and notes to financial statements.
The Company does not have any material credit risk exposure to any single debtor or group of debtors under financial
instruments entered into by the company.
The Company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with
number of known and existing customers and reputable organisations.
(i) Cash deposits
Credit risk for cash deposits is managed by holding all cash deposits with major Australian banks.
(ii) Trade receivables
Credit risk for trade receivables is managed by setting credit limits and completing credit checks for new customers.
Outstanding receivables are regularly monitored for payment in accordance with credit terms.
The aging analysis of trade and other receivables is provided in Note 9. As the company undertakes transactions with
a large number of customers and regularly monitors payment in accordance with credit terms, the financial assets that
are neither past due nor impaired, are expected to be received in accordance with the credit risk.
(iii) Other receivables
Other receivables relate to Research and Development tax concessions receivable from the Australian Taxation Office
and do not pose a material credit risk.
(d) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
All financial liabilities are expected to be settled within 6 months of year end.
The company does not have any material exposure to liquidity risk.
(e) Fair value
The fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in the
Consolidated Statement of Financial Position and notes to the consolidated financial statements.
Note 4: Revenue and Other Income
Revenue from continuing operations
Device and consumable sales
Device rental income
Consulting income
Other revenue
Grant income
Interest income
2014
$000
2013
$000
110
117
302
529
11
227
238
767
210
16
173
399
136
4
140
539
52
53
dorsaViAnnual Report 2014 Notes to the Financial Statements
Notes to the Financial Statements
Note 6: Income Tax
(a) Components of tax benefit
Current tax
2014
$000
(560)
(560)
(b) Prima facie tax payable
The prima facie tax refundable on loss before income tax is reconciled to the income tax benefit as follows:
Prima facie income tax refundable on loss before income tax at 30.0%
(2012: 30.0%)
Add tax effect of:
– Accounting R&D expenditure
– Other non-allowable items
– Share based payments expense
– Tax losses not recognised
– Deferred tax assets not recognised
Less tax effect of:
– Amortisation of capital raising costs
– R&D tax offset
Income tax benefit attributable to loss
(c) Deferred tax assets not brought to account
Temporary differences
Operating tax losses
Note 7: Dividends
There were no dividends paid during the period.
Note 8: Cash and Cash Equivalents
Cash at bank and on hand
Deposits at call
2014
$000
(1,236)
373
1
25
898
32
1,329
93
560
653
(560)
2014
$000
93
1,311
1,404
2014
$000
338
13,600
13,938
2013
$000
(514)
(514)
2013
$000
(652)
348
5
–
297
10
660
8
514
522
(514)
2013
$000
61
413
474
2013
$000
274
–
274
Note 9: Receivables
Current
Trade receivables
Other receivables
R&D tax offset refundable
Amounts receivables from:
– Superspine Forrest Hill Unit Trust
2014
$000
2013
$000
82
44
560
686
27
713
150
–
514
664
27
691
Trade receivables ageing analysis at 30 June is:
Not past due
Past due 31 to 60 days
Past due 61 to 90 days
Past due more than 91 days
Gross
2014
$000
Impairment
2014
$000
Gross
2013
$000
Impairment
2013
$000
24
17
5
36
82
–
–
–
–
–
84
7
20
39
150
–
–
–
–
–
Trade receivables are non-interest bearing with 30 days terms. An impairment loss is recognised when there is objective
evidence that an individual trade receivable is impaired. Trade receivables not impaired are expected to be received.
Note 10: Inventories
Current
At cost
Raw materials
Finished goods
Stock in transit
Write downs of inventories to net realisable value recognised as
an expense during the year
Note 11: Other Assets
Prepayments
2014
$000
2013
$000
–
190
–
190
–
23
133
30
186
–
2014
$000
42
2013
$000
27
54
55
dorsaViAnnual Report 2014 Notes to the Financial Statements
Notes to the Financial Statements
Note 12: Intangible Assets
(a) Reconciliations
Reconciliation of the carrying amounts of plant and equipment at the beginning and end of the current financial year
Patents at cost
Less accumulated amortisation
2014
$000
285
(27)
258
(a) Reconciliations
Reconciliation of the carrying amounts of intangible assets at the beginning and end of the current financial year
2013
$000
158
(16)
142
2013
$000
102
47
(7)
142
2014
$000
142
127
(11)
258
2014
$000
2013
$000
98
(36)
62
56
(4)
52
130
(71)
59
11
(2)
9
22
(6)
16
198
55
(29)
26
7
–
7
76
(54)
22
4
(1)
3
22
(4)
18
76
Testing equipment
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
Leased Devices
Opening carrying amount
Additions
Transfers from Inventory
Depreciation expense
Closing carrying amount
Office equipment
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
Furniture, fixtures and fittings
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
Tooling
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
Total plant and equipment
Opening carrying amount
Additions
Transfers from Inventory
Depreciation expense
Closing carrying amount
2014
$000
2013
$000
26
43
(7)
62
7
4
45
(4)
52
22
54
(17)
59
3
7
(1)
9
18
–
(2)
16
76
108
45
(31)
198
11
19
(4)
26
–
7
–
–
7
32
4
(14)
22
1
2
–
3
20
–
(2)
18
64
32
–
(20)
76
Patents at cost
Opening balance
Additions
Amortisation expense
Closing balance
Note 13: Plant and Equipment
Plant and equipment
Testing equipment at cost
Accumulated depreciation
Leased devices at cost
Accumulated depreciation
Office equipment at cost
Accumulated depreciation
Furniture, fixtures and fittings at cost
Accumulated depreciation
Tooling at cost
Accumulated depreciation
Total plant and equipment
56
57
dorsaViAnnual Report 2014
Notes to the Financial Statements
Notes to the Financial Statements
Note 14: Payables
Current
Unsecured liabilities
Trade payables
Unearned Income
Sundry creditors and accruals
Loan from related parties:
Note 15: Borrowings
Current
Unsecured liabilities
Convertible notes (a)
Premium finance liability
2014
$000
2013
$000
208
75
210
1
494
2014
$000
–
–
–
152
68
35
6
261
2013
$000
1,000
17
1,017
(a) Terms and conditions relating to the above convertible notes
The Company issued the 1 million convertible notes on 27 February 2013 at an issue price of $1.00 per note with
a maturity date of 27 February 2014. The notes entitled the holder to convert to preference Shares of dorsaVi Ltd at
any time at a 10% discount to the last round or automatically if more than $2 million is raised by the Company at
a 10% discount to the terms of the new round.
During the period from August to November 2013, the Company issued a further 2 million convertible notes at an issue
price of $1.00 per note. These notes carried the same terms and conditions as the previous convertible notes issued.
All notes converted to ordinary Shares at IPO.
Note 16: Provisions
Current
Employee benefits
Non Current
Employee benefits
(a) Aggregate employee benefits liability
(b) Number of employees at year end
Note 17: Share Capital
Notes
(a)
(a)
2014
$000
211
14
225
23
2013
$000
95
9
104
12
The company issued 41,250,000 ordinary shares during the year ended 30 June 2014 for $0.40 per share raising
$16,500,000 with costs of raising capital totalling $1,416,000.
Movements in shares on issue
Ordinary Shares
Beginning of the financial year
Issued during the financial year
– Preference shares converted
to ordinary shares
– Conversion of ordinary shares
– Employee share scheme (A)(B)
– Convertible note conversion
to ordinary shares
– Shares issued in IPO
– Cost of raising capital
End of the financial year
Parent Equity
2014
Parent Equity
2013
No of Shares
2,200,000
$000
64
No of Shares
2,200,000
$000
64
53,451,327
11,769,027
5,279,646
7,500,000
41,250,000
–
121,450,000
5,687
–
–
3,000
16,500
(1,416)
23,835
–
–
–
–
–
–
–
–
–
–
2,200,000
64
(A) Pre-IPO Shares issued under the Employee Share Ownership Plan:
800,000 ordinary shares were issued to employees of the company at nil value prior to listing under the Employee Share
Ownership Plan. On listing these ordinary shares converted at a factor of 6.3495 to 5,079,646 ordinary shares in the company.
Refer to Note 22(a) Employee Share Ownership Plan (ESOP).
(B) Post-IPO Shares issued under the Employee Share Ownership Plan:
200,000 ordinary shares were issued to employees of the company at an average market price of 49 cents. These shares
are subject to a non-recourse loan. Refer to Note 22(a) Employee Share Ownership Plan (ESOP).
Preference Shares
Parent Equity
2014
Parent Equity
2013
No of Shares
6,040,000
$000
5,687
No of Shares
6,040,000
(6,040,000)
(5,687)
–
–
–
6,040,000
$000
5,687
–
5,687
Beginning of the financial year
Shares converted to Ordinary
Shares
End of the financial year
Rights of each type of share
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held.
At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder
has one vote on a show of hands.
Capital management
When managing capital, management’s objective is to ensure the Company continues as a going concern as well
as to maintain optimal returns to shareholders and benefits for other stakeholders. This is achieved through the
monitoring of historical and forecast performance and cash flows.
During 2014, management paid $nil dividends (2013: $nil).
Employee Share Ownership Plan (ESOP)
The consolidated entity continued to offer employee participation in short-term and long-term incentive schemes
as part of the remuneration packages for the employees of the consolidated entity. Refer to Note 22, Share Based
Payments, for detailed disclosures.
58
59
dorsaViAnnual Report 2014
Notes to the Financial Statements
Notes to the Financial Statements
Note 18: Reserves and Accumulated Losses
(b) Reconciliation of cash flow used in operations with loss after income tax
Share-based payment reserve
Notes
18(a)
2014
$000
84
84
2013
$000
–
–
Accumulated losses
18(b)
(9,299)
(5,737)
(a) Share-based payment reserve
(i) Nature and purpose of reserve
This reserve is used to record the fair value of Options and Shares issued to employees as part of their remuneration.
The balance is transferred to share capital when Options are granted and balance is transferred to retained earning
when Options lapse.
(ii) Movements in reserve
Balance at beginning of year
Movement taken to comprehensive income during the year
Balance at end of year
(b) Accumulated losses
Balance at the beginning of year
Net loss attributable to members of dorsaVi Ltd
Balance at end of year
Note 19: Cash Flow Information
(a) Reconciliation of cash
2014
$000
–
84
84
2014
$000
(5,737)
(3,562)
(9,299)
2013
$000
–
–
–
2013
$000
(4,078)
(1,659)
(5,737)
Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the
Statement of Financial Position is as follows:
Cash at bank and on hand
Cash on deposit
2014
$000
338
13,600
13,938
2013
$000
274
–
274
Loss from ordinary activities after income tax
Adjustments and non cash items
Amortisation
Depreciation
Share Based Payments
Changes in assets and liabilities
(Increase)/decrease in receivables
(Increase)/decrease in other assets
Increase in inventories
Increase/(decrease) in payables
(Increase)/decrease in R&D tax offset receivable
Increase in provisions
2014
$000
(3,562)
2013
$000
(1,659)
11
31
84
24
(15)
(49)
222
(46)
121
383
7
20
–
(66)
178
(47)
(61)
302
40
373
Cash flows used in operating activities
(3,179)
(1,286)
Note 20: Commitments & Contingencies
(a) Operating lease commitments
Non-cancellable operating leases contracted for but not capitalised in the financial statements:
Payable
– not later than one year
– later than one year and not later than five years
Description of leasing arrangement:
Operating lease of premises – Expires 31 May 2015.
(b) Contingent asset and liabilities
There are no contingent assets or contingent liabilities at balance date.
2014
$000
70
–
70
2013
$000
40
38
78
60
61
dorsaViAnnual Report 2014
Notes to the Financial Statements
Notes to the Financial Statements
Note 21: Earnings Per Share
Reconciliation of earnings used in calculating earnings per Share:
Loss from continuing operations
Loss used in calculating basic earnings per share
Earnings used in calculating diluted earnings per share
2014
$000
(3,562)
(3,562)
(3,562)
2014
No of
Shares
2013
$000
(1,659)
(1,659)
(1,659)
2013
No of
Shares
Weighted average number of ordinary Shares used in calculating basic
earnings per Share
97,677,625
8,240,000
Effect of dilutive securities:
Share Options
–
–
Adjusted weighted average number of ordinary Shares used in calculating
diluted earnings per Share
97,677,625
8,240,000
Note 22: Share Based Payments
(a) Employee Share Ownership Plan (ESOP)
The Board has established an Employee Share Ownership Plan (ESOP). This plan was established by the Company to
facilitate the acquisition of Shares and Options by those employed, or otherwise engaged by, or holding a position or
office in dorsaVi Ltd.
The key objective of the plan is to provide an incentive for employees to align their interests with those of the
shareholders. Other objectives of the ESOP include:
• to attract, motivate and retain quality employees and Directors of the Group;
• to create a commitment and united purpose between the employees and Directors and the Group; and
• to add wealth for all shareholders of dorsaVi through the motivation of the Group’s employees and Directors.
The plan allows for dorsaVi to offer employees non-recourse and interest-free loans to acquire fully paid Shares.
On 20 September 2013, the Company’s shareholders approved the giving of such financial assistance.
Only a person who is an Eligible Person may be invited and authorised by the Board to participate in this plan.
An Eligible Person means:
• an employee of the Group; or
• a Director of the Group who holds a salaried employment or office in the Group; or
• a contractor engaged by the Group and whom the Company has determined is an Eligible Person to participate in
this plan.
There is no maximum limit on the number of Securities that may be acquired by Eligible Persons under the ESOP.
However, the Board intends to restrict further issues of Securities to no more than 5% of the Company’s issued Share
capital. This limit will be maintained unless shareholder approval is subsequently sought to increase this level.
Initial ESOP
Initially, employees had acquired 800,000 Shares (which converted at IPO to 5,079,646 Shares) at $1.00 each under
the ESOP at a total value of $800,000. The Company has agreed to fund this acquisition by way of non-recourse,
interest-free loans.
Under the terms of issue of Shares under the ESOP to those employees, the Shares are fully paid ordinary Shares in
the Company, which entitle the holders to participate in any dividends or bonus issues of Shares pro rata with other
shareholders. However, the Initial ESOP Shares are subject to restriction agreements such that the holders of those
Shares are not able to dispose of them within 24 months of listing (unless ASX otherwise approves). If any of these
employees cease to be employed by the Group for any reason, the person must repay the outstanding balance of the
loan made to them. If they do not, the Company may sell those Shares to repay the non-recourse loan owed to it by
the departing employee (with any excess funds from the sale being paid to the departing employee).
Post IPO ESOP
Between the IPO and 30 June 2014, a further 200,000 Shares were granted to employees under the ESOP at an
average market price of 49 cents, subject to a non-recourse loan. These shares carry a full entitlement to dividends
and capital returns. There is no ability for the company to offset dividends paid against the non-recourse loan.
The post IPO ESOP Shares are subject to restriction agreements such that the holders of those Shares are not able to
trade them within 12 months of issuance. After 12 months, 1/3rd of the issued shares can be traded. Shares become
available for trading at a rate of 1/36th of the issued Shares over the remaining 24 months, contingent upon continued
employment with the Company.
(b) Employee option plan
Under the Company’s Employee Share Ownership Plan 2013, dorsaVi agreed to grant an Option to purchase
1,000,000 ordinary Shares of the Company. The option grant vests over a three-year period. One-third of the shares
are subject to vesting on 8 April 2015. The remaining shares vest monthly over the following two years, contingent
upon ongoing employment with dorsaVi.
The exercise price of the options is $0.51, which is equal to the average per share list price of the Company’s ordinary
Shares on the 20 trading days prior to the date of grant. As a condition of the Option grant an individual stock Option
agreement will need to be executed as authorised by the Remuneration Committee of the Board of Directors.
Details of the Options granted are provided below:
Grant Date
08/04/14
Expiry
Date
Exercise
price
Balance
at
01/07/13
Granted
during
the year
Exercised
during
the year
Expired
during
the year
Balance
at year
end
Exer-
cisable at
year end
08/04/17
$0.51
0 1,000,000
0
0 1,000,000
0
Other additional information associated with this Option grant include:
• The weighted average remaining contractual life for Share Options outstanding at the end of the period was
2.8 years.
• The weighted average value of the Options at grant date was $0.30. This excluded any consideration of the impact
of the exercise (or vesting) conditions
• The fair value was determined using the binomial American option-pricing model.
• This Share price at grant date: $0.445
• Expected price volatility of the Company’s shares: 85%
• Dividends: nil
• Risk free interest rate: 4.1%
(c) Expenses recognised from share-based payment transactions
The expense recognised in relation to the share-based payment transactions was recorded within employee benefits
expense in the statement of comprehensive income were as follows:
Options issued under employee option plan
Shares issued under employee option plan
Total expenses recognised from share-based payment transactions
2014
$000
47
37
84
2013
$000
–
–
62
63
dorsaViAnnual Report 2014
Notes to the Financial Statements
Notes to the Financial Statements
Note 23: Directors’ and Executives’ Compensations
Note 25: Auditor’s Remuneration
Compensation by category
Short-term employment benefits
Post-employment benefits
Share-based payments
2014
$000
1,067
63
84
1,214
2013
$000
474
33
–
507
Note 24: Subsidiaries of the Group & Related Party Disclosures
The consolidated financial statements include the financial statements of dorsaVi Ltd and its controlled entities
listed below:
Country of
incorporation
UK
USA
Ownership interest held by DVL
2014
%
100
100
2013
%
–
–
dorsaVi Europe Ltd
dorsaVi USA, Inc
dorsaVi Europe Ltd was incorporated on 3 February 2014.
dorsaVi USA, Inc. was incorporated on 19 May 2014.
(a) The following provides the total amount of transactions that were entered into with related
parties for the relevant financial year:
Transactions with entities with associates:
Superspine Forrest Hill Unit Trust is considered an associate of dorsaVi Ltd, as dorsaVi Ltd has a 25% ownership in the
entity. During the year dorsaVi Ltd provided $NIL (2013: $26,607) of start up funding. There is a loan receivable from
Superspine Forrest Hill Unit Trust of $26,607 (2013: $26,607) at year-end.
Transactions with directors, key management personnel and other related parties:
Pro-Active Industries Pty Ltd is a related party of dorsaVi Ltd, as a director of dorsaVi Ltd controls it. During the year,
Pro-Active Industries Pty Ltd paid and was reimbursed for expenses incurred on behalf of dorsaVi Ltd. Total value of
these transactions were $78,035 (2013: $26,947). The expenses were incurred in the normal course of business and
on normal terms and conditions. The balance outstanding at balance date was $14,472 (2013: $3,114) included in
Trade Payables at Note 14.
Starfish Ventures Pty Ltd is a related party of dorsaVi Ltd, as it is connected with a director of dorsaVi Ltd. During the
year, Starfish Ventures Pty Ltd on-charged rent, incidentals and car parking to dorsaVi Ltd. Total value of these
transactions were $51,145 (2013: $34,858). The rent was charged to dorsaVi Ltd on normal terms and conditions.
The balance outstanding at balance date was $NIL (2013: $3,490) included in Loans from Related Parties at Note 14.
(a) Amounts paid and payable to Pitcher Partners Melbourne for:
(i) Audit and other assurance services
An audit or review of the financial report of the entity and any other entity in
the consolidated entity
Total remuneration for audit and other assurance services
(ii) Other non-audit services
Investigating Accountants Report
Taxation & other Compliance Services
Total remuneration for non-audit services
Total remuneration of Pitcher Partners Melbourne
Note 26: Parent Entity Information
Summarised presentation of the parent entity, dorsaVi Ltd, financial statements:
(a) Summarised statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed capital
Share-based payment reserve
Accumulated Losses
Total equity
(b) Summarised statement of comprehensive income
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
2014
$000
2013
$000
60
60
39
36
75
135
2014
$000
15,311
444
15,755
568
14
582
15,173
23,835
84
(8,746)
15,173
(3,009)
–
(3,009)
22
22
–
6
6
28
2013
$000
1,178
218
1,396
1,373
9
1,382
14
5,751
–
(5,737)
14
(1,659)
–
(1,659)
64
65
dorsaViAnnual Report 2014
Notes to the Financial Statements
Notes to the Financial Statements
dorsaVi
Annual
Report
2014
Note 28: Subsequent Events
On 3 July 2014, dorsaVi Ltd entered into a contract to acquire 100% of the issued capital of Australian Workplace
Compliance Pty Ltd. This increased the Group’s service offering and client base in the Occupational Health and Safety
(OH&S) market. The purchase price was $120,000 in cash and is not considered a material transaction for financial
reporting purposes. As part of the acquisition the founder of Australian Workplace Compliance, Mark Heaysman,
joined dorsaVi Ltd in the capacity as a full time employee. If his employment ceases within 12 months, Mark Heaysman
grants to dorsaVi Ltd a put option to sell the shares in Australian Workplace Compliance Pty Ltd and the business
name back to Mark Heaysman. As at the date of the financial report, acquisition accounting for the business
combination had not been finalised.
On 3 July 2014, dorsaVi Ltd announced the issue of 250,000 fully paid ordinary shares under the Employee Share
Ownership Plan. The Company provided Mark Heaysman with a non-recourse interest-free loan to assist the executive
to subscribe for the Shares. These Shares were issued at a market price of 46 cents. These Shares carry a full
entitlement to dividends and capital returns. There is no ability for the company to offset dividends paid against the
non-recourse loan. These Shares are subject to restriction agreements such that Mr Heaysman is not able to trade
them within 12 months of issuance. After 12 months, 1/3rd of the issued Shares can be traded. Shares become
available for trading at a rate of 1/36th of the issued shares over the remaining 24 months, contingent upon his
continued employment with the Company.
On 8 July 2014, the Group announced that regulatory approval was received from Medsafe, the New Zealand
Medicines and Medical Devices Safety Authority, for the use and sale of ViMove in New Zealand.
On 15 July 2014, the Group announced the US launch following 510K clearance by the US Food and Drug Administration
(FDA) for measuring, recording, and reporting on movement and muscle activity of the lower back/lumbar spine.
On 23 July 2014, the Group announced its first US customer with support from leading pain specialist
Dr Mehul J. Desai. Dr Desai offers ViPerform assessments at the Metro Orthopaedics and Sports Therapy
practice in Maryland.
On 2 September 2014, dorsaVi Ltd issued 200,000 options with an expiry date of 1 September 2019, to newly hired
US sales staff. The strike price per Option is $0.40 which is equal to the closing price of dorsaVi Ltd’s ordinary Shares
on the date of grant (2 September 2014). The Options granted will vest over a three-year period, with one-third of the
Shares subject to vesting one year from 2 September 2014 and the remaining Shares vesting monthly over the
following two years; contingent upon the Option holders’ continued employment with the Group.
Note 27: Segment Information
(a) Description of segments
The consolidated entity’s chief operating decision maker has identified the following reportable segments:
• Segment 1: Australia
• Segment 2: Europe
• Segment 3: United States of America
Management differentiates operating segments based on geographical areas and regulatory environments. The type
of products and services from which each reportable segment derives its revenue is considered the same.
The operating segments have been identified based on internal reports reviewed by the consolidated entity’s chief
operating decision makers in order to allocate resources to the segment and assess its performance.
(b) Segment information
The consolidated entity’s chief operating decision maker’s use segment revenue and segment result to assess the
financial performance of each operating segment. Due to the infancy of segment operations (i.e. both dorsaVi Europe
Ltd & dorsaVi USA Inc. subsidiaries incorporated during the year), the chief operating decision makers only receive
aggregated financial information for assets and liabilities. Accordingly there are no disclosures for the individual
segment’s financial positions at year end.
Amounts for segment information are measured in the same way in the financial statements. They include items
directly attributable to the segment and those that can reasonably be allocated to the segment based on the
operations of the segment. There has been no inter-segment revenue or expenses during the year.
Segment information is reconciled to financial statements and underlying profit disclosure notes as following:
2014
Segment revenue
Total segment revenue
Segment revenue from
external source
Segment result
Total segment result
Segment result from external
source
Items included within
the segment result:
Interest income
Interest expense
Depreciation and amortisation
expense
Income tax benefit
Australia
$000
Europe
$000
762
762
(3,009)
(3,009)
227
(1)
(42)
560
5
5
(395)
(395)
–
–
–
–
USA
$000
–
–
(158)
(158)
–
–
–
–
Total
$000
767
767
(3,562)
(3,562)
227
(1)
(42)
560
There is no prior year comparative segment financial information given the geographical subsidiaries were incorporated
during the 2014 financial year. Refer Subsidiaries of the Group & Related Party Disclosures at Note 24.
(c) Major customers
The total amount of external revenue derived from one major customer where the revenue is greater than 10% of the
consolidated entity’s total revenue was $172,000 (2013: $104,000). Revenue from this customer is included in the
Australian segment.
66
67
Directors’ Declaration
Auditor’s Opinion
The directors declare that the financial statements and notes set out on pages 40 to 67 in accordance with the
Corporations Act 2001:
(a) Comply with Accounting Standards and the Corporations Regulations 2001, and other mandatory professional
reporting requirements;
(b) As stated in Note 1(a) the Consolidated Financial Statements also comply with International Financial Reporting
Standards; and
(c) Give a true and fair view of the financial position of the consolidated entity as at 30 June 2014 and of its
performance for the year ended on that date.
In the directors’ opinion there are reasonable grounds to believe that dorsaVi Ltd will be able to pay its debts as and
when they become due and payable.
This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer
and Chief Financial Officer to the directors in accordance with Sections 295A of the Corporations Act 2001 for the
financial year ending 30 June 2014.
Independent Auditor’s Report to the members of dorsaVi Ltd
We have audited the accompanying financial report of dorsaVi Ltd and controlled entities, which comprises the
consolidated statement of financial position as at 30 June 2014, the consolidated statement of comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory information, and the directors’
declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as
the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and
is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the directors.
Auditor’s Responsibility
Herb Elliott
Director & Chairman
Melbourne
Date: 29 September 2014
Andrew Ronchi
Director & CEO
Melbourne
Date: 29 September 2014
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about
whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
In our opinion:
(a) the financial report of dorsaVi Ltd and controlled entities is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the consolidated financial report also complies with International Financial Reporting Standards as disclosed
in Note 1.
68
69
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
An independent member of Baker Tilly International
dorsaViAnnual Report 2014
Auditor’s Opinion
Shareholder Information
Independent Auditor’s Report to the members of dorsaVi Ltd
Overview
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 28 to 37 of the directors’ report for the year ended
30 June 2014. The directors of the company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of dorsaVi Ltd for the year ended 30 June 2014 complies with section 300A
of the Corporations Act 2001.
F V Russo
Partner
Melbourne
Date: 29 September 2014
PITCHER PARTNERS
Melbourne
Date: 29 September 2014
The Company’s securities are listed for quotation in the form of Ordinary Shares on the Australian Securities Exchange
(ASX) and trade under the symbol “DVL”.
The shareholder information below was applicable as at 2 September 2014.
The Company’s Share capital was as follows:
Type of Security
Ordinary Shares (Shares)
Options
Substantial Holders
Names of Holders
Number of
Securities
121,700,000
1,200,000
Number of
Holders
632
3
Number of
Shares Held
% of
Total Shares
Starfish Technology Fund II, LP, Starfish Ventures, Michael Panaccio* and
Christiana Panaccio and Micana Family Trust
AR BSM Pty Ltd as Trustee for the AR BSM Trust and Andrew James Ronchi
DR BSM Pty Ltd as Trustee for the DR BSM Trust and Daniel Ronchi
80,543,119
8,246,482
8,246,482
66.18
6.78
6.78
* Michael Panaccio and related parties have, for the purposes of the substantial holding provisions of the Corporations Act,
a relevant interest in 19,573,274 (16.08% of the total Shares) that are subject to mandatory and voluntary escrow arrangements
between dorsaVi Ltd and those various registered entered into as a condition of listing on the ASX. This relevant interest arises
because the agreements contain specific restrictions on the disposal of these securities.
Distribution Schedule
Number of Shares
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Unmarketable Parcels
Number of
Holders
11
111
87
344
79
632
Based on the closing market price 2 September 2014, there were 13 shareholders holding less than a marketable
parcel (i.e. a parcel of securities of less than $500).
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
An independent member of Baker Tilly International
70
71
dorsaViAnnual Report 2014
Shareholder Information
Shareholder Information
dorsaVi’s Top 20 Shareholders
Restricted Securities & Escrow Agreements
Set out below is a schedule of the 20 largest holders of each class of securities quoted, including the number and
percentage of each class of securities held by those holders.
Name of registered holder
Starfish Technology Fund II LP
AR BSM PTY LTD
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