dorsaVi
Annual Report 2015

Plain-text annual report

ANNUAL REPORT / / 2015 d o r s a V i A n n u a l R e p o r t 2 0 1 5 dorsaVi has a powerful technology for use in occupational health and safety, clinical and elite sport applications that measures human movement like never before. Our products produce objective, easy to interpret data that can be turned into measurable results for patients, athletes and workers. dorsaVi Ltd // ACN 129 742 409 CONTENTS 3 4 7 8 Chairman’s Review CEO’s Report Financial Report Corporate Governance Statement 17 Directors’ Report 37 Auditor’s Independence Declaration 38 Financial Statements 43 Notes 68 Directors’ Declaration 69 Independent Auditor’s Report 71 Shareholder Information 2 dorsaVi ANNUAL REPORT // 2015CHAIRMAN’S REVIEW ViMove. ViPerform has served an important role in raising awareness and validating our technology, as well as informing our product development pipeline which has resulted in new applications such as running and knee control assessments. The regulatory, economic and clinical environment continues to strengthen globally for our products. The cost of workplace accidents and injuries has become a global issue for employers and insurers and there is growing demand for informed and measurable solutions that will not only have a substantial and positive economic impact, but will ultimately improve workplace safety. We are pleased to have received further clearance from the US FDA to expand the use of our ViMove product in the United States, which enables us to market ViMove in a broader way to clinicians, providing the ability to compare low back movement with the normal population. In regards to reimbursement, we have a clear strategic plan that targets existing reimbursement codes as well as developing a pathway to our own codes. The validation of our products continues to expand. We now name some of the world’s leading elite sports teams, multinational businesses, and most successful brands, who have undertaken their own due diligence in considering our products and pleasingly our retention and conversion of these organisations to larger projects and/ or an annuity-based relationship is proving very successful. to foster this culture within dorsaVi in parallel with having a solid commercial plan that can drive the acceleration and acceptance of our products globally. Our R&D efforts are important to ensure we remain leaders in our field and capitalise on the opportunities in front of us. We are in a fortunate position that R&D is undertaken in-market as our customers seek further applications of our products. I am particularly proud of the Company’s achievements this year as we continue to develop as a global company in the medical grade, wearable technology space. We are evolving our innovative technology, listening to our customers, and adapting through market insights. The future holds many possibilities for dorsaVi and we will continue to remain focused on commercialising our technology globally. The year presented the usual challenges to introducing new and innovative products into new markets which have regulatory and reimbursement thresholds. These challenges have been embraced and progressed by our dedicated staff and progress has been substantial but slower than anticipated. On behalf of the board, I would like to thank CEO Andrew Ronchi, the senior leadership team, and the entire staff. Finally, to our shareholders, we thank you for choosing to be part of dorsaVi’s future. Yours sincerely, We are an organisation where innovation is in our DNA and it is important for us to continue Herb Elliott Chairman 3 Dear Shareholders, On behalf of the Board and Management of dorsaVi, I’m pleased to present the Annual Report for the Financial Year 2014/2015. This is our second year as a publicly listed company and we have seen promising growth across our products and key markets. dorsaVi’s focus has been on the commercialisation and sales of our world-first technology. Today, dorsaVi has hundreds of active customers and products in the market globally. The number of active customers has increased substantially over the last half of the year, which is reflected in our revenue. Our global footprint has expanded with sales teams on the ground in the United Kingdom, United States and Australia and customers in each of these regions. This pipeline is expected to continue to drive accelerated sales in the coming year with the company focused on the priority OHS market through dorsaVi Workplace Solutions and clinical product dorsaVi ANNUAL REPORT // 2015CEO OPERATIONAL REPORT dorsaVi has a dedicated team of sales, marketing and technology experts across Australia, United States and United Kingdom. We are expanding our global footprint with devices across these three key market. The company has made substantial progress as we broaden the footprint of dorsaVi with our products approved for use in Australia, the United Kingdom and Europe, and the United States, and I’m pleased to share some of the highlights with you. ViSafe™ is a wireless sensor technology that tracks and measures how people move in real-time work situations, so companies can assess high risk movements with objective data, not just opinion, and then design fact-based solutions to create a safer work environment. Dr Andrew Ronchi Chief Executive Officer ViMove™ is a wireless sensor technology that objectively measures human movement and turns it into actionable data. Wearable motion and muscle activity sensors record data at 200 frames per second and provide new insights for clinicians and their patients. 4 ViPerform™ provides objective data to accurately assess and prevent risk of injury, guide training programs, and help determine when players are safe to return to play. SOME OF OUR KEY ACHIEVEMENTS OVER THE PAST YEAR INCLUDE: § dorsaVi was granted 510K clearance from the Food and Drug Administration (FDA) for the expanded use of ViMove in the United States, enabling the Company to increase its marketing efforts to physical therapists and healthcare professionals in the US; § The Company made further positive progress towards securing reimbursement for its ViMove devices in the US, with independent analysis determining that existing CPT codes can be used with dorsaVi’s wearable technology; § New data from a randomised controlled clinical trial released by peer reviewed journal, BMC Musculoskeletal Disorders, demonstrated that patients monitored and treated using ViMove had a significant and sustained improvement in pain and functional ability over a 12 month period; § The signing of our first OHS customers outside of Australia – Transport for London (London Underground) in the UK and Caterpillar in the US with both these geographies signing further customers since improving the market need and scalability of the OHS model; § In the UK, YourPhysioPlan (YPP), a national network of more than 100 private member clinics was signed with the intention of establishing ViMove as the standard of care across its clinics. ViMove is currently available in five of the clinics, with plans to expand the program. DORSAVI WORKPLACE SOLUTIONS dorsaVi Workplace Solutions is the occupational health and safety division, which incorporates the ViSafe product and a compliance arm. ViSafe enables employers to assess risk of injury to its workforce as well as test the effectiveness of proposed changes to workplace design, equipment or methods based on objective evidence. It is one of the only technologies in the world that can accurately measure movement and provide truly objective data to inform workplace decisions. With the ageing population and increasing compensation claims for serious work-related injuries or illnesses, companies are looking for evidence based solutions. Recent figures have revealed that 132,570 workers compensation claims for serious injury were made in Australia in 2014. With increasing pressures on workplaces and insurers to reduce the spiraling costs of workplace injury, dorsaVi Workplace Solutions is ideally placed with recent projects resulting in >80% reduction in injuries as well as showing an increase in productivity. dorsaVi Workplace Solutions is currently the strongest performing division, with customers in each of our three priority geographies – UK, US and Australia. These companies represent both repeat and new businesses in industries as diverse as gaming, transport, construction, aged care, logistics and distribution. These customers are making decisions based on evidence and facts, rather than opinion. The UK has seen a rapid uptake of projects since launching in March and signing the first major OHS contract, Transport for London, which operates the London Underground. New contracts have also been signed with construction company Vinci, Skanska and Napp Pharmaceutical Group to address lower back injury and risk and to also improve productivity. In the US market, dorsaVi signed construction and mining equipment manufacturer, Caterpillar Inc. Caterpillar’s seal metal casting facility in Toccoa, Georgia, are using dorsaVi’s OHS wearable sensor technology, ViSafe, to evaluate and define the best practice for workers using heavy material handling equipment. The first emergency service group Anaheim Police Department, (Los Angeles) was also signed to decide on whether to adopt vests or belts for officer equipment. In the Australian market, the company has strengthened its relationship with the signing § Sporting clubs continue to adopt ViPeform technology with new signups across codes globally including recent NBA Champions, the Golden State Warriors and Super Bowl Champions (NFL), the New England Patriots; § There are currently nearly 170 active customers globally with new or repeat customers. Post reporting period § dorsaVi signed follow-on annuity based contracts with Crown Resorts and Sodexo. § The company has raised $4 million in a private placement with an additional $3 million underwritten in a 1 for 10 Rights Issue. § The company has entered into a three year exclusive agreement with YPP. of a number of repeat and new customers including BP Australia, Allianz, Toll, Crown Casino, Monash Health, Coles and Sodexo. Other new contracts include: Visy, Peninsula Health, Sano Health, Bonacci, Sydney Opera House, Kennard’s Hire, Silverchain, and Martin Brower. The business model for OHS has been validated with initial smaller projects providing the business case and evidence to inform a larger solution-based projects like Crown Resorts and Sodexo contracts. dorsaVi continues to grow its customer base through direct customer interaction. In addition, the company is working closely with insurers and rehabilitation providers. dorsaVi’s ability to assist large, manual handling workforces to reduce and prevent workplace injury through proactive workplace solutions is highly attractive to senior management focussing on decreasing the costs of workplace injury, decreasing premiums and improving productivity. Equally, the ability for dorsaVi’s products to assist in returning injured workers to the workforce is clearly a benefit for both insurers and the rehabilitation providers they partner with, as well as the employee. 5 dorsaVi ANNUAL REPORT // 2015CEO OPERATIONAL REPORT continued CLINICAL SOLUTIONS ViMove continues to represent the largest long-term opportunity for dorsaVi. There are a number of drivers to our success with ViMove: 1. Regulatory: ViMove is cleared for sale in Australia, Europe and the United States. The FDA cleared ViMove for the expanded use of ViMove, which allows the device to display lower back and pelvic range of motion from healthy patients. Clinicians and patients will now be able to compare how their movements are tracking against a “normal” population based on their age group and help guide therapy decisions and rehabilitation accordingly. 2. Reimbursement: dorsaVi has a program to achieve its own reimbursement code in the United States. As a precursor to this, the company’s reimbursement consultants have identified existing codes, which are being used by clinicians. 3. Large clinical networks: dorsaVi signed its first major clinical network – YourPhysioPlan in the UK. The pilot program involves an initial five flagship clinics with the intention of introducing ViMove into more than 100 clinics nationally. YouPhysioPlan is in a growth phase with plans to establish more than 300 clinics. This model is one that is being pursued in other markets. 4. Standard of care: The demand for objective validation of clinical opinion is growing, particularly with the new generation of clinicians. dorsaVi is working with a number of Australian universities who are now combining ViMove as part of their training and university studies. Familiarity and experience using ViMove is expected to inform its use as the standard of care for the future generation of clinicians. 5. Clinical validation: The results of a clinical trial using dorsaVi’s ViMove technology was published in the independent peer reviewed journal BMCMusculoskeletal and reported improvement rates at 12 months were above the clinical threshold of more than 30% with the sensors showing a 35%-47% improvement rate across all primary outcome measures. This was an important milestone for dorsaVi with the results being widely shared with clinicians, insurers and large employer’s who, as part of their consideration of products, value high quality, independent clinical validation. SPORTING SOLUTIONS Some of the world’s biggest and most influential sporting teams are using ViPerform from Manchester United (EPL) to Patriots (NFL), Golden State Warriors (NBA) to Collingwood Football Club (AFL). We are continuing to expand our portfolio of professional sports clubs using ViPerform to inform injury recovery programs and develop changes to training regimes to avoid fatigue and assess injury. Sporting clubs are recognising the importance of incorporating advanced technology to measure and monitor player movement and assessing risk of injury is increasingly seen as key considerations by professional teams to optimise athletic performance. ViPerform is now being used across multiple codes overseas including NBA, NRL, NFL and EPL. ViPerform and the use of our technology with elite sporting clubs has been an important part of our strategy in terms of raising awareness and public relations, as well as informing research and development. In conclusion, the year ahead is focussed clearly on executing on our sales and marketing program and to support rapid product adoption across all our products and markets. We remain confident that our revenue will continue to show strong growth quarter on quarter as we expand our customer base and convert higher value contracts. 6 FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2015 8 Corporate Governance Statement 17 Directors’ Report 37 Auditor’s Independence Declaration 38    Consolidated Statement of Comprehensive Income 39    Consolidated Statement of Financial Position 40    Consolidated Statement of Changes in Equity 41 Consolidated Statement of Cash Flows 43 Notes to the Financial Statements 68 Directors’ Declaration 69 Independent Auditor’s Report 71 Shareholder Information 7 dorsaVi ANNUAL REPORT // 2015FINANCIAL REPORTdorsaVi Ltd and Controlled Entities ABN: 15 129 742 409CORPORATE GOVERNANCE STATEMENT The Board of directors of the Company is responsible for the governance of the Company and its controlled entities (“the Group”). 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 over the 2015 financial year 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 (3rd Edition)’ (‘3rd Edition Recommendations’) and that where it does not comply, it is due to 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 in their early stages of development and growth. 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 The Company provides below a review of its corporate governance framework using the same numbering as adopted for the principles set out in the 3rd Edition Recommendations. PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT Recommendation 1.1: Establish and disclose the respective roles and responsibilities of its board and management and how their performance is monitored and evaluated 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 Chief Executive Officer 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 Chief Executive Officer; §§ monitoring the performance of the Chief Executive Officer; §§ where appropriate, ratifying senior executive appointments, organisational changes and senior management remuneration policies and practices; §§ approving succession plans for management; §§ monitoring senior executives’ performance and implementation of strategy, and ensuring appropriate resources 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. 8 CORPORATE GOVERNANCE STATEMENTThe functions reserved for the Board include: §§ appointment of a Chair; §§ appointment and removal of the Chief Executive Officer; §§ appointment of directors to fill a vacancy or as 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. Responsibility for day-to-day management and administration of the Company is delegated by the board to the Chief Executive Officer and the executive team. The Chief Executive Officer manages the Company in accordance with the strategy, plans and policies approved by the board. The responsibilities of the Chief Executive Officer include: §§ developing and recommending to the board strategies, business plans and annual budgets of the Company; §§ implementing the strategies, business plans and budgets adopted by the board; §§ providing effective leadership, direction and supervision of the executive team to achieve the strategies, business plans and budgets adopted by the board; §§ ensuring compliance with applicable laws and regulations; §§ ensuring the board is given sufficient information to enable it to perform its functions, set strategies and monitor performance; and §§ acting within authority delegated by the board. A copy of the Company’s Board Charter is available on the Company’s website at www.dorsavi.com Recommendation 1.2: A listed entity should (a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and (b) provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director The Company will undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director. The Company will provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. Recommendation 1.3: A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. The Company has formal letters of appointment for each of its directors and senior executives, setting out the key terms and conditions of the appointment. Recommendation 1.4: The Company Secretary should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board The Company Secretary is accountable to the Board, through the Chairman, on all matters relating to governance and the effective operation of the Board. 9 dorsaVi ANNUAL REPORT // 2015CORPORATE GOVERNANCE STATEMENTRecommendation 1.5: The Company should: (a) have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the Company’s progress in achieving them; (b) disclose that policy or a summary of it; and (c) disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board in accordance with the Company’s diversity policy and its progress towards achieving them, and either: 1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes); or 2) as a “relevant employer” under the Workplace Gender Equality Act, the Company’s most recent “Gender Equality Indicators”, as defined in and published under that Act. 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, has: §§ established appropriate and measurable objectives for achieving gender diversity; and §§ annually review, develop and assess both the measurable objectives for achieving gender diversity and the Group’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. There were no women on the Board during the 2015 financial year. The proportion of women in the senior executive team of the Company as at 30 June 2015 was 27%. The Company is not a “relevant employer” under the Workplace Gender Equality Act. A copy of the Diversity Policy is available on the Company’s website at www.dorsavi.com. Recommendation 1.6: Disclose in the Corporate Governance section of its annual report or on its website: (a) its process for periodically evaluating the performance the board, its committees and individual directors; and (b) in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. A process has been established to review the Board’s performance, conduct at meetings and the quality of board papers at each meeting of the Board. The Board during the 2015 financial year performed an assessment of its skills, experience and composition and considered is current composition to be appropriate given the strategic direction of the Company and its stage of development. There was no formal performance review conducted of the Board, its committees and individual directors in the 2015 financial year as the Company only listed on the ASX in December 2013 and the Board only came together in its current form in late October 2013. Recommendation 1.7: Disclose in the Corporate Governance section of its annual report or on its website: (a) its process for periodically evaluating the performance of its senior executives; and (b) in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. 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 10 CORPORATE GOVERNANCE STATEMENT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 Board and Nomination and Remuneration Committee ensure that an evaluation of the senior management team is undertaken at least annually. The Nomination and Remuneration Committee annually reviews the performance of the CEO and recommends to the Board the key performance targets of the CEO. In addition, the Board has established a process whereby it reviews senior executive performance at each meeting of the Board. All senior executives of the company were subject to an annual performance review in the 2015 financial year. 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. A copy of the Nomination and Remuneration Committee Charter is available on the Company’s website at www.dorsavi.com The Company did not comply with all aspects of Recommendations 1.5 and 1.6 but it did comply with Recommendations 1.1, 1.2, 1.3, 1.4 and 1.7 for the 30 June 2015 financial year. PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE Recommendation 2.1: The Board should establish a nomination committee which: (a) has at least three members, a majority of whom are independent directors; and (b) is chaired by an independent director, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the members of the nomination committee; and (b) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings. The Board has established a Nomination and Remuneration Committee., which consists of three non-executive directors: Mr Herb Elliott, Dr Michael Panaccio and Mr Greg Tweedly. Mr Elliott is Chairman of the Committee and is an independent director. The Nomination and Remuneration Committee is comprised of a majority of independent directors. The Nomination and Remuneration Committee’s authority, responsibilities, composition and membership requirements are documented in the Nomination and Remuneration Committee charter approved by Board, which is available on the Company’s website at www.dorsavi.com Details of the relevant qualifications and experience of the members of the committee and their attendance at meetings during the reporting period are disclosed in the Annual Report. Recommendation 2.2: The Company should disclose in the Corporate Governance section of its annual report or on its website a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. The Board during the 2015 financial year performed an assessment of its skills, experience and composition and considered its current composition to be appropriate given the strategic direction of the Company and its stage of development. The Board approved during the year a Board Skills Matrix which reflects the company’s key strategic goals and the mix of skills, experience and expertise that the Board currently has and is looking to achieve in its membership. The Board Skills Matrix reflects that the Board has and is looking to achieve a mix of skills, experience and expertise in a range of areas including: strategic planning, marketing and sales, medical technology, government regulation & policy, occupational health and safety, physiotherapy, reimbursement, health insurance and international business management. 11 dorsaVi ANNUAL REPORT // 2015CORPORATE GOVERNANCE STATEMENTRecommendation 2.3: The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the names of the directors considered by the board to be independent directors; (b) if a director has an interest, position, association or relationship of the type listed below but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) the length of service of each director. The Company has assessed the independence of its directors against the requirements for independence which are set out in Principle 2 of the ASX Corporate Governance Principles and Recommendations. 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. Accordingly, the majority of the Company’s Board is comprised of independent directors. Dr Andrew Ronchi and Dr Michael Panaccio are not independent directors. 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 current composition of the Board of directors and length of tenure of each member is as follows: Name Position Date appointed Independent Herbert Elliott Chairman (non-executive) Ashraf Attia Director (non-executive) Michael Panaccio Director (non-executive) Gregory Tweedly Director (non-executive) Andrew Ronchi Executive Director Oct 2013 July 2008 May 2008 Oct 2013 Feb 2008 YES YES NO YES NO 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 2.4: A majority of the board should be independent directors. A majority of the Board were independent directors during the 2015 financial year. Recommendation 2.5: The chair should be an independent director and, in particular, should not be the same person as the CEO. Mr Herb Elliott is an independent director. Dr Andrew Ronchi is the CEO. The roles of Chairman and CEO are exercised by two separate individuals and the Company’s Chairman is an independent director. Recommendation 2.6: The Company should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. The Company has an induction program for new directors which provides a summary of the company and its products and activities to assist each new director to become effective in their role. The program includes one-on-one meetings with the CEO and senior members of management. In addition the Board receives ongoing briefings and development sessions from senior management to continuously build non-executive directors’ knowledge and to ensure that the Board remains up to date with key internal and external developments. The Company did not comply with all aspects of Recommendation 2.2 but did comply with Recommendations 2.1, 2.3, 2.4, 2.5 and 2.6 for the 2015 financial year. 12 CORPORATE GOVERNANCE STATEMENTPRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY Recommendation 3.1: The Company should disclose in the Corporate Governance section of its annual report or on its website its codes of conduct for its directors, senior executives and employees. 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 The Company complied with Recommendation 3.1 during the 2015 financial year. PRINCIPLE 4: SAFEGUARD INTEGRITY IN CORPORATE REPORTING Recommendation 4.1: The board should establish an audit committee which: (a) has at least three members, all of whom are non-executive independent directors; and (b) is chaired by an independent director who is not the chair of the board, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the relevant qualifications and experience of the members of the committee; and (b) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings. The Company has established an Audit and Risk Committee. 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. The Audit and Risk Committee’s authority, responsibilities, composition and membership requirements are documented in the Audit and Risk Committee charter approved by Board, which is available on the Company’s website at www.dorsavi.com. Details of the relevant qualifications and experience of the members of the committee and their attendance at meetings during the reporting period are disclosed in the Annual Report. Recommendation 4.2: The board should, before it approves the financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the Group have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Group, and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. The Chief Executive Officer 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. 13 dorsaVi ANNUAL REPORT // 2015CORPORATE GOVERNANCE STATEMENTRecommendation 4.3: The Company should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. The external auditor attends the Company’s Annual General Meeting and is available to answer shareholder questions regarding aspects of the external and their report. The Company complied with Recommendations 4.1 to 4.3 during the 2015 financial year. PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE Recommendation 5.1: The Company should include a copy of its continuous disclosure policy, or a summary of it, on its website. 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 The Company complied with Recommendation 5.1 during the 2015 financial year. PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITY HOLDERS Recommendation 6.1: The Company should provide information about itself and its governance to investors via its website. The Board is responsible for the governance of the Company. Key aspects of the Company’s corporate governance framework and practices are disclosed on the Company’s website www.dorsavi.com. Recommendation 6.2: The Company should design and implement an investor relations program to facilitate effective two-way communication with investors. The Company engages an external investor relations consultant, to facilitate engagement with shareholders and queries which arise from time to time from shareholders. The Company at the AGM responds to all enquiries received from shareholders. The Company through its investor relations consultant, Continuous Disclosure Policy, market updates, financial reporting and website, provides investors with the opportunity to have an understanding of the Company’s business, governance and financial performance. Recommendation 6.3: The Company should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. 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 2015 meeting of shareholders. A copy of the Company’s Shareholder Communications Policy is available on the Company’s website at www.dorsavi.com 14 CORPORATE GOVERNANCE STATEMENTRecommendation 6.4: The Company should give shareholders the option to receive communications from, and send communications to, the entity and its security registry electronically. Shareholders are able to contact the Company or its share registrar, Computershare, by mail, telephone, email or online via the Computershare Investor Centre portal. Shareholders may choose to receive communication from, and send communications to, the Company and Computershare electronically. The Company complied with Recommendations 6.1 to 6.4 for the 30 June 2015 financial year. PRINCIPLE 7: RECOGNISE AND MANAGE RISK Recommendation 7.1: The Company should have a risk committee which: (a) has at least three members, a majority of whom are independent directors; and (b) is chaired by an independent director, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the members of the committee; (b) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings. dorsaVi has established an Audit and Risk Committee. The Committee has three members, the majority of whom are independent directors. The Chairman of the Committee, Mr Greg Tweedly is an independent director. The Audit and Risk Committee’s authority, responsibilities, composition and membership requirements are documented in the Audit and Risk Committee charter approved by Board, which is available on the Company’s website at www.dorsavi.com Details of the relevant qualifications and experience of the members of the committee and their attendance at meetings during the reporting period are disclosed in the Annual Report. Recommendation 7.2: The Company should disclose in the Corporate Governance section of its annual report or on its website whether it has reviewed its risk management framework in the last 12 months to satisfy itself that it continues to be sound. 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, with the oversight of the Audit and Risk Committee, has established and implemented the risk management system for assessing, monitoring and managing the Company’s material risks. The board monitored the Company’s risk management framework and risk profile during the year. Recommendation 7.3: The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) if it has an internal audit function, how the function is structured and what role it performs; or (b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. The Company does not have an internal audit function. 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. The Audit and Risk Committee with oversight from the Board reviews and assesses the Company’s processes for evaluating and continually improving the effectiveness of its risk management and internal control processes. 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 15 dorsaVi ANNUAL REPORT // 2015CORPORATE GOVERNANCE STATEMENTRecommendation 7.4: The Company should disclose in the Corporate Governance section of its annual report or on its website whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. The Board has overseen the development by management of a comprehensive process to identify and manage key business risks, including economic risk. The Company has adopted policies and processes to assist the Company to identify, evaluate and mitigate technological, economic, operational and other risks. The Company is not subject to material environmental and social sustainability risks. The Company complied with Recommendations 7.1 to 7.4 for the 2015 financial year. PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY Recommendation 8.1: The Company needs to have a remuneration committee which: (a) has at least three members, a majority of whom are independent directors; and (b) is chaired by an independent director, and should disclose the charter of the committee on its website. The Company should disclose in the Corporate Governance section of its annual report or on its website: (a) the members of the committee; and (b) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings. 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 is an independent director. The Nomination and Remuneration Committee is comprised of a majority of independent directors. The Nomination and Remuneration Committee’s authority, responsibilities, composition and membership requirements are documented in the Nomination and Remuneration Committee charter approved by the Board, which is available on the Company’s website at www.dorsavi.com Details of the relevant qualifications and experience of the members of the committee and their attendance at meetings during the reporting period are disclosed in the Annual Report. Recommendation 8.2: The Company should disclose in the Corporate Governance section of its annual report or on its website its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other 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 8.3: The Company has an equity-based remuneration scheme and should disclose in the Corporate Governance section of its annual report or on its website its policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme. The Company’s Share Trading Policy prohibits participants in the Company’s share or option plans from using derivatives or engaging in any conduct that seeks to have the effect of providing greater benefit than would otherwise have been realised by the participant in respect of unvested Company securities. Please refer to the Policy for further details. A copy of the Policy is available on the Company’s website at www.dorsavi.com The Company complied with Recommendations 8.1, 8.2 and 8.3 for the 2015 financial year. 16 CORPORATE GOVERNANCE STATEMENTDIRECTORS’ REPORT The directors present their report together with the financial report of the consolidated entity consisting of dorsaVi Ltd (“the Company” or dorsaVi”) and the entities it controlled, for the financial year ended 30 June 2015 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: Mr Panaccio 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: Mr 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, sale 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 $8,036,161 (2014: $3,562,023). 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. The Group consists of four 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 §§ Australian Workplace Compliance Pty Ltd, a wholly owned subsidiary purchased on 3 July 2014 and domiciled in Australia 17 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORTRevenue for the 2015 financial year was $1,850,416 (2014: $767,418) predominantly driven by 157% growth in sales revenue to $1,358,218 (2014: $529,381). The loss from continuing operations after income tax for the 2015 financial year was $8,036,161 (2014: $3,562,023). dorsaVi Ltd has invested heavily in both its people and its infrastructure assets in moving its operations from an Australian centric Research and Development environment to a global Sales and Marketing one. While sales revenue grew by 157% year on year, the employee benefits expense grew by 115%. 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. Furthermore, dorsaVi Ltd’s product development and marketing teams were also strengthened by a number of significant hires in both departments. During the 2015 financial year dorsaVi Ltd continued 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 most 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 produced a like for like decrease in revenue over the first 12 months of conversion to the license revenue period from March 2014. The significant long-term benefit is that it produces an ongoing annuity revenue stream. Under certain circumstances dorsaVi Ltd continued to make outright sales to universities and hospitals where there was a greater need for the customer to use funding for the once off purchase. By 30 June 2015 the Group had 170 devices in the market globally. Of these, 55 were in the market under outright sale and 115 were in the market via license. This 170 represented a 68% increase over the 101 in the market at 30 June 2014. Employee benefits expense for the 2015 financial year was $5,029,132 (2014: $2,334,386), which represented a 115% increase year on year. The employee headcount at 30 June 2015 was 33 (2014: 23), which represented a 44% increase year on year. Employee benefits expense represented 48% of the total expenses for the Group for the 2015 financial year (2014: 48%). Advertising & Conference expenses for the 2015 financial year were $1,013,938 (2014: $343,508), which represented a 195% increase year on year. Breaking these out, Advertising expenses for the 2015 financial year were $682,492 (2014: $208,254), which represented a 228% increase year on year. Significant expenses in the 2nd half of the year were fees incurred to corporately rebrand and product line rebrand at the same time as building and launching a new website. Conference expenses for the 2015 financial year were $331,446 (2014: $135,254), which represented a 145% increase year on year. Significant expenses were incurred in attending new conferences in the United States to promote and sell the ViPerform Product in the first half of the year and launch ViSafe in Europe and the United States in the second half. Regulatory expenses for the 2015 financial year were $506,052 (2014: $71,360). Significant expenses incurred during the year include FDA clearance for increase use of the ViMove and ViPerform products in the US market. Travel expenses for the 2015 financial year were $932,546 (2014: $284,449). Significant expenses were incurred during the year to attend the previously mentioned conferences and grow and convert the new business pipeline globally. The parent, dorsaVi Ltd, and its wholly owned subsidiaries, dorsaVi Europe Ltd, dorsaVi USA, Inc and Australian Workplace Compliance Pty Ltd, are the entities that generate revenue for the Group. The four 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 capital expenditure 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 2015 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 sale of devices was up 38% in the 2015 financial year over the 2014 financial year. In Europe over the same period revenue from devices was up $114,821 to $117,576 (2014: $2,755). In the United States revenue from licensing and sale of devices was up $46,148 (2014: $NIL). A major milestone for the Group’s US operations was achieved in July 2014 when the ViMove received 510(k) 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. In May 2015, dorsaVi received expanded labelling for its 510(k) cleared ViMove product that is used to accurately assess movement and muscle activity in the low back and pelvis, manage treatment options, and guide recovery. In June 2015, dorsaVi announced that an independent clinical research and reimbursement institute has determined that existing Current Procedural Terminology (CPT) 18 DIRECTORS’ REPORTcodes can be used with dorsaVi’s industry leading wearable sensor technology, ViMove and ViPerform in the US. These CPT codes are numeric codes that enable healthcare providers to describe or report work performed under private and public insurance programs. The Regulatory & Clinical Research Institute (RCRI) in Minneapolis, Minnesota reviewed applicability of CPT code sets to dorsaVi’s ViMove and ViPerform products. Based on RCRI research, CPT code 97750, which is used to report a physical performance test or measurement, aligns with the activities performed when dorsaVi sensors and software are used to measure movement. The US Medicare national average clinician payment is US$33.42 for each fifteen-minute block of services and a corresponding written report. Multiple units of the code can be billed in a single patient encounter provided documentation supports time spent directly with the patient. Australian revenue for OH&S Consultancy utilising ViSafe technology was up 171% in the 2015 financial year over the 2014 financial year. The growth in this market was due to dorsaVi acquisition of the OH&S consultancy firm Australian Workplace Compliance Pty Ltd which increased the Company’s service offering and client base in the OH&S market. During the 2015 financial year, dorsaVi introduced OH&S Consultancy Services into the US and European markets. The revenue generated in these two markets was $55,373 in 2015 (2014:NIL). The directors expect revenue in Australia, Europe and the US to continue to grow year on year. Factors impacting and driving this growth include; the effectiveness of the global marketing plan; further sales generation in the OH&S market in the Europe and US markets; increased FDA clearances in the US market leading to further product use; shortening of the sales lead times; and the adoption of new software development. The material business risks that are likely to have an effect on the financial prospects of the Group include: §§ 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 the 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 the 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, slower or less successful than planned, dorsaVi may need to raise capital in the future. In August 2015, dorsaVi Ltd raised additional capital. Please refer to after balance date events. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS 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. Issued capital increased to $23,855,099 at 30 June 2015 (2014: $23,835,099). Total equity decreased to $6,616,716 at 30 June 2015 (2014: $14,619,662). Total liabilities increased to $1,400,614 at 30 June 2015 (2014: $718,957). AFTER BALANCE DATE EVENTS On 9 July 2015, dorsaVi announced the signing of two leading National Football League (NFL) teams for the use of its ViPerform technology, the New Orleans Saints and Cleveland Browns. These two NFL teams have been incorporating the technology in team training protocols during the off-season, and all will now utilise the sensor technology during the 2015-16 season to assess and monitor players and guide recovery of their athletes. On 15 July 2015, dorsaVi Ltd announced Mr Jerome Whelan, Chief Financial Officer, tendered his resignation from the Company. The Company has commenced an executive search for a suitable replacement. On 17 August 2015, dorsaVi announced the signing of its fourth contract with Crown Resorts. The contract represents dorsaVi’s largest commercial project to date and will be implemented over 18 months with an additional annual annuity in the form of a license fee for ViSafe. On 18 August 2015, dorsaVi announced the issue of 500,000 shares at $0.26 cents. 19 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORTOn 18 August 2015, dorsaVi announced that reigning US football Super Bowl Champions the New England Patriots and two elite college athletic programs have all signed to use ViPerform wearable sensors. The Ohio State University Buckeyes are the first NCAA Division I team to adopt ViPerform. dorsaVi technology is primarily being used by the Buckeyes with their women’s soccer team. Marquette University in Milwaukee, Wisconsin is the first NCAA Division I men’s basketball team to adopt the technology. They follow in the footsteps of three NBA teams who are integrating ViPerform into training plans:  the Houston Rockets, the New York Knicks, and the 2015 NBA champions the Golden State Warriors. On 20 August 2015, dorsaVi announced the signing of its third contract with Sodexo, one of the world’s largest services and labour hire companies. The company has entered a 12 month contract to undertake assessments of their employees working in remote areas of Australia. Sodexo will lease dorsaVi’s ViSafe technology to undertake its own testing and assessments of workers involved in manual handling activities and tasks in remote sites in Australia. dorsaVi will be responsible for the analysis of data, producing insights and action points to allow Sodexo to make informed decisions. On 21 August 2015, dorsaVi Ltd announced the signing of its second contract with international architecture firm, DesignInc, to assess and maintain its integrated management system. The three year deal will see dorsaVi work across the review and maintenance of the Integrated Management System. On 26 August 2015, dorsaVi Ltd announced that it has raised a total of $4,000,000 by way of a placement of approximately 15,400,000 ordinary shares at $0.26 per share with various institutional and sophisticated investors. In addition on 17 September 2015, the Company successfully completed a fully underwritten 1 for 10 non-renounceable pro rata rights offer of ordinary shares raising approximately $3,200,000 from its Australian and New Zealand shareholders. The price of the Shares under the Offer was $0.26 each (i.e. the same price per share as offered under the Placement). On 29 September 2015, dorsaVi Ltd announced the signing of a three year agreement with YourPhysioPlan to sell ViMove in the UK and Ireland. The agreement provides exclusive marketing rights for ViMove for private physiotherapy, osteopathy and chiropractic markets in the UK and Ireland. dorsaVi will maintain full direct sales rights in the UK and Ireland for ViPerform and ViSafe to elite sports and OH&S customers respectively. LIKELY DEVELOPMENTS The following likely developments in the business of the Group are expected to influence its financial results in the near term: As new license agreements for ViMove and ViPerform are signed it is expected that the resulting revenue from adhesives associated with use of the devices will also increase. 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, Europe and US markets from its OH&S consultancy revenue stream. 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. 20 DIRECTORS’ REPORTSHARE OPTIONS Options over unissued ordinary shares granted by dorsaVi Ltd during or since the financial year end to executives were as follows: Executive Dave Wildermuth Options granted during the year 900,000 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. SHARES UNDER OPTION Unissued ordinary shares of dorsaVi Ltd under option at the date of this report are as follows: Date options granted 8 April 2014 2 September 2014 31 October 2014 Number of unissued ordinary shares  under option 1,000,000 100,000 900,000 Issue price of shares $0.51 $0.40 $0.40 Expiry date  of the options 7 April 2019 1 September 2019 30 October 2019 No option holder has any right under the options to participate in any other share issue of the company. 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 Herbert James Elliott, AC MBE, MA (Cantab) – Non-executive Chairman 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 has been a chairman of Telstra Foundation Limited (March 2002 to December 2010).  Herb is a former director of Ansell Limited (February 2001 to October 2006). Herb is a former director of Fortescue Metals Group Limited (ASX: FMG). He was a director of Fortescue from October 2003 to November 2014 and served as company chairman from 2007 to 2011. He 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. 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 2015. 21 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORT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 2015.  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. 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 2015. Andrew Ronchi, B.App.Sci (Physio), PhD (RMIT Eng), GAICD – Chief Executive Officer, Director 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. No other directorships of listed companies were held during the three years to 30 June 2015. 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. 22 DIRECTORS’ REPORTDIRECTORS’ MEETINGS 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: Mr Herb Elliott Mr Ashraf Attia Dr Michael Panaccio Mr Greg Tweedly Dr Andrew Ronchi Mr Herb Elliott Dr Michael Panaccio Mr Greg Tweedly Board of Directors Audit & Risk Committee Eligible  to attend Attended Eligible  to attend Attended 12 12 12 12 12 11 12 12 12 12 – 3 3 3 – – 3 3 3 – Nomination & Remuneration Committee Eligible  to attend Attended 2 2 2 2 2 2 DIRECTORS’ INTEREST IN SHARES OR OPTIONS AS AT 30 JUNE 2015 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 The directors have no interests in options over shares in dorsaVi Ltd as at the date of this report. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Group has insured its Directors, Secretary and executive officers for the financial year ended 30 June 2015. 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. 23 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORT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. (a) Amounts paid and payable to Pitcher Partners Melbourne for non-audit services: Investigating Accountants Report Taxation & Other Compliance Services Total remuneration for non-audit services 2015 $ 2014 $ – 36,306 36,306 38,500 36,453 74,953 24 DIRECTORS’ REPORTREMUNERATION REPORT (AUDITED) The Directors present the consolidated entity’s 2015 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 Non-Executive Directors Period of Responsibility Position Herb Elliott Ashraf Attia Michael Panaccio Greg Tweedly Executive Director Full Year Full Year Full Year Full Year Chairman, Non-Executive Director Independent, Non-Executive Director Non-Executive Director Independent, Non-Executive Director Andrew Ronchi Full Year Chief Executive Officer/Director Executives Daniel Ronchi* 1 July 2014 to 10 March 2015 Chief Technical Officer Jerome Whelan Full Year Chief Financial Officer Jarrod Sculli Sarah Riseley* Zoë Whyatt Resigned 3 July 2014 National Sales Manager, Australia 1 July 2014 to 10 March 2015 Marketing Director Full Year Chief Operating Officer, Europe Meagan Blackburn* 1 July 2014 to 10 March 2015 Global Clinical & Sports Innovation John Kowalczyk Full Year President of dorsaVi USA Mark Heaysman Appointed 1 July 2014 Head of Occupational Health & Safety David Wildermuth Appointed 3 November 2014 Chief Marketing Officer Matthew May Appointed 10 November 2014 Sales Manager, Australia * Effective 10 March 2015, the following changes were made to the dorsaVi executive structure: • Dan Ronchi (CTO) reports directly to Dave Wildermuth (CMO) • Meagan Blackburn (CIO) reports directly to Dave Wildermuth (CMO) • Sarah Riseley (Business Development) reports directly to Matthew May (Sales Manager, AU) As such the pro rata compensation costs of the period from 10 March 2015 to 30 June 2015 have been removed from the annual costs. The following changes occurred after 30 June 2015 to the date the financial report was authorised for issue: Jerome Whelan resigned on 14 July 2015 effective 12 October 2015. B. Remuneration Policies Nomination & Remuneration Committee The Nomination & Remuneration Committee of the Board of Directors is responsible for making recommendations to the Board on the remuneration arrangements for each Non-Executive Director (NED), Executive Director/Chief Executive Officer (CEO) and each Executive reporting to the CEO. The current members of the Nomination & Remuneration Committee are Herb Elliott, Michael Panaccio, Ashraf Attia and Greg Tweedly. The Nomination & Remuneration Committee 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. 25 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORTThe primary responsibility of the Nomination & Remuneration Committee is to review and recommend to the Board: §§ Executive remuneration and incentive policies and practices; §§ 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. Remuneration Strategy The remuneration strategy of dorsaVi Ltd 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; §§ Provide strong linkage between individual and Company performance and rewards; §§ 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, organizing 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. Non-Executive Director Remuneration Structure 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: $75,092 plus superannuation; §§ Other Directors: $50,000 plus superannuation; and §§ Further fees for acting as chairman of a committee: $5,000 plus superannuation 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 2015 is detailed in Table 1 of this section of the 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. 26 DIRECTORS’ REPORT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 incentive (LTI) Fixed Remuneration Objective Fixed remuneration is reviewed annually by the Board/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 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 determine 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 annual STI payments available for executives across the Company are subject to the approval of the Nomination & Remuneration Committee. 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 Nomination & Remuneration Committee applies its discretion to allow vesting at or post cessation of employment in appropriate circumstances. Options were granted under the ESOP plan during the 2015 Financial Year to David Wildermuth. See Table 6 on page 33. Shares in accordance with the ESOP plan during the 2015 Financial Year were also issued to Mark Heaysman (250,000 at an average market price of 46 cents), Matthew May (20,000 at an average market price of 40 cents) and Dan Ronchi (50,000 at an average market price of 37.22 cents). See Table 7 on page 34. 27 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORTEmployment Agreements 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 following key management personnel have notice periods other than one month: Name Notice Period John Kowalczyk 12 months Andrew Ronchi Jerome Whelan Matthew May Meagan Blackburn 6 months 3 months 3 months 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 David Wildermuth 4 weeks CEO Remuneration Under Andrew Ronchi’s employment agreement his fixed remuneration is $250,000 per annum excluding superannuation. 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 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%) was to be granted to Andrew Ronchi if the Company’s revenue (excluding any acquired revenue) equals or exceeds $5 million in the 2014 calendar year. No options were granted; §§ the remaining two thirds (or 1% of the 1.5% during the current year) 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. No options were granted during the current year; and §§ provided Andrew Ronchi remains CEO for the relevant year in which those revenue targets are met. 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. 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 USD200,000 per annum. He is eligible to receive an annual bonus of up to USD100,000, 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. The Company agreed that his bonus for his first year of employment would not be less than USD50,000. This initial bonus of USD50,000 was paid to John Kowalczyk before the end of the 2015 Financial Year. Options were granted under the ESOP plan during the 2014 Financial Year to 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 vests 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, 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, John Kowalczyk executed an individual stock option agreement. 28 DIRECTORS’ REPORTC. Details of key management personnel remuneration (a) Non-Executive Directors’ remuneration: Table 1 Short-Term Post employment Share- based pay- ments Total perform- ance related Options as % of total TOTAL Long- term Salary  fees $ Cash bonus $ Non- monetary $ Other $ Super- annu- ation $ Retire- ment benefits $ Termin- ation benefits $ Incentive plans $ Options $ $ 2015 Non-Executive Directors Herb Elliott Ashraf Attia 75,092 49,992 Michael Panaccio (i) 54,625 Greg Tweedly (ii) 60,087 239,796 – – – – – – – – – – – – – – – 5,945 – – – 5,945 – – – – – – – – – – – – – – – – – – – – 81,037 49,992 54,625 60,087 245,741 % – – – – – % – – – – – (i) Michael Panaccio provides his services via Starfish Technology Fund II, LP. (ii) Greg Tweedly provided his services via Silverlake Pty Ltd. Short-Term Post employment Share- based pay- ments Total perform- ance related Options as % of total TOTAL Long- term Salary  fees $ Cash bonus $ Non- monetary $ Other $ Super- annu- ation $ Retire- ment benefits $ Termin- ation benefits $ Incentive plans $ Options $ $ 2014 Non-Executive Directors Herb Elliott (i) Ashraf Attia (ii) 58,662 44,247 Michael Panaccio (iii) 30,249 Greg Tweedly (iv) 42,966 176,124 (i) Appointed 13 October 2013 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 58,662 44,247 30,249 42,966 176,124 % – – – – – % – – – – – (ii) Full year appointment. The Director’s fee increased from $2,200 per month to $4,553 per month inclusive of superannuation effective 13 October 2013. (iii) Full year appointment. No Director’s fees charged prior to 11 December 2014. Michael Panaccio provides his services via Starfish Technology Fund II, LP. (iv) Appointed 13 October 2013. Greg Tweedly provided his services via Silverlake Pty Ltd. 29 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORT(b) Executives’ remuneration: Table 2 Short-Term Post employment Share- based pay- ments Total perform- ance related TOTAL Long- term Share based pay- ment as % of total Salary  fees $ Cash bonus $ Non- monetary $ Other $ Super- annu- ation $ Retire- ment benefits $ Termin- ation benefits $ Incentive plans $ Options $ $ % 2015 Executive Director – – – – – – – – – – – – – – – – – – – 26,600 9,628 20,900 145 7,148 – – 5,011 27,703 – 14,517 3,776 18,401 – 12,056 8,787 137,098 – – – – – – – – – – – – – – – – – – – – – – – – Andrew Ronchi 250,000 30,000 Executives Daniel Ronchi (vi) (ix) 101,344 – Jerome Whelan (vi) 180,000 40,000 Jarrod Sculli (vi) 4,655 161 Sarah Riseley (iv) (ix) 75,242 9,999 Meagan Blackburn (iv) (vii) (ix) 114,750 Zoë Whyatt (vii) 188,870 – – 240,540 60,135 John Kowalczyk (v) (viii) Mark Heaysman (i) David Wildermuth (ii) (v) (viii) 152,812 152,339 Matthew May (iii) (vi) 126,900 1,587,452 140,295 (i) Appointed 1 July 2014. (ii) Appointed 3 November 2014. (iii) Appointed 17 November 2014. (iv) Employed 4 days per week. – – – – – – – – – – – – – – – 306,600 9.8 1,988 112,960 3,548 244,448 – – – – 4,961 92,389 114,750 188,870 – 16.4 3.2 10.8 – – 176,402 509,791 11.8 34.6 50,451 217,780 87,729 262,245 2,645 141,601 – – – – 322,763 2,196,395 6.4 % – 1.8 1.5 – – – – 23.2 33.5 1.9 14.7 (v) Other 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 started in Q1 2014/2015. (vi) Share based payments comprise loan shares granted under the dorsaVi Ltd’s ESOP and are backed by an interest free, no-recourse loan. For accounting purposes these are valued the same as options. (vii) Converted into AUD from GBP at the exchange rate at the average rate throughout 2014/2015. (1 GBP = 1.8887 AUD) (viii) Converted into AUD from USD at the exchange rate at the average rate throughout 2014/2015. (1 USD = 1.2027 AUD) (ix) Part Year KMP to 10 March 2015 due to change in KMP structure and reporting lines. 30 DIRECTORS’ REPORTShort-Term Post employment Share- based pay- ments Total perform- ance related TOTAL Long- term Salary  fees $ Cash bonus $ Non- monetary $ Other $ Super- annu- ation $ Retire- ment benefits $ Termin- ation benefits $ Incentive plans $ Options $ 2014 Executive Director Andrew Ronchi 219,580 50,000 Executives Daniel Ronchi 147,729 20,000 Jerome Whelan (i) (ix) 27,461 – Jarrod Sculli (ii) (ix) 92,497 2,012 Sarah Riseley (iii) 103,321 7,500 Meagan Blackburn (iv) (v) Zoë Whyatt (iv) (vi) John Kowalczyk (vii) (viii) 118,283 39,166 37,759 – – – 785,796 79,512 (i) Appointed 7 May 2014. (ii) Appointed 16 September 2013. - – – – – – – – – - – – 25,556 16,037 2,540 14,743 8,742 10,448 10,573 – – – – – – 25,191 63,448 - – – – – – – – – - – – – – – – – – - – – – – – – – – Share based pay- ment as % of total % - – 38.0 13.5 – – – 55.5 $ % 295,136 16.9 - – 183,766 18,407 48,408 18,407 136,401 – – – 131,842 118,283 39,166 47,075 84,834 10.9 – 1.7 5.7 – – – 83,889 1,037,836 7.7 8.1 (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. (vii) Other 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, no-recourse loan. For accounting purposes these are valued the same as options. 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. Performance-based remuneration granted to key management personnel has regard to Company performance over a twelve month to 2-year period. 31 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORTThe following table summarises the performance conditions for KMP with a performance-linked bonus: Table 3. KMP Performance conditions Andrew Ronchi Key Milestones as determined by and at the discretion of the Board John Kowalczyk Key Milestones as determined by and at the discretion of the Board Jerome Whelan Key Milestones as determined by and at the discretion of the Board David Wildermuth Key Milestones as determined by and at the discretion of the Board Mark Heaysman Key Milestones as determined by and at the discretion of the Board Matthew May Key Milestones as determined by and at the discretion of the Board These performance conditions were selected to promote the creation of shareholder wealth during the period. The following table sets out the terms and conditions of each grant of the performance-linked bonus affecting compensation in current and future years: Table 4. 2016 Andrew Ronchi John Kowalczyk David Wildermuth Mark Heaysman Matthew May 2015 Andrew Ronchi John Kowalczyk David Wildermuth Jerome Whelan Mark Heaysman Matthew May Total Potential  Performance  Linked Bonus $ 100,000 120,270 (i) 90,202 (ii) 25,000 20,000 Total Potential  Performance  Linked Bonus $ 100,000 120,270 (i) 90,202 (ii) 40,000 20,000 20,000 Awarded/ Available % Forfeited % Estimated  Maximum total  value of Bonus 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100,000 120,270 90,202 25,000 20,000 Awarded/ Available % Forfeited % Estimated  Maximum total  value of Bonus 42% 50% 0% 100% 75% 0% 58% 50% 0% 0% 25% 0% 42,083 60,135 90,202 40,000 15,000 20,000 (i) USD 100,000 converted at US/AUD rate 1.2027. 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 directed above. (ii) USD 75,000 converted at US/AUD rate 1.2027. 32 DIRECTORS’ REPORT(c) Consequences of Company’s performance on shareholder wealth The following table summarises Company performance and key performance indicators: Table 5 Company Performance Revenue % increase in revenue Profit before tax % increase in loss before tax Change in share price Dividend paid to shareholders Return of capital Total remuneration of KMP Total performance based remuneration E. Key management personnel’s share-based compensation (a) Details of compensation Options 2015 2014 1,850,416 767,418 141% 42% (8,684,709) (4,121,606) (111%) (41%) – – (90%) 10% – – 2,442,136 1,213,960 140,295 79,512 In 2015 the Company agreed to grant David Wildermuth an Option under the Company’s Employee Share Ownership Plan 2013 to purchase 900,000 ordinary shares of the Company. The option grant shall vest over a four year-period. With one quarter of the shares subject to such option vesting as of the first anniversary of the effective date (being 3 November 2014) and the remaining shares vesting monthly over the following three years, contingent upon his continued employment with the Company. The exercise price of the options is $0.40 which is equal to the per share list price of the Company’s ordinary shares on the date of grant. The option grant will be exercisable during the five-year period following the date of grant. As a condition of the option grant, David Wildermuth 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 Company’s Board of Directors. Table 6 2015 Grant Date Executives John Kowalczyk (i) Value  per option at grant date $ Granted Number Vest  Number During the Year Year in which option may be  vested Value  Exer- cised During the year Value  Lapsed  during the year Vest % Terms and conditions for each grant For- feited % Exercise  Price $ First Exercise  Date Last  Exercise  Date Expiry Date 8 April 2014 1,000,000 0.3000 388,888 2015 (i) 38.9% David Wildermuth (ii) 3 November 2014 900,000 0.2568 – 2015 (ii) – 1,900,000 – 388,888 – – – – – – – – – – – – 0.51 7 April 2019 0.40 – 30 October 2019 – – – – – – – (i) (ii) 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 continued employment with the Company. The option grant shall vest over a four-year period, with one-quarter of the shares subject to such option vesting as of the first anniversary of effective date (being 3 November 2014) and the remaining shares vesting monthly over the following three years, contingent upon his continued employment with the Company. As at 30 June 2015, no options have been exercised, and accordingly no shares have been issued as a result of options previously issued. 33 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORTF. Key management personnel’s equity holdings (a) Number of options held by key management personnel As at June 2015 John Kowalczyk holds an option under the Company’s Employee Share Ownership Plan 2013 to purchase 1,000,000 ordinary shares of the Company and David Wildermuth holds an option under the Company’s Employee Share Ownership Plan 2013 to purchase 900,000 ordinary shares of the Company. (b) Number of shares held by key management personnel (consolidated) The relevant interest of each key management personnel in the share capital of the Company as notified the ASX as at 30 June 2015 is as follows: Michael Panaccio (relevant interest) 19,573,274 Table 7 2015 Non-Executive Directors Herb Elliott Ashraf Attia Michael Panaccio Greg Tweedly Executive Director Andrew Ronchi Executives Daniel Ronchi Jerome Whelan Jarrod Sculli Sarah Riseley Zoë Whyatt Meagan Blackburn John Kowalczyk David Wildermuth Mark Heaysman Matthew May Balance 1/07/14 Received as Remu- neration Net change Other Balance 30/06/15 75,000 189,491 60,969,845 62,500 8,246,482 – – – – – – – – – – – – 75,000 189,491 60,969,845 19,573,274 62,500 8,246,482 8,246,482 50,000(i) (8,296,482)(iii) – 100,000(i) 100,000(i) 634,956 63,496 253,982 – – – – – – – – – – – – 100,000 (100,000) (634,956)(iii) – – – 63,496 (253,982)(iii) – – – – – 250,000(i) 117,289(ii) 367,289 20,000(i) – 20,000 98,515,508 320,000 (9,168,131) 89,667,377 (i) Employee Loan Shares (ii) Includes 67,289 bought on market and balance bought off market. (iii) Part year KMP to 10 March 2015. G. Loans to key management personnel The Board 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 of office in, dorsaVi. The plan allows for dorsaVi to offer employees non-recourse and interest free loans to acquire fully paid shares. 34 DIRECTORS’ REPORT(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: Table 8 Balance 1/7/2014 Interest paid and payable  Interest not charged Balance 30/6/2015 Number in group 30/6/2015 2015 $638,000 – Not Applicable $730,610 9 (b) Aggregate of loans made is greater than $100,000 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 entities related to them is greater than $100,000: Table 9 2015 Ashraf Attia(ii) Andrew Ronchi(ii) Daniel Ronchi(ii) Jerome Whelan(ii) Jarrod Sculli(i) Sarah Riseley(ii) Meagan Blackburn(ii) Zoë Whyatt(ii) Mark Heaysman(ii) (iii) Matthew May(ii) (iii) Balance 1/7/2014 $ 20,000 185,000 185,000 49,000 49,000 100,000 40,000 10,000 – – Interest paid and payable Interest not charged Highest indebtedness during the year $ Balance 30/6/2015 $ – Not Applicable 20,000 20,000 – Not Applicable 185,000 185,000 – Not Applicable 203,610 203,610 – Not Applicable 49,000 – Not Applicable – 49,000 49,000 – Not Applicable 100,000 100,000 – Not Applicable – Not Applicable – Not Applicable – Not Applicable 40,000 10,000 115,000 8,000 730,610 40,000 10,000 115,000 8,000 779,610 638,000 – (i) (ii) Jarrod Sculli resigned, his loan was discharged and his shares returned. 50,000 of these shares were sold to Mark Heaysman off market. 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. 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. (iii) Commenced during the 2015 FY 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. 35 dorsaVi ANNUAL REPORT // 2015DIRECTORS’ REPORT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 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 goods and services was $18,509 (2014: $78,035). The goods and services supplied were in the normal course of business and on normal terms and conditions. The balance outstanding at balance date was $11 (2014: $14,472) included in Trade Payables at Note 14. During the year ended 30 June 2015, dorsaVi Ltd paid $19,946 (2014: $NIL) to Simon Heaysman and paid $12,337 (2014: $NIL) to Dane Heaysman (both inclusive of expense claim reimbursements). These amounts were paid to them in their capacity as data analysts on various ViSafe projects throughout the financial year. These individuals are related to dorsaVi through their relationship to their father, Mr Mark Heaysman. (b) Transactions with other related parties Starfish Ventures Pty Ltd is a related party as it is connected with a director of dorsaVi Ltd. During the year ended 30 June 2015, Starfish Ventures Pty Ltd charged rent to dorsaVi Ltd. Total value of these rental charges was $69,102 (2014: $59,735). The rent was charged to dorsaVi on normal terms and conditions. The balance outstanding at balance date was $10,174 (2014: $51,145) included in Trade Payables at Note 14. I. Use of remuneration consultants No remuneration consultants were engaged during the course of the 2015 or 2014 financial years. J. Voting and comments made at the Company’s 2014 Annual General Meeting (AGM) At the company’s most recent AGM, resolution to adopt the prior year remuneration report was put to the vote and at least 75% of ‘yes’ votes were cast for adoption of that report. No comments were made on the remuneration report that was considered at the AGM. Signed in accordance with a resolution of the directors — End of the remuneration report — Herb Elliott  Director & Chairman Melbourne Date: 29 September 2015 Andrew Ronchi Director & CEO Melbourne Date: 29 September 2015 36 DIRECTORS’ REPORT • PITCHER PARTNERS dorsaVi Ltd and controlled entities ABN: 15 129 742 409 AUDITOR'S INDEPENDENCE DECLARATION To the Directors of dorsaVi Ltd In relation to the independent audit for the year ended 30 June 2015, to the best of my knowledge and belief there have been: (i) (ii) No contraventions of the auditor independence requirements of the Corporations Act 2001; and No contra v entions of any applicable code of professional conduct. This declaration is in respect of dorsaVi Ltd and the entities it controlled during the year. Partner 29 September 2015 PITCHER PARTNERS Melbourne ;\n mrlepenciwll V : ( :t<:ria ~~ P~:crtni::~,~~h:p /·SN ?.'! ~/{~-> 2~~5 18G Lovd 'i 9 1 ;:) \N> a ::: Sin:~:-H , t-.:h:-;itJI)U(rl£.- V!C 3001) L!Bb d ~!y k::~te:d t;y a scherr;e approved under P : ·vfe:~s!v : al St<:-tncjr..nis l. (qisiaUo:·: ?Hct1<-;r Pannon .. i~: ar: ass<:•C!Ci:on G~ moep(YH1ent firrn:~ \,idt:v urn -2 ! Sy(in:-~ y ! PerH: ! !:\(jtdai DR BSM PTY LTD No. of Shares held % of total Shares 60,597,345 40.42 7,021,814 7,021,814 4. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – GSCO ECA 4,947,499 CITICORP NOMINEES PTY LIMITED BENTALE PTY LTD STARFISH TECHNOLOGY FUND II NOMINEES A PTY LTD STARFISH TECHNOLOGY FUND II NOMINEES B PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 3 GARSIND PTY LTD 4,673,911 3,598,637 3,029,868 3,029,867 2,913,000 1,635,000 SANDHURST TRUSTEES LTD 1,547,743 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. MOZLEY PTY LTD ANDREW RONCHI DANIEL RONCHI MR FRANCIS ROSS SELLENGER + MRS DIANA ELIZABETH SELLENGER MORRMAC PTY LTD MRS ROSALIND LAWRENCE ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD 19. MARK STEPHEN HEAYSMAN 20. MUHAMMAD UMER Total Shares held by top 20 Shareholders Total Shares held by all other Shareholders OPTIONS (NOT LISTED ON ASX) 4.68 4.68 3.30 3.12 2.40 2.02 2.02 1.94 1.09 1.03 0.89 0.86 0.82 0.70 0.70 0.63 0.60 0.59 0.57 1,340,218 1,292,135 1,224,668 1,055,385 1,044,231 939,923 905,511 880,000 855,442 109,554,011 40,360,605 73.08 26.92 There were 2,000,000 unquoted options on issue to purchase ordinary shares under the Company’s Incentive Stock Option Agreement. The Options have been issued to three employees and were issued in accordance with the terms and conditions of the dorsaVi Ltd 2013 Share Ownership Plan. 72 FINANCIAL REPORTRESTRICTED SECURITIES & ESCROW AGREEMENTS The following Shareholders were required to enter into restriction agreements with the Company which restrict them from dealing with the following Shares, such as selling or encumbering them, for 24 months following the Shares being quoted on ASX (except in limited circumstances with ASX’s consent). Shareholder AR BSM Pty Ltd as Trustee for the AR BSM TRUST (An Entity controlled by Andrew Ronchi, CEO, Director) Number of Shares 6,893,414 DR BSM Pty Ltd as Trustee for the DR BSM Trust (An entity controlled by Daniel Ronchi) 6,893,414 Starfish Technology Fund (An entity associated with Michael Panaccio, a director of the Company) Andrew Ronchi Daniel Ronchi Ashraf Attia (a director of the Company) Total 38,097,345 712,168 712,168 76,991 53,385,500 The following Shareholders entered voluntarily into restriction agreements with the Company which restrict them from dealing with the following Shares, such as selling or encumbering them, for 24 months following the Shares being quoted on ASX. Shareholder AR BSM Pty Ltd as Trustee for the AR BSM TRUST (An Entity controlled by Andrew Ronchi, CEO, Director) Number of Shares 128,400 DR BSM Pty Ltd as Trustee for the DR BSM Trust (An entity controlled by Daniel Ronchi) 128,400 Starfish Technology Fund (An entity associated with Michael Panaccio, a director of the Company) Andrew Ronchi Daniel Ronchi Ashraf Attia (a director of the Company) Shares issued to other employees under the employee share ownership plan. Total 15,000,000 462,500 462,500 50,000 2,603,319 18,835,119 In summary, 72,220,619 (or 48.17%) Shares are subject to restrictions on sale and other dealings for a period of 24 months from quotation. This 24 month period expires on 11 December 2015. VOTING RIGHTS At a general meeting, each Shareholder present (in person or by proxy, attorney or representative) has one vote on a show of hands and one vote for each Share held when voting is done via a poll. Proxy forms will be included in each notice of meeting sent to Shareholders. Holders of issued but unexercised options are not entitled to vote. 73 dorsaVi ANNUAL REPORT // 2015FINANCIAL REPORTREQUIRED STATEMENTS (a) There is no current on-market buy-back of the Company’s securities. (b) The Company’s securities are not quoted on any exchange other than the ASX. (c) The Company has continued to use the cash (and assets in a form readily convertible to cash) that it had at the time of admission to the ASX in a manner consistent with its business objectives (as described in the Prospectus lodged with the Australian Securities and Investments Commission with respect to the Company’s initial public offering) for the period 1 July 2014 to 30 June 2015. (e) The name of the Company Secretary is Mr Brendan Case. (f) The address and telephone number of our principal registered office in Australia is: C/- Pitcher Partners, Level 19, 15 William Street, Melbourne, Victoria, 3000 Phone: +61 3 8610 5000 (g) Register of securities Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street, Abbotsford VIC 3067 GPO BOX 242, Melbourne, Victoria, 3001 Phone: +61 3 9415 5000 CORPORATE DIRECTORY Board of Directors and Company Secretary Executive Team Mr Herbert Elliott Chairman Dr Andrew Ronchi Chief Executive Officer Mr Ashraf Attia Non Executive Director Mr Jerome Whelan Chief Financial Officer Dr Michael Panaccio Non Executive Director Ms Meagan Blackburn Dr Andrew Ronchi Chief Executive Officer & Executive Director Mr Gregory Tweedly Non Executive Director Mr Brendan Case Company Secretary Registered Office in Australia Mr Mark Heaysman Mr John Kowalczyk Ms Sarah Riseley Mr Daniel Ronchi Ms Zoe Whyatt Principal Administrative Office Level 1, 120 Jolimont Road, Melbourne East, VIC 3002 Phone: 1800 367 7284 Share Registry Computershare Investor Services Pty Limited GPO BOX 242, Melbourne, Victoria, 3001 Phone: +61 3 9415 5000 Annual General Meeting Date & Place The Annual General Meeting will be held Thursday, 26 November 2015 at 11:00 am at: The offices of Pitcher Partners, Level 19, 15 William Street, Melbourne, Victoria, 3000 C/- Pitcher Partners, Level 19, 15 William Street, Melbourne, Victoria, 3000 Phone: +61 3 8610 5000 Auditor Pitcher Partners Level 19, 15 William Street, Melbourne, Victoria, 3000 Investor Relations Ms Rebecca Wilson Buchan Consulting Phone: +61 3 9866 4722 74 FINANCIAL REPORT www.colliercreative.com.au #DOR0008 d o r s a V i A n n u a l R e p o r t 2 0 1 5 www.dorsavi.com 

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