dorsaVi
Annual Report 2017

Plain-text annual report

dorsaVi Ltd and controlled entities ABN: 15 129 742 409 APPENDIX 4E - YEAR ENDED 30 JUNE 2017 dorsaVi Ltd and controlled entities APPENDIX 4E PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017 Provided to the ASX under listing rule 4.3A ABN: 15 129 742 409 ASX CODE: DVL dorsaVi Ltd and controlled entities ABN: 15 129 742 409 APPENDIX 4E - YEAR ENDED 30 JUNE 2017 TABLE OF CONTENTS Appendix 4E Details of the reporting period and the previous corresponding period Results for Announcement to the Market Explanation of Results Statement of Accumulated Losses Details of entities over which control has been gained or lost during the period Audit of the Financial Report Attachment Annual Report for the year ended 30 June 2017 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 APPENDIX 4E - YEAR ENDED 30 JUNE 2017 Details of the reporting period and the previous corresponding period Reporting period: Year ended 30 June 2017 Previous corresponding period: Year ended 30 June 2016 Results for announcement to the market Revenue June 2017 June 2016 Change Change ($) ($) ($) (%) 3,897,882 3,238,138 659,744 20% Loss from ordinary activities after tax attributable to members (3,876,248) (5,237,102) 1,360,856 -26% Loss for the period attributable to members (3,876,248) (5,237,102) 1,360,856 -26% Net Tangible asset per share Explanation of Results June 2017 (cents) June 2016 (cents) Change (cents) 6.29 5.02 1.27 dorsaVi Ltd continued to focus on building its sales revenue and customer base in Australia, the UK and the US and on reducing cost. Total revenue increased 20% year on year. Total expenditure reduced by $538,376 (6% year on year) mainly due to: a reduction in employee benefits expense and reductions in professional and consultancy expenditure as regulatory requirements become more streamlined. The loss from continuing operations after income tax for the 2017 financial year was $3,876,248 (2016: $5,237,102), a reduction of 26% on the 2016 financial year. During the financial year there were no returns to shareholders in any form. This report should be read in conjunction with any public announcements made by dorsaVi Ltd in accordance with the continuous disclosure requirements arising under the Corporations Act 2001 and ASX Listing Rules. The information provided in this report contains all the information required by ASX Listing Rule 4.3A. dorsaVi Ltd and controlled entities ABN: 15 129 742 409 APPENDIX 4E - YEAR ENDED 30 JUNE 2017 Consolidated Statement of Profit or Loss and Other Comprehensive Income Refer to the attached statement Consolidated Statement of Financial Position Refer to the attached statement Consolidated Statement of Changes in Equity Refer to the attached statement Consolidated Statement of Cash Flows Refer to the attached statement Dividends The board has declared no dividend for the years ended 30 June 2016 or 30 June 2017. There are no dividend reinvestment plans in operation. Statement of Accumulated Losses Balance at the beginning of year (22,212,210) (17,317,080) (15,868,777) (13,085,756) Consolidated Entity Parent Entity 2017 $ 2016 $ 2017 $ 2016 $ Net loss attributable to members of the parent entity Reversal of share based payment reserve Total available for appropriation Dividends paid Balance at end of year (3,876,248) (5,237,102) (1,964,808) (3,124,993) 15,326 341,972 15,326 341,972 (15,868,777) (17,818,259) (26,073,132) (22,212,210) - - - - (26,073,132) (22,212,210) (17,818,259) (15,868,777) Details of entities over which control has been gained or lost during the period There was no gain or loss in control of entities during the year ended 30 June 2017. Audit of the Financial Report The audit has been completed. The financial report contains an independent audit report that is not subject to a modified opinion, emphasis of matter or other matter paragraph. Date: 28 August 2017 Damian Connellan CFO dorsaVi Ltd GD4543 DS - Annual Report Cover A4 2pp – FRONT COVER GoDesign.net.au ANNUAL REPORT 2017 dorsaVi Ltd (ABN: 15 129 742 409) Annual Report For the Year Ended 30 June 2017 CONTENTS Chairman’s Review CEO Operational Report Financial Report Directors’ Report Auditor’s Independence Declaration Financial Report for the Year Ended – 30 June 2017 Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report to The Members of dorsaVi Ltd Shareholder Information 2 4 8 10 29 30 34 60 61 66 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 CHAIRMAN’S REVIEW Dear Shareholders I am delighted to present dorsaVi’s Annual Report for the Financial Year 2016/2017. As global demand for sophisticated and accurate movement data continues to grow, dorsaVi’s first to market position in medical grade wearable technology is now well established. This Financial Year was marked with important milestones demonstrating the continued market opportunities for data-driven wearable technology. The launch of myViSafe in the Australian, the US and UK market; the unveiling of our new generation ViMove2™ and subsequent launch in Australia; our successful projects with big brands such as Snowy Hydro, Heathrow Airport, Crown Resorts and shoe manufacturer Mizuno all illustrate our success in satisfying an unmet demand for meaningful movement data. In December 2016 dorsaVi raised $8.0M (before costs) to invest in further product development and growth in the major US market. Listening to market feedback in relation to our products is essential to ensure we remain market leaders in this fast-moving movement analytics space. Our team have made significant investment into both gathering market feedback and optimising our products to stay ahead of the curve. Our new mini sensors and app based functionality will allow the product to be truly scalable, improving start up time, reducing the training time for our sales teams and enabling the products to be sold on line. Whilst outside the 2016/2017 Financial Year, our 510(k) clearance by the US FDA for the next generation ViMove2™ sensor in July, was a major regulatory milestone, paving the way for the product’s anticipated launch in the UK and US in the 2018 Financial Year. ViMove2™ is designed to measure, record and analyse movement and muscle activity of the lower back, and, considering the significant size of the low-back pain market - it costs the US economy US$100-$200 billion annually - the product has mass market clinical opportunities. With our first mover advantage in medical-grade wearable technology and the aforementioned milestones, our products continue to gain traction with major workforce employers, clinicians and elite sports clubs across all our three priority markets; the US, UK and Australia. There are of course also macro factors which have supported our achievements and success throughout the year. This includes the increasing awareness within labour intensive industries who recognise the importance of preventing workplace injury; a greater focus on providing a safer workplace; and clinical networks looking to position themselves as innovators who offer best practice treatments with leading technologies. Whilst dorsaVi differentiates itself as a data-driven company with innovative products assisting large workforce companies, athletes and clinicians, at our core we are a company making a difference in people’s lives and their recovery journey. Within the OHS market, dorsaVi captured two prestigious awards in the UK, being awarded the Health and Safety Solution of the Year at the London Construction Awards and the Product Innovation for myViSafe at the British Safety Industry Federation. The award winning ViSafe™ product is being used by new customers and repeat projects in large manual handling industries such as construction, aviation, transport and manufacturing. The launch of myViSafe™, an easy-to-use wearable sensor system that can be self-managed by employers, has also helped create an annuity revenue model for dorsaVi from the OHS market. The scalable nature of this product means it can be used by small and large corporations and it addresses the growing demand for employers to take preventative measures when it comes to workplace safety. In terms of our clinical opportunities, we are pleased by the initial sales growth following ViMove2™’s Australian launch and we are in the planning stages of launching this highly intuitive product in the UK later this calendar year and US in the fourth quarter of FY18. ViMove™ has already demonstrated its effectiveness in reducing pain and improving clinical outcomes through a randomised controlled clinical trial, with the outcomes published in a peer reviewed journal. A subsequent health economic paper shows the merits for the use of this technology in reducing the costs associated with managing chronic low back pain. The US based clinical group Select Medical, who have over 2,000 sites in 46 states, have steadily increased their use of ViMove and now have the technology used at 45 of their clinical sites as part of their initial pilot study – well ahead of expectations. 2 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 In our sporting market, we continue to see strong demand for our technology among elite and professional teams across the sports spectrum, from the NBA to NFL and NHL. This market continues to provide practical product development insights for our new generation devices, as well as supporting dorsaVi’s brand awareness. We go into this new financial year with revenue growth in the major US market and new products that continue to lead our field. With the backing of peer reviewed clinical data, US reimbursement, US, European and Australian regulatory clearance, and market evidence from our product in the market, we are confident on continued global scale up. On behalf of the board, I would like to thank CEO Andrew Ronchi and his team for their tireless efforts and passion for the company and for their dedication for helping our customers on their recovery journey. To our shareholders, we are grateful for your continued support. In closing, I would like to advise all of dorsaVi’s employees, customers and shareholders that I have advised the Board of my intention to retire as Chairman and as a director of dorsaVi at the Company’s Annual General Meeting (AGM) to be held on 23 November 2017. Mr Greg Tweedly, the current Chair of the Audit and Risk Committee, will succeed me as Chairman at the AGM. It has been a pleasure to be associated with dorsaVi. Herb Elliott Chairman 3 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 CEO OPERATIONAL REPORT “dorsaVi had a year of strong client retention, expansion and revenue growth in the US market. Launching the new app-based mini sensors and building annuity revenue into the OHS market have been critical steps forward for dorsaVi. This has been a year of significant product development, and I am pleased to share our highlights with shareholders and stakeholders.” Andrew Ronchi, Chief Executive Officer Introduction The year was marked with significant developments across dorsaVi’s key geographic markets in the US, UK and Australia. Our first to market position in providing medical grade wearable technology continues to strengthen as demand for sophisticated and accurate movement data grows internationally. As a medical grade wearable, cleared for sale by the FDA, TGA, and in Europe with the CE mark, we remain in a strong position to capitalise on this rising demand, differentiating ourselves from consumer wearables. Our expanding new customer base and strong retention with existing clients support this strong position. With regulatory approval behind us, our focus is now firmly on execution and scalability. Whilst dorsaVi has a leading market position and there are high barriers to entry into the market, given our FDA, TGA, CE Mark and patent-protected technologies, product innovation remains a key ingredient to our success. We continue to strive to be the world leader in movement analysis and technologies for the clinical, workers’ compensation and elite sports markets. The introduction of our mini sensors used in myViSafe™ and ViMove2™ demonstrates our investment in innovation and we expect promising returns from these new products. Financial Summary Our annual sales revenue was up 15% year-on-year in Australian dollar terms. Sales revenue would have increased 21% compared to the previous year if currency exchange rates had remained constant throughout the past financial year. Cost was down 6% year-on-year. Whilst macro political events in the UK influenced lower growth, and Australian sales growth was impacted by a hold on marketing campaigns ahead of the launch of MyViSafe and ViMove2™, we have been encouraged by the strong revenue growth in the US, which was up 161% on FY2016. Key Milestones 4 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Business Overview dorsaVi Workplace Solutions (OHS) dorsaVi’s workplace solutions taps into the significant yet underserved Occupational Health and Safety (OHS) market worth US$250 billion per annum in the US alone. As regulatory changes to workers’ compensation incentivise workplaces to establish preventative practices for workplace injury, there is a growing demand for data-driven technologies to help improve workplace safety and reduce the rate of injuries. dorsaVi’s ViSafe provides an OHS solution to determine, measure and mitigate high risk activities in the workplace, allowing senior management and Boards to make informed decisions based on data and facts rather than opinion only. Our self-managed solution, myViSafe™, which was available commercially at the end of 2016, has introduced an annuity revenue stream into the ViSafe product portfolio. By providing a complete manual handling movement analysis training and education solution to employers, we have identified an unmet need for an interactive and personalised approach to manual handling assessment, compliance and workplace training. The easy-to-use application of myViSafe™ means it is a scalable solution for small to large corporates. In Australia, the innovative solution is already used by Crown Resorts, Coles Liquor and Visy Board. In the UK Marston’s Brewery have taken up myViSafe to assess onsite jobs and tasks and for continuous auditing of their manual handling workforce. In the US, dorsaVi has signed Weyerhaeuser in the logging industry, Workright NW for manual handling training, Innocor for the assessment of worker tasks in the manufacturing sector and Southern Towing in the shipping and freight area. These companies in each jurisdiction value the objective data that they are able to gather on their own employee’s movements. Senior management are most interested in the ability to remotely monitor their workforce through an easy to use dashboard. The market opportunity for a solution like myViSafe™ is significant. In the UK and Australia, we are operating a direct sales model. In the US we have an agent model to enable rapid revenue growth, coupled with direct sales representatives in key markets. Currently, dorsaVi has sales partnerships with seven agents across the country, and continues to offer centralised analysis ensuring data integrity and ownership remains within dorsaVi’s control. We are focused on scaling up sales programs and will continue to capitalise on our first mover advantage to address the growing demand for data-driven technologies to inform workplace decisions. A self-managed solution for organisations to monitor employee movement Key benefits: ! Annuity revenue business model for dorsaVi that provides a scalable solution for small to large corporations ! Mass opportunity with a very large serviceable market due to attractive price point ! High volume solution with low touch support 5 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 dorsaVi Clinical A major milestone for dorsaVi was the launch of the new generation ViMove2™, which is designed to measure, record, and analyse movement of the lower back and lower limbs. This product has received 510(k) clearance from the US FDA, and following a pilot launch in Australia, is preparing for launch in the UK and US in FY2018. We continue to build on the strong foundations of ViMove™ with clinical trials showing our ViMove™ treatment protocol reduces pain by 45% and improves function by 73% in patients with chronic low back pain. A health economic paper released also shows that our ViMove™ treatment protocol delivers both improved clinical outcomes and reduced economic impact. “This evaluation has identified that motion-sensor biofeedback intervention using ViMove System was both more effective and less costly overall than the control from the societal perspective. Rarely are health care interventions found to be both more effective and less costly overall.” - Prof. Terry Haines, Monash University (Melbourne, Australia) ViMove2™’s easier-to-use application provides significant benefits for physical therapist/physiotherapists, including a rapid start up time of 10 seconds (vs previous 3 minutes) and reducing the face-to-face training time for new clinical sites, reducing the training time from four hours to 10 minutes, with training now delivered online. This frees up sales staff for additional sales activity and is designed to enhance both the clinician’s and the patient’s experience. An example of ViMove2™’s uptake in the Australian market is with the integrated physiotherapy clinic, Kieser. This physiotherapy chain signed a three-year deal in June 2017 for the uptake of 18 devices to be used across their nine clinics. We look forward to the opportunities ViMove2™ will bring to the US and UK clinical markets when launched. In parallel, dorsaVi has seen continued growth in the number of US clinical sites which use our existing clinical products ViMove and ViPerform. The continued adoption of dorsaVi’s technology into clinical centres, leading hospitals and universities/colleges is important in fulfilling the strategic plan of training the next generation of clinicians to use our technology in managing movement-related conditions. The US clinical opportunity for dorsaVi is significant, with more than 284,000 physical therapists in the country. Since launching ViMove and ViPerform in the US in 2014, the company has signed on 160 sites. Of note is our partnership with Select Medical which has 2,000 clinical sites across the US. Our initial pilot program was for an initial 20 sites, and has been scaled up early with ViMove and ViPerform already being used in 45 sites, with more expected throughout the coming year. The uptake by Select Medical is above initial expectations and is indicative of the demand from the market for data-driven technologies to assist in achieving best practice treatments for patients. The ViMove2™ solution includes specialist modules: ! ViMove2™ Knee: Clinicians can quickly assess the stresses and strains placed on a patient’s knee in real time, which has historically been very difficult to do. ! ViMove2™ Low Back: Rapidly gains a clearer picture by assessing lumbar spine movement in real-time, automatically prescribing exercises that are appropriate for patients based on the assessment data. ! ViMove2™ Run: Enables clinicians to quickly understand how a runner is moving, providing new insights on the quality of running. Finally, the first retail opportunity for our technology sees leading sports shoe manufacturer Mizuno utilise the ViMove™ Run solution to better understand and inform shoe selection at a retail level in the UK. This pilot program illustrates the strong need for data-driven technologies and evidence for new data insights at a retail level. 6 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 dorsaVi Elite Sports The elite sports market continues to be an important segment for the company to explore product development and expansion, while also acting as a source of brand and product validation. The association with well-known sports teams and athletes has helped open new opportunities in other markets. Over the past year, the company has continued to expand its ViPerform™ solution to more US sports customers, including National Basketball Association (NBA) team LA Lakers, National Football League (NFL) team and 2017 Super Bowl champion New England Patriots, as well as National Hockey League team Philadelphia Flyers. Other groups which have adopted the ViPerform™ technology include Ohio State University and the Marquette University basketball team. The Athletic Movement Index is the most popular dorsaVi module in the US and allows sport administrators to benchmark their players against normalised data as an indicator to injury susceptibility and strength. dorsaVi Elite Sports continues to expand organically and through strong word of mouth. Andrew Ronchi Chief Executive Officer 7 FINANCIAL REPORT For The Year Ended 30 June 2017 8 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Financial Report For The Year Ended 30 June 2017 TABLE OF CONTENTS Directors’ Report Auditor’s Independence Declaration Financial Report For The Year Ended – 30 June 2017 Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes In Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report to the Members of dorsaVi Ltd Shareholder Information 10 29 30 30 31 32 33 34 60 61 66 9 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Directors’ Report The directors present their report together with the financial report of the Group consisting of dorsaVi and the entities it controlled, for the financial year ended 30 June 2017 and auditor’s report thereon. 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 and Risk Committee. He was appointed to the Board on 14 July 2008. Michael Panaccio – Non-executive Director: Dr. Panaccio serves on the Audit and 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 and Risk Committee and serves on the Nomination and Remuneration Committee. He was appointed to the Board on 29 October 2013. Andrew Ronchi – Chief Executive Officer, Director: Dr. Ronchi was appointed to the Board on 18 February 2008. The directors have been in office since the start of the year to the date of this report unless otherwise stated. Principal Activities The principal activity of dorsaVi Ltd and its controlled entities during the financial year was distribution of innovative motion analysis technologies. These technologies are commercialised via license, sale or fixed fee consultancy. There has been no significant change in the nature of these activities during the financial year. Results The consolidated loss after income tax attributable to the members of dorsaVi Ltd was $3,876,248 (2016: $5,237,102). Review of Operations dorsaVi Ltd has been listed on the ASX since December 2013. The Group consists of four entities: 1. dorsaVi Ltd, the listed Parent group; 2. dorsaVi Europe Ltd, a wholly owned subsidiary incorporated and domiciled in the UK; 3. dorsaVi USA, Inc., a wholly owned subsidiary incorporated and domiciled in the US; and 4. Australian Workplace Compliance Pty Ltd, a wholly owned subsidiary domiciled in Australia. Revenue for the 2017 financial year was $3,897,882 (2016: $3,238,138) predominantly driven by 15% (2016: 123%) growth in sales revenue to $3,466,027 (2016: $3,019,928) and increased grant income. The loss from continuing operations after income tax for the 2017 financial year was $3,876,248 (2016: $5,237,102), a reduction of 26% on the 2016 financial year. dorsaVi Ltd has continued to focus on building its sales revenue and customer base in each of its three geographic locations and, at the same time, controlling cost. Whilst sales revenue grew by 15% year on 10 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 year, total expenditure reduced by $538,376 (6% year on year) mainly due to a reduction in employee benefits expense and reductions in professional and consultancy expenditure as regulatory requirements become more streamlined. OHS Services During 2017 dorsaVi continued the development of ViSafe and the launch of myViSafe with myViSafe starting to bring annuity revenue into the OHS business model. The need for these products continues to be validated by major corporates undertaking assessments with a high proportion of these corporations signing on for repeat and larger contracts. Significant new and repeat customers have included Coles Liquor, Crown Resorts, Visy Board, Snowy Hydro, Transport for London, Heathrow Airport, Network High Speed Rail, Siemens, Intel, Innocor, Weyerhaeuser and Chilton Logging. Revenue for OHS Consultancy, utilising ViSafe technology, was $1,911,091 for the 2017 financial year up 10% over the 2016 financial year ($1,737,388). Clinical and Sports Product By 30 June 2017 the Group had over 400 devices in the market globally. This represented a 33% increase over the 300 devices in the market at 30 June 2016. The investment in, and release of, ViMove2 in the Australian market during 2017 and the progressive release in the US and UK over the 2018 financial year is expected to increase the rate of device take up and lower the cost of goods sold. Revenue from the licensing and sale of devices was $1,554,936 for the 2017 financial year up 21% over the 2016 financial year ($1,282,540). The directors expect global revenue to continue to grow year on year. Factors impacting and driving this growth include: the effectiveness of the global marketing plan; additional sales generation in the OHS and clinical markets in Australia, Europe and US markets; shortening of the sales lead times; and the rate of uptake of new generation product. Cost of sales increased in the 2017 financial year to $1,068,139 (2016: $841,416) in line with expectations and largely as a result of the increase in OHS assessments. Employee benefits expense for the 2017 financial year was $4,302,643 (2016: $4,762,296), a 10% decrease year on year. Employee benefits expense represented 50% of the total expenses for the Group for the 2017 financial year (2016: 52%). 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 OHS 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 initial float in the 2014 financial year and subsequent capital raisings were and are primarily being used to fund, both, the commercial rollout of dorsaVi’s products and continued product development. There is no guarantee that the commercial rollout will result in profitability for the Group. If the commercial roll out is slower or less successful than planned, dorsaVi may need to raise additional capital in the future. 11 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Significant Changes in the State of Affairs The following changes in the state of affairs occurred during the period: ! On 18 August 2016, dorsaVi Ltd announced that it had entered into a partnership with a leading US- based sports injury expert to develop an Athletic Movement Index (AMI) to be used on the ViPerform platform to optimise athletic performance in college and school athletes. ! On 29 September 2016, dorsaVi Ltd announced that they had been awarded a Victorian Government Future Industries grant of $350,000 to assist in the implementation, over an eighteen-month period ended 28 February 2018, of new manufacturing technologies and processes. ! On 27 October 2016, dorsaVi Ltd announced the launch of a US based patient registry to recruit low back pain patients to produce a series of medial publications and to form part of dorsaVi’s reimbursement strategy for the US market. ! On 29 November 2016, at dorsaVi Ltd’s annual general meeting, shareholders approved the grant of 900,000 performance rights to the Chief Executive Officer, Andrew Ronchi pursuant to the dorsaVi Employee Share Ownership Plan (ESOP). The performance rights are subject to performance and vesting conditions. The performance rights will be granted to Dr Ronchi before 29 November 2017 but will not be fully vested until 29 November 2019 if performance and vesting conditions are fully satisfied. The performance rights were granted at a zero-exercise price. ! On 6 December 2016, dorsaVi Ltd launched myViSafe, a complete manual handling movement analysis training and education solution for the workplace. Crown Resorts Ltd will be the first to manage its manual handling risk using myViSafe. ! On 6 December 2016, dorsaVi Ltd announced that it had signed a 12-month distribution agreement with Connect Healthcare Collaboration. Under this agreement Connect will act a sales agent for the dorsaVi workplace solution, ViSafe. ! On 13 December 2016, dorsaVi Ltd issued 10,869,565 fully paid ordinary shares to various institutional and sophisticated investors under a private placement. The shares were issued at $0.46 per share and raised $5,000,000 before costs. ! On 13 December 2016, dorsaVi Ltd also announced the offer, to eligible shareholders, of ordinary shares under a Share Purchase Plan (SPP) at the same price offered to institutional and sophisticated investors. The SPP, which closed on 19 January 2017, was oversubscribed and resulted in the issue of 2,173,850 fully paid ordinary shares at $0.46 per share raising $999,971 before costs. ! On 19 December 2016, dorsaVi Ltd announced that it had signed a twelve-month agreement with Heathrow Airport to assist it with its plans to implement new manual handling aids across all its terminals. ! On 20 January 2017, dorsaVi Ltd shareholders, at a general meeting, approved the issue of 4,347,828 fully paid ordinary shares, at $0.46 per share, to major shareholder, Starfish Technology Fund II Trust A and Starfish Technology Fund II Trust B. This share issue raised $2,000,001. ! On 23 February 2017, dorsaVi Ltd announced that the UK’s Network Rail (High Speed) Ltd would use dorsaVi’s ViSafe product to enhance its understanding of movement associated with manual work by its overhead contact system and track maintenance teams. ! On 4 May 2017, dorsaVi Ltd announced that Chinese Patent Application 201280017642.1 had been granted. This is the first patent granted for the automatic detection of whether a person is standing, sitting, lying down or engaged in dynamic activity. Patent applications covering this intellectual property are undergoing review on other geographies. ! On 11 May 2017, dorsaVi Ltd announced that Snowy Hydro Ltd would undertake an extensive program of ViSafe assessments to provide them with a better understanding of the movement profiles associated with civil and maintenance roles and to enable informed modification of related plant and equipment. ! On 15 May 2017, dorsaVi Ltd announced the commercial release of its ViMove2 product featuring smaller, faster and easier to use sensors, together with a simplified software interface, improved reporting tools, out of clinic monitoring, a comprehensive exercise video library and a patient app. ! On 15 May 2017, dorsaVi Ltd granted of 1,250,000 options to a senior executive and 50,000 to an employee pursuant to the dorsaVi Employee Share Ownership Plan (ESOP). The options have an exercise price of $0.33 and expire 5 years from the date of vesting. 550,000 of the options vested on grant date. 750,000 of the options are subject to performance and vesting conditions over three years and will not be fully vested until the year ended 30 June 2020 if performance and vesting conditions are fully satisfied. ! On 5 June 2017, dorsaVi Ltd granted of 2,849,000 performance rights to five senior executives and three employees pursuant to the dorsaVi Employee Share Ownership Plan (ESOP). The performance rights were granted at a zero-exercise price. 250,000 of the performance rights vested on 1 July 2017. 2,599,000 of the performance rights are subject to performance and vesting conditions over three years and will not be fully vested until the year ended 30 June 2020 if performance and vesting conditions are fully satisfied. 12 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 ! On 14 June 2017, dorsaVi Ltd announced that Kieser Australia had signed a three-year agreement to use ViMove2 across its network of nine centres located in Melbourne and Sydney. After Balance Date Events With the exception of the following, no matters or circumstances have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. ! On 14 July 2017, dorsaVi Ltd received 510(k) Clearance by the US Food and Drug Administration (FDA) for the next generation ViMove2 sensor designed to measure, record and analyse movement and muscle activity of the lower back. ! On 27 July 2017, the Remuneration Committee and the Board completed their assessments of the performance of key management personnel for the year ended 30 June 2017. Of the 795,666 performance rights and performance options previously granted in respect of that year it was confirmed that performance outcomes would result in 407,363 (51%) of these rights and options vesting. In accordance with performance agreements these rights and options will vest on 1 October 2017 and 1 January 2018. ! On 14 August 2017, dorsaVi Ltd issued 250,000 fully paid ordinary shares, at $nil per share, to employees, under the dorsaVi ESOP. The issue of these shares arose on the vesting of 250,000 performance rights previously granted as a result of those employees meeting the performance conditions attached to the rights. ! On 28 August 2017, dorsaVi Ltd announced that Herb Elliott had advised the Board of his intention to retire as Chairman and as a director of dorsaVi at the Company’s Annual General Meeting (AGM) to be held on 23 November 2017. Mr Greg Tweedly, the current Chair of the Audit and Risk Committee, will succeed Herb Elliott as Chairman at the AGM. Likely Developments The following likely developments in the business of the Group are expected to influence its financial results in the near term: ! The Group expects continued growth in total revenue, year on year, in the Australian, Europe and US markets from its OHS consultancy and Clinical revenue streams. ! The Group also expects to increase, year on year, the annuity revenue proportion of total OHS and Clinical revenue. ! The Group expects that, the new product released into the Australian market during 2017, will be progressively released into the UK and US markets during the 2018 financial year. Environmental Regulation The Group’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. Equity Instruments Performance rights and options over unissued ordinary shares granted by dorsaVi Ltd during or since the financial year end to executives were as follows: Executives A Ronchi M Blackburn M Connell M Heaysman M May M Umer Z Wyhatt Equity Instrument Performance Rights Performance Rights Performance Rights Performance Rights Performance Rights Performance Rights Options Granted during the Year 900,000 450,000 300,000 500,000 675,000 150,000 1,250,000 13 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 There were no performance rights or options over unissued ordinary shares granted to non-executive 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 Number of Unissued Ordinary Shares under Option Issue Price of Shares Expiry Date of the Options 2 September 2014 24 March 2016 15 May 2017 15 May 2017 15 May 2017 15 May 2017 15 May 2017 100,000 200,000 550,000 133,333 133,333 133,334 350,000 1,600,000 $0.40 $0.40 $0.33 $0.33 $0.33 $0.33 $0.33 1 September 2019 24 March 2021 15 May 2022 1 October 2022 1 October 2023 1 October 2024 1 July 2024 No option holder has any right under the options to participate in any other share issue of the Group. 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. Shares Subject to Performance Rights Unissued ordinary shares of dorsaVi Ltd subject to performance rights at the date of this report are as follows: Date Performance Rights Granted Number of Unissued Ordinary Shares subject to Performance Rights Issue Price of Shares Vesting Date of Performance Rights 5 June 2017 5 June 2017 5 June 2017 5 June 2017 5 June 2017 250,000 662,334 622,334 622,332 1,592,000 3,749,000 - - - - - 1 July 2017 1 October 2017 1 October 2018 1 October 2019 1 July 2019 A performance right holder does not have any right to participate in any other share issue of the Group until the performance rights vest and are converted to ordinary shares. Shares Issued on Vesting of Performance Rights Since 30 June 2017 and to the date of this report, 250,000 shares were issued on the vesting of 250,000 performance rights. There remain 3,499,000 performance rights that do not convert to issued shares unless performance conditions are met and they vest. 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 and was Group 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. 14 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 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. No other directorships of listed companies were held during the three years to 30 June 2017. Ashraf Attia, BSc (Eng)(Hons), MSc (Biomed. Eng), Dip (Mktg), FAICD – Non-executive Director Ash Attia serves on the Audit and Risk Committee. He was appointed to the Board on 14 July 2008. Ash has had senior management experience in multinational operations for over 25 years within the medical devices, biotechnology and diagnostics industries. He was most recently the Managing Director, Asia Pacific of St Jude Medical/Thoratec, a Group with global revenues of over 5.5 billion, which manufactures and sells cardiac assist devices for use by patients with heart failure. Ash has also 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 2017. Michael Panaccio, BSc (Hons), MBA, PhD, FAICD – Non-executive Director Michael Panaccio serves on the Audit and 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 previously been a director of numerous technology businesses in Australia and the US including ImpediMed Ltd (resigned August 2016), SIRTeX Medical Ltd, Protagonist Therapeutic Inc and Energy Response Pty Ltd. With the exception of ImpediMed Ltd, no other Directorships of listed companies were held during the three years to 30 June 2017. Michael is also a director of Starfish Ventures Pty Ltd, MuriGen Therapeutics Pty Ltd, Armaron Bio Ltd, Ofidium Pty Ltd, Mimetica Pty Ltd and Cylite Pty Ltd. Gregory John Tweedly, B. Com, CPA, GAICD – Non-executive Director Greg Tweedly chairs the Audit and 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 Melbourne Health, Chair of the Personal Injury Education Foundation 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 Emergency Services and Telecommunications Authority, 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 2017. 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 2017. 15 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Brendan Case, MComLaw (Melb), BEc, CPA, Grad Dip App Fin, Dip FP, FCIS Brendan Case has served as dorsaVi Ltd’s secretary since October 2013 and has more than 20 years of company secretarial, corporate governance and finance experience. He is a former Associate Company Secretary of National Australia Bank Limited (NAB), former secretary of NAB’s Audit and Risk Committees and has held senior management roles in risk management and regulatory affairs. Directors’ Meetings 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 Eligible to Attend 8 8 8 8 8 Attended 8 5 8 8 8 Audit and Risk Committee Attended Eligible to Attend - 2 2 2 - - 2 2 2 - Nomination and Remuneration Committee Eligible to Attend 2 2 2 Attended 2 2 2 Directors’ Interest in Shares, Performance Rights or Options as at 30 June 2017 Names of Holders Michael Panaccio Andrew James Ronchi Ashraf Attia Herbert James Elliott Gregory John Tweedly Ordinary Shares of dorsaVi Ltd 72,421,255 8,331,546 211,139 100,097 86,347 The directors have no interests in performance rights or options over shares in dorsaVi Ltd as at the date of this report with the exception of Andrew Ronchi who has an interest in 900,000 performance rights which, subject to the satisfaction of performance conditions, can vest into shares progressively over the next three financial years. Indemnification and Insurance of Directors and Officers The Group has insured its Directors, Secretary and executive officers for the financial year ended 30 June 2017. 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. ASIC Instrument on Rounding of Amounts In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the directors’ report and in the financial statements have been rounded to the nearest dollar. 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 Group. 16 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Proceedings on behalf of the Group No person has applied for leave of Court to bring proceedings on behalf of the Group. 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 for the following reasons: ! All non-audit services were subject to the corporate governance procedures adopted by dorsaVi Ltd and have been reviewed and approved by the Audit Committee to ensure they do not impact on the integrity and objectivity of the auditor; and ! The non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for dorsaVi Ltd or any of its related entities, acting as an advocate for dorsaVi Ltd or any of its related entities, or jointly sharing risks and rewards in relation to the operations or activities of dorsaVi Ltd or any of its related entities. Amounts Paid and Payable to Pitcher Partners Melbourne for Non-audit Services: Taxation and Other Compliance Services Total Remuneration for Non-audit Services 2017 $ 2016 $ 26,831 26,831 24,595 24,595 17 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Remuneration Report (Audited) The Directors present the Group’s 2017 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 Period of Responsibility Position Directors Herb Elliott Ashraf Attia Michael Panaccio Greg Tweedly Full Year Full Year Full Year Full Year Executive Director Andrew Ronchi Full Year Executives Damian Connellan Megan Connell Meagan Blackburn Muhammad Umer Matthew May Zoë Whyatt Mark Heaysman Full Year Full Year Full Year Full Year Full Year Full Year Full Year B. Remuneration Policies Chairman, Non-Executive Director Independent, Non-Executive Director Non-Executive Director Independent, Non-Executive Director Chief Executive Officer/Director Chief Financial Officer Chief Marketing Officer Chief Innovation Officer Software Architect Sales Manager, Australia Chief Operating Officer, Europe Chief Operating Officer, USA Nomination and Remuneration Committee The Nomination and 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 and Remuneration Committee are: Herb Elliott, Michael Panaccio and Greg Tweedly. The Nomination and 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 and Remuneration Committee may also engage external consultants to provide independent advice. The primary responsibility of the Nomination and 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 and 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 Group. 18 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 To this end, the key objectives of the Group’s reward framework are to: ! Align remuneration with the Group’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 Group 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 Group 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 and Remuneration Committee, considers the level of remuneration required to attract and retain Directors with the necessary skills and experience for the Group’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 Group 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 Group 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 2017 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 Group provides a remuneration package that incorporates both cash based remuneration and share- based remuneration. The contracts for service between the Group and executives are on a continuing basis the terms of which are not expected to change in the immediate future. Share-based remuneration is conditional upon continuing employment thereby aligning director and shareholder interests. Remuneration consists of the following key elements: ! Fixed remuneration (base salary and superannuation); and ! Variable remuneration – short term incentives (STI) in the form of an annual incentive plan and long- term equity incentive (LTI) Fixed Remuneration Objective Fixed remuneration is reviewed annually by the Board / Nomination and Remuneration Committee. The process consists of a review of the Group and individual performance, relevant comparative remuneration from external and internal sources and where appropriate, external advice on policies and practices. 19 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 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 Group. Variable Remuneration – Short-Term Incentive (STI) Objective The key objective of the STI program is to link the achievement of the Group’s operational targets with the remuneration received by the executives charged with meeting those targets. Structure Any STI granted depend 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 (KPI’s) cover individual, team and organisational financial measures of performance. Typically included are measures such as: achieving sales/revenue targets and/or growth, and meeting Group compliance requirements. These measures were chosen as they represent the key drivers for the short-term success of dorsaVi. The Group has predetermined benchmarks that must be met in order to trigger STI under the STI scheme. Either on an annual or financial year basis, after consideration of performance against the Key Milestones or KPIs, the Nomination and Remuneration Committee, in line with their responsibilities determine the amount, if any, of the STI to be awarded to each Executive. This process usually occurs within one month after the trigger date. Typically, STI awards are made under the Employee Share Ownership Plan (ESOP) and are delivered in the form of share options or performance rights. Each option entitles the holder to one fully paid ordinary share of dorsaVi Ltd at an exercise price to be determined in accordance with the ESOP or by determination by the Nomination and Remuneration Committee. Each performance right vested entitles the holder to one fully paid ordinary share of dorsaVi Ltd at $nil price. The annual STI available for executives across the Group are subject to the approval of the Nomination and Remuneration Committee. Variable Remuneration – Long-Term Incentive (LTI) Objective The objectives of providing long term incentives are: to motivate and retain key dorsaVi employees; to attract quality employees; to create commonality of purpose between dorsaVi and its employees; to add wealth for all shareholders of the Group 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 Group. LTI awards are made under the Employee Share Ownership Plan (ESOP) and are delivered in the form of share options, performance rights or loan for shares. Each option entitles the holder to one fully paid ordinary share of dorsaVi Ltd at an exercise price to be determined in accordance with the ESOP or by determination by the Nomination and Remuneration Committee. Each performance right vested entitles the holder to one fully paid ordinary share of dorsaVi Ltd at $nil price. Where an LTI participant ceases employment prior to vesting in their award, the options and unvested performance rights are forfeited unless the Nomination and Remuneration Committee applies its discretion to allow vesting at or post cessation of employment in appropriate circumstances. Options and performance rights were granted, under the ESOP plan, during the 2017 Financial Year. See Table 6. 20 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Employment Agreements The Group has entered into Employment Agreements with all executives, including the CEO. The Group 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 Group may terminate the contract at any time without notice if serious misconduct has occurred. The notice periods for key management personnel are as follows: Name Andrew Ronchi Damian Connellan Matthew May Muhammad Umer Mark Heaysman Meagan Blackburn Zoë Whyatt Megan Connell Notice Period 6 months 3 months 3 months 3 months 3 months 8 weeks’ notice until 3 years of continuous employment. One additional week for each completed year of continuous employment up to a maximum of 12 weeks’ notice. 12 weeks’ notice 8 weeks’ notice CEO Remuneration Under Andrew Ronchi’s employment agreement his fixed remuneration is $250,000 per annum plus superannuation giving a total of $273,750 inclusive of superannuation. In addition, Andrew Ronchi has, as approved at a meeting of shareholders, been granted 900,000 performance rights. The vesting of these performance rights is subject to performance conditions over three years but will not fully vest before 29 November 2019. None of these performance rights vested during the year ended 30 June 2017. Upon termination of Andrew Ronchi’s employment contract, he will be subject to a restraint of trade for a maximum of 12 months. C. Details of Key Management Personnel Remuneration (a) Non-Executive Directors’ Remuneration: Table 1 Short-Term Post Employment 2017 Salary Fees Cash Bonus Non- Monetary Other $ Non-Executive Directors H Elliott A Attia M Panaccio (i) G Tweedly 74,341 54,450 54,120 49,912 232,823 $ - - - - - $ - - - - - $ - - - - - Super- annu- ation $ Retire- ment Benefits $ Termin- ation Benefits $ 7,062 5,173 - 9,710 21,945 - - - - - - - - - - Long- term Share- based Pay- ments Incentive Plans Equity TOTAL Total Perform- ance Related Options as % of Total $ - - - - - $ - - - - - $ % % 81,403 59,623 54,120 59,622 254,768 - - - - - - - - - - (i) Michael Panaccio provides his services via Starfish Technology Fund II, LP. Short-Term Post Employment 2016 Salary Fees Cash Bonus Non- Monetary Other $ Non-Executive Directors H Elliott A Attia M Panaccio (i) G Tweedly 67,583 45,000 49,163 49,500 211,246 $ - - - - - $ - - - - - $ - - - - - Super- annu- ation $ Retire- ment Benefits $ Termin- ation Benefits $ 6,420 3,919 - 4,311 14,650 - - - - - - - - - - Long- term Share- based Pay- ments Incentive Plans Equity TOTAL Total Perform- ance Related Options as % of Total $ - - - - - $ - - - - - $ % % 74,003 48,919 49,163 53,811 225,896 - - - - - - - - - - (i) Michael Panaccio provides his services via Starfish Technology Fund II, LP. 21 (i) (ii) (iii) (iv) 2016 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (b) Executives’ Remuneration: Table 2 Short-Term Post Employment Super- annu- ation $ Retire- ment Benefits $ Termin- ation Benefits $ 19,616 - 2017 Salary Fees Cash Bonus Non- monetary Other $ Executive Directors A Ronchi 249,999 Executives M Blackburn D Connellan M Connell M Heaysman (i) (iii) M May M Umer Z Whyatt (i) (iv) 205,000 109,289 119,013 281,039 205,000 150,000 134,431 1,453,771 $ - - - - - - - - - $ - - - - - - - - - $ - - - - 19,475 - 11,306 68,062 9,738 - - 19,475 14,250 16,659 4,033 84,721 97,893 - - - - - - - - - - - - - - - - - Long- term Share- based Pay- ments Incentive Plans Equity (ii) TOTAL Total Perform- ance related Share based Payments as % of Total $ - - - - - - - - - $ $ % % 97,402 367,017 8,560 - 4,410 233,035 109,289 134,729 33,629 392,468 39,252 3,378 263,727 167,628 104,254 259,377 290,885 1,927,270 - - - - - - - - - 26.5 3.7 - 3.3 8.6 14.9 2.0 40.2 15.1 Other benefits include the payment of a relocation allowance and certain health and disability related insurance premiums as is customary in the US and UK markets. Share based payments comprise mixture of the grant of options, performance rights, and, loan shares backed by an interest free, no-recourse loan. For accounting purposes, all these equity instruments are valued the same as options. Converted into AUD from USD at the average exchange rate throughout 2016/2017 (1 AUD = 0.7545 USD). Converted into AUD from GBP at the average exchange rate throughout 2016/2017 (1 AUD = 0.5951 GBP). Short-Term Post Employment Salary Fees Cash Bonus Non- monetary Other Super- annu- ation $ Retire- ment Benefits $ Termin- ation Benefits $ $ 221,539 78,264 $ $ Executive Directors A Ronchi 231,250 10,897 52,307 110,800 Executives J Whelan D Connellan (ii) D Wildermuth (v) (viii) M Connell (iii) (xi) M Blackburn (i) 31,250 M Umer (iv) M May 196,004 Z Whyatt (vii) 162,800 J Kowalczyk (v) (viii) (ix) M Heaysman (x) 144,442 251,728 - - - - - - - - - $ - - - - - - - - - - - 180,000 20,000 - 19,308 - - - 4,801 - 523 23,685 - 1,035 - 13,722 - 2,969 - 18,620 4,884 - 42,557 11,534 67,939 17,652 - - - - - - - - - - - - - - - - - - - - - TOTAL Total Perform- ance Related Share based Payments as % of Total Long- Term Share- based pay- ments Incentive Plans Equity (vi) $ - - - - - - - - - - - $ $ % % - 250,558 - - 57,108 - 110,800 - - - 324,011 24.2 - 11,932 - 158,164 863 35,082 2,466 217,090 26,152 193,836 15,326 321,145 - - - - - - - - - - - - 2.5 1.1 13.5 4.8 71,504 357,095 5.6 20.0 (i) (ii) (iii) (iv) (v) (vi) - - - 111,019 118,210 1,593,017 98,624 - Appointed 1 July 2015. Appointed 13 October 2015. Appointed 24 May 2016. Appointed 15 April 2016. 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. 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. 116,311 2,036,821 5.7 4.8 22 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (vii) (viii) (ix) (x) (xi) Converted into AUD from GBP at the average exchange rate throughout 2015/2016 (1 AUD = 0.4914 GBP). Converted into AUD from USD at the average exchange rate throughout 2015/2016 (1 AUD = 0.7283 USD). Other benefits include post-employment costs associated with resignation of J Kowalczyk. Relocation allowance included in other benefits. Employed 3 days per week. D. Relationship between Remuneration and Group Performance (a) Remuneration Not Dependent on Satisfaction of Performance Condition The non-executives remuneration policy is not directly related to Group 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 Group 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 Group performance over a twelve month to 2-year period. The following table summarises the performance conditions for KMP with performance-linked equity instruments: Table 3. KMP Andrew Ronchi Damian Connellan Megan Connell Meagan Blackburn Muhammad Umer Matthew May Zoe Whyatt Mark Heaysman Conditions for vesting of Options and Performance Rights Key Milestones as determined by and at the discretion of the Board Key Milestones as determined by and at the discretion of the Board Key Milestones as determined by and at the discretion of the Board Key Milestones as determined by and at the discretion of the Board Key Milestones as determined by and at the discretion of the Board Key Milestones as determined by and at the discretion of the Board Key Milestones as determined by and at the discretion of the Board Key Milestones as determined by and at the discretion of the Board These vesting 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 As at the date of this report the following performance linked bonuses are payable for key management personnel. 2017 A Ronchi M Blackburn M Connell M Heaysman M May M Umer Z Whyatt (i) Total Performance Linked Bonus $ 97,402 8,560 4,410 33,629 39,252 3,378 104,254 Awarded/Available Forfeited % 81% 80% 72% 95% 89% 85% 95% % 19% 20% 28% 5% 11% 15% 5% All performance bonuses are in the form of performance rights that convert to shares on their vesting date, 1 October 2017 or 1 January 2018, or options, and have been valued at the market share price on date of grant. 23 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (c) Consequences of Group’s Performance on Shareholder Wealth The following Table summarises Group Performance and Key Performance Indicators: Table 5 Group Performance Revenue % increase in revenue Loss before tax % (increase)/decrease in loss before tax Change in share price Dividend paid to shareholders Return of capital Total remuneration of KMP Total performance based remuneration 2017 3,897,882 20% (4,717,447) 20% 7% - - 2,182,038 290,885 2016 3,238,138 75% (5,915,567) 32% 4% - - 2,450,850 98,264 2015 1,850,416 141% (8,684,709) (111%) (41%) - - 2,442,136 140,295 2014 767,418 42% (4,121,606) (90%) 10% - - 1,213,960 79,512 E. Key Management Personnel’s Share-Based Compensation (a) Details of Compensation Equity Table 6 2017 Grant Date (i) Number Granted Value per Unit at Grant Date $ Vested during the Year Year in which Equity may Vest Terms and Conditions for each Grant Vest Lapsed during the Year Exercise Price Expiry Date First Exercise Date Last Exercise Date % $ 2016 - 250,000 0.28 2017 - 250,000 0.28 2018 - 250,000 0.28 - - - - - - - - - Executives Z Whyatt 30-Sep-15 250,000 0.28 Z Whyatt 30-Sep-15 250,000 0.28 Z Whyatt 30-Sep-15 250,000 0.28 M Heaysman 3-Jul-14 250,000 0.04 M Heaysman 17-Aug-15 500,000 0.17 M May 5-Nov-14 20,000 0.27 M Umer 25-Feb-15 30,000 0.23 A Ronchi 29-Nov-16 150,000 0.45 A Ronchi 29-Nov-16 150,000 0.45 A Ronchi 29-Nov-16 150,000 0.45 A Ronchi 29-Nov-16 450,000 0.45 Z Whyatt - - - - - - - - - - - 2017 2020 - - 2019 100% 2020 100% 2018 2019 2020 2020 - - - - 15-May-17 500,000 0.33 500,000 2017 100% Z Whyatt 15-May-17 133,333 0.33 Z Whyatt 15-May-17 133,333 0.33 Z Whyatt 15-May-17 133,334 0.33 Z Whyatt 15-May-17 350,000 0.33 M Heaysman 5-Jun-17 83,334 0.31 M Heaysman 5-Jun-17 83,334 0.31 - - - - - - - - - - - - 2018 2019 2020 2020 2018 2019 24 - - - - - - - - - - - - - - - 0.46 3-Jul-19 N/A N/A 0.26 17-Aug-20 N/A N/A 0.40 5-Nov-19 N/A N/A 0.36 25-Feb-20 N/A N/A - - - - 1-Oct-17 1-Oct-17 1-Oct-17 1-Oct-18 1-Oct-18 1-Oct-18 1-Oct-19 1-Oct-19 1-Oct-19 29-Nov-19 29-Nov-19 29-Nov-19 0.33 15-May-22 15-May-17 15-May-22 0.33 1-Oct-22 1-Oct-17 1-Oct-22 0.33 1-Oct-23 1-Oct-18 1-Oct-23 0.33 1-Oct-24 1-Oct-19 1-Oct-24 0.33 1-Jul-24 1-Jul-19 1-Jul-24 - - 1-Jan-18 1-Jan-18 1-Jan-18 1-Jan-19 1-Jan-19 1-Jan-19 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 2017 Grant Date (i) Number Granted Value per Unit at Grant Date $ Vested during the Year Year in which Equity may Vest Vest Lapsed during the Year Exercise Price % $ Terms and Conditions for each Grant Executives M Heaysman 5-Jun-17 333,332 0.31 M Connell 5-Jun-17 50,000 0.31 M Connell 5-Jun-17 50,000 0.31 M Connell 5-Jun-17 50,000 0.31 M Connell 5-Jun-17 150,000 0.31 M Blackburn 5-Jun-17 100,000 0.31 M Blackburn 5-Jun-17 100,000 0.31 M Blackburn 5-Jun-17 100,000 0.31 M Blackburn 5-Jun-17 150,000 0.31 M May M May M May M May M May 5-Jun-17 100,000 0.31 5-Jun-17 125,000 0.31 5-Jun-17 125,000 0.31 5-Jun-17 125,000 0.31 5-Jun-17 200,000 0.31 M Umer 5-Jun-17 25,000 0.31 M Umer 5-Jun-17 25,000 0.31 M Umer 5-Jun-17 25,000 0.31 M Umer - - - - - - - - - - - - - - - - - 5-Jun-17 75,000 5,775,000 0.31 - 500,000 2020 2018 2019 2020 2020 2018 2019 2020 2020 2017 2018 2019 2020 2020 2018 2019 2020 2020 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 750,000 - - - - - - - - - - - - - - - - - - Expiry Date First Exercise Date Last Exercise Date 1-Jan-20 1-Jan-20 1-Jan-20 1-Oct-17 1-Oct-17 1-Oct-17 1-Oct-18 1-Oct-18 1-Oct-18 1-Oct-19 1-Oct-19 1-Oct-19 1-Jul-19 1-Jul-19 1-Jul-19 1-Oct-17 1-Oct-17 1-Oct-17 1-Oct-18 1-Oct-18 1-Oct-18 1-Oct-19 1-Oct-19 1-Oct-19 1-Jul-19 1-Jul-19 1-Jul-19 1-Jul-17 1-Jul-17 1-Jul-17 1-Oct-17 1-Oct-17 1-Oct-17 1-Oct-18 1-Oct-18 1-Oct-18 1-Oct-19 1-Oct-19 1-Oct-19 1-Jul-19 1-Jul-19 1-Jul-19 1-Oct-17 1-Oct-17 1-Oct-17 1-Oct-18 1-Oct-18 1-Oct-18 1-Oct-19 1-Oct-19 1-Oct-19 1-Jul-19 1-Jul-19 1-Jul-19 (i) The options and performance rights granted during the current year are subject to performance and retention conditions. As at 30 June 2017, no options have been exercised or performance rights vested and, accordingly, no shares have been issued as a result of options previously vested or performance rights granted. 25 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 2016 Grant Date (i) Number Granted Value per Unit at Grant Date $ Vested during the Year Year in which Equity may Vest Vest % Terms and Conditions for each Grant Lapsed during the Year Exercise Price Expiry Date First Exercise Date Last Exercise Date $ Executives J Kowalczyk 8-Apr-14 1,000,000 0.30 - 2015 (i) 39% 1,000,000 0.51 11-Dec-15 J Kowalczyk 11-Dec-15 277,778 0.10 277,778 2015 (ii) 100% - 0.38 11-Dec-16 D Wildermuth 21-Oct-14 900,000 0.26 318,750 2015 (iii) 35% - 0.40 14-Jul-16 - - - - - - Z Whyatt 30-Sep-15 250,000 0.28 250,000 2016 100% - 0.28 30-Sep-20 30-Sep-15 30-Sep-20 Z Whyatt 30-Sep-15 250,000 0.28 Z Whyatt 30-Sep-15 250,000 0.28 3-Jul-14 M Heaysman (iv) M Heaysman (iv) 17-Aug-15 M May (iv) 250,000 0.04 500,000 0.17 - - - - 2017 2018 2017 2020 - - - - - 0.28 30-Sep-21 30-Sep-16 30-Sep-21 - 0.28 30-Sep-22 30-Sep-17 30-Sep-22 - 0.46 3-Jul-19 - 0.26 17-Aug-20 - - - - - - - - - - 5-Nov-14 20,000 0.27 20,000 2019 100% - 0.40 5-Nov-19 M Umer (iv) 25-Feb-15 30,000 0.23 30,000 2020 100% - 0.36 25-Feb-20 J Whelan (iv) (v) 6-May-14 100,000 0.18 3,827,778 - 896,528 2017 - 100,000 0.49 6-May-17 1,100,000 (i) (ii) (iii) (iv) (v) The options available to this employee were forfeited on 11 December 2015 as the employee resigned from the Group. The option grant shall vest at the same time as they were granted. These options related to prior service and were not forfeited on termination. The options available to this employee were forfeited on 14 July 2016 as the employee resigned from the Group on 14 April 2016. The share based compensation comprises non-recourse interest free loans granted under the Employee Share Ownership Plan to acquire shares in dorsaVi. The accounting treatment for non- recourse loans is consistent with accounting for options. The exercise period is from grant date up to the fifth-year anniversary. J Whelan resigned 12 October 2015. F. Key Management Personnel’s Equity Holdings (a) Number of Equity Holdings held by Key Management Personnel As at 30 June 2017 key management personnel held options, under the Group’s Employee Share Ownership Plan 2013, to purchase 1,250,000 ordinary shares of the Group. As at 30 June 2017 500,000 of these options had vested and were convertible to shares. As at 30 June 2017 key management personnel held 3,475,000 performance rights, under the Group’s Employee Share Ownership Plan 2013, which, on vesting, convert to 3,475,000 ordinary shares of the Group. As at 30 June 2017 none of these performance rights had vested and converted to shares. 26 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (b) Number of Shares held by Key Management Personnel (Consolidated) The relevant interest of each key management personnel in the share capital of the Group as notified the ASX as at 30 June 2017 is as follows: Table 7 2017 Non-Executive Directors H Elliott A Attia M Panaccio M Panaccio (relevant interest) G Tweedly Executive Director A Ronchi Executives M Connell D Connellan M Blackburn Z Whyatt M Umer M Heaysman M May Balance 1/07/16 Received as Remuneration Net Change Other Balance 30/06/17 82,500 208,440 67,055,830 1,000,000 68,750 8,313,949 - - 253,982 63,496 795,442 1,168,972 20,000 79,031,361 - - - - - - - - - - - - - - 17,597 (i) 2,699 (i) 4,365,425 (ii) - 100,097 211,139 71,421,255 1,000,000 17,597 (i) 86,347 17,597 (i) 8,331,546 - - 17,597 (i) - - - - 4,438,512 - - 271,579 63,496 795,442 1,168,972 20,000 83,469,873 (i) (ii) G. Acquired shares through the Group's share purchase plan. Acquired shares through the Group's share purchase plan and as part of a private placement. Loans to Key Management Personnel (a) Aggregate of Loans Made There were no loans made to key management personnel during the 2017 financial year (2016: $nil). There were no outstanding loans to key management personnel as at 30 June 2017 (30 June 2016: $nil). H. Other Transactions with Key Management Personnel (a) Transactions with Key Management Personnel of the Entity or its Parent and their Personally Related Entities During the year ended 30 June 2017, dorsaVi Ltd paid $nil (2016: $20,011) to Simon Heaysman, paid $nil (2016: $2,224) to Dane Heaysman (both inclusive of expense claim reimbursements) and paid $104,038 (2016: $97,754) to Safety Assess Pty Ltd a related Company of Dane Heaysman. These amounts are on normal commercial terms and were paid to these parties in their capacity as ViSafe Assessors on various ViSafe projects throughout the financial year. These individuals and company 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 2017, Starfish Ventures Pty Ltd charged rent to dorsaVi Ltd. Total value of these rental charges was $121,970 (2016: $105,995). The rent was charged to dorsaVi on normal terms and conditions. The balance outstanding at balance date was $14,916 (2016: $20,772) included in Trade Payables at Note 14. 27 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 During the year ended 30 June 2017, dorsaVi Ltd paid $54,120 (2016: $49,163) to Starfish Technology Fund II, LP on behalf of Michael Panaccio for director’s fees. I. Use of Remuneration Consultants During the year the Board did not engage remuneration consultants. J. Voting and Comments made at the Group’s 2016 Annual General Meeting (AGM) At the Group’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. -----------------------------------End of the Remuneration Report------------------------------------------ Signed in accordance with a resolution of the directors Herb Elliott Director and Chairman Andrew Ronchi Director and CEO Melbourne Date: 28 August 2017 Melbourne Date: 28 August 2017 28 AUDITOR’S INDEPENDENCE DECLARATION  To the Directors of dorsaVi Ltd.  In relation to the independent audit for the year ended 30 June 2017, 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 contraventions of APES 110 Code of Ethics for Professional Accountants.  This declaration is in respect of dorsaVi Ltd and the entities it controlled during the year.  F V RUSSO  Partner  28 August 2017  PITCHER PARTNERS  Melbourne   An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000  Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners is an association of independent firms Melbourne  |  Sydney  |  Perth  |  Adelaide  |  Brisbane|  Newcastle An independent member of Baker Tilly International 29                                                            dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Financial Report for the Year Ended – 30 June 2017 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017 Revenue and Other Income Sales revenue Other income Less: Expenses Cost of sales Advertising expenses Conference expenses Consultancy expenses Depreciation and amortisation expenses Device development expenditure Employee benefits expenses Finance costs Occupancy expenses Professional fees Regulatory expenses Software expenses Travel expenses Other expenses Loss before Income Tax Benefit Income tax benefit Loss from Continuing Operations Notes 2017 $ 2016 $ 4 4 5 5 5 5 5 6 3,466,027 431,855 3,897,882 3,019,928 218,210 3,238,138 (1,068,139) (239,990) (72,596) (332,815) (174,677) (181,033) (4,302,643) - (283,078) (446,470) (86,800) (170,261) (447,460) (809,367) (8,615,329) (4,717,447) 841,199 (3,876,248) (841,416) (228,395) (59,652) (443,696) (115,935) (118,300) (4,762,296) (3,094) (274,997) (617,489) (212,405) (177,208) (392,388) (906,434) (9,153,705) (5,915,567) 678,465 (5,237,102) Other Comprehensive Income Items that may be reclassified subsequently to profit and loss: Exchange differences on translation of foreign subsidiaries net of tax Other comprehensive income for the year Loss for the Year Loss per share for loss from continuing operations attributable to equity holders of the parent entity: Basic loss per share Diluted loss per share 308,995 308,995 (3,567,253) 191,699 191,699 (5,045,403) 20 20 (2.45 cents) (2.45 cents) (3.63 cents) (3.63 cents) The above statement should be ready in conjunction with the accompanying notes. 30 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2017 Current Assets Cash and cash equivalents Receivables Inventories Other assets Total Current Assets Non-Current Assets Intangible assets Plant and equipment Total Non-Current Assets Total Assets Current Liabilities Payables Provisions Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Share capital Reserves Accumulated losses Total Equity Notes 2017 $ 2016 $ 8 9 10 11 12 13 14 15 15 8,609,602 2,410,615 317,157 146,125 11,483,499 2,607,199 381,094 2,988,293 14,471,792 6,029,185 1,820,958 246,781 136,056 8,232,980 1,059,871 310,242 1,370,113 9,603,093 930,084 385,696 1,315,780 714,005 279,114 993,119 30,340 30,340 1,346,120 18,892 18,892 1,012,011 13,125,672 8,591,082 16 17 17 38,440,518 758,286 (26,073,132) 13,125,672 30,709,796 93,496 (22,212,210) 8,591,082 The above statement should be ready in conjunction with the accompanying notes. 31 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 Consolidated Entity Balance as at 1 July 2015 Loss for the year Exchange differences on translation of foreign operations, net of tax Total Comprehensive Income for the Year Transactions with Owners in their capacity as Owners: Issue of shares Cost of raising capital Redemption of Employee share ownership plan Employee share ownership plan Options lapsed Share Capital $ 23,855,099 - Reserves $ 78,697 - Accumulated Losses $ Total Equity $ (17,317,080) (5,237,102) 6,616,716 (5,237,102) - - 191,699 - 191,699 191,699 (5,237,102) (5,045,403) 7,719,800 (381,538) 56,435 - - 6,854,697 - - - - 7,719,800 (381,538) - 165,072 (341,972) (176,900) - - 341,972 341,972 56,435 165,072 - 7,019,769 Balance as at 30 June 2016 30,709,796 93,496 (22,212,210) 8,591,082 Balance as at 1 July 2016 Loss for the year Exchange differences on translation of foreign operations, net of tax Total Comprehensive Income for the Year Transactions with Owners in their capacity as Owners: Issue of shares Cost of raising capital Redemption of Employee share ownership plan Employee share ownership plan Options lapsed 30,709,796 - 93,496 - (22,212,210) (3,876,248) 8,591,082 (3,876,248) - - 308,995 - 308,995 308,995 (3,876,248) (3,567,253) 7,999,972 (309,411) 40,161 - - 7,730,722 - - - 371,121 (15,326) 355,795 - - 7,999,972 (309,411) - - 15,326 15,326 40,161 371,121 - 8,101,843 Balance as at 30 June 2017 38,440,518 758,286 (26,073,132) 13,125,672 The above statement should be ready in conjunction with the accompanying notes. 32 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017 Cash Flow from Operating Activities Receipts from customers Payments to suppliers and employees Grants received Interest received Finance costs Income tax refunded Net Cash used in Operating Activities Cash Flow from Investing Activities Payment for plant and equipment Payment for intangibles Net Cash used in Investing Activities Cash Flow from Financing Activities Proceeds from share issue Cost of raising capital Proceeds from employee share ownership plan Repayments of borrowings Net Cash provided by Financing Activities Reconciliation of Cash Cash at beginning of the financial year Net increase in cash held Cash at End of the Year Notes 2017 $ 2016 $ 3,475,183 2,567,599 (7,947,085) 258,370 148,588 - 678,220 (3,386,724) (9,376,574) 86,455 129,164 (3,094) 648,548 (5,947,901) 18 (b) (133,492) (1,630,089) (1,763,581) (14,545) (568,327) (582,327) 7,999,972 (309,411) 40,161 - 7,730,722 7,179,800 (381,538) 56,435 (38,252) 6,816,445 6,029,185 2,580,417 8,609,602 5,743,513 285,672 6,029,185 18 (a) The above statement should be ready in conjunction with the accompanying notes. 33 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Notes to the Financial Statements TABLE OF CONTENTS NOTE 1: NOTE 2: NOTE 3: NOTE 4: NOTE 5: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS FINANCIAL RISK MANAGEMENT REVENUE AND OTHER INCOME LOSS FROM CONTINUING OPERATIONS NOTE 6: INCOME TAX NOTE 7: DIVIDENDS NOTE 8: CASH AND CASH EQUIVALENTS NOTE 9: RECEIVABLES NOTE 10: INVENTORIES NOTE 11: OTHER ASSETS NOTE 12: INTANGIBLE ASSETS NOTE 13: PLANT AND EQUIPMENT NOTE 14: PAYABLES NOTE 15: PROVISIONS NOTE 16: SHARE CAPITAL NOTE 17: RESERVES AND ACCUMULATED LOSSES NOTE 18: CASH FLOW INFORMATION NOTE 19: COMMITMENTS AND CONTINGENCIES NOTE 20: LOSS PER SHARE NOTE 21: SHARE BASED PAYMENTS NOTE 22: DIRECTORS' AND EXECUTIVE COMPENSATION NOTE 23: SUBSIDIARIES AND RELATED PARTY DISCLOSURES NOTE 24: AUDITOR'S REMUNERATION NOTE 25: PARENT ENTITY INFORMATION NOTE 26: SEGMENT INFORMATION NOTE 27: SUBSEQUENT EVENTS 35 43 43 46 46 46 47 47 47 48 48 48 48 50 50 50 51 52 52 53 53 55 56 56 57 57 59 34 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 JUNE 2017 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies adopted by the Group in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. (a) Basis of Preparation of the Financial Report This financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board. The financial report covers dorsaVi Ltd and controlled entities as a Group. dorsaVi Ltd is a company limited by shares, incorporated and domiciled in Australia at: Level 1, 120 Jolimont Road, East Melbourne East, Victoria, 3002. dorsaVi Ltd is a for-profit entity for the purpose of preparing the financial statements. The financial report was authorised for issue by the directors on the date of the director’s report. Compliance with IFRS The consolidated financial statements of dorsaVi Ltd also comply with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Historical Cost Convention The financial report has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets and liabilities as described in the accounting policies. Significant Accounting Estimates and Judgements The preparation of the financial report requires the use of certain estimates and judgements in applying the entity’s accounting policies. Those estimates and judgements significant to the financial report are disclosed in Note 2. (b) Going Concern The financial report has been prepared on a going concern basis. (c) Principles of Consolidation The consolidated financial statements are those of the Group, comprising the financial statements of the parent entity and of all entities, which the parent entity controls. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies, which may exist. All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on consolidation. Subsidiaries are consolidated from the date on which control is established and are de- recognised from the date that control ceases. (d) Revenue Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered to have passed to the buyer at the time of delivery of the goods to the customer. Revenue from the provision of services to a customer is recognised upon performance of the service. Accrued income arising from recognised revenue is transferred to trade receivables when project milestones 35 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 are achieved and tax invoices are raised. Certain customers may be invoiced in advance of the provision of services and this unearned income is recognised as a liability until the service is performed. Revenue from fixed price contracts is recognised by reference to the stage of completion. The stage of completion is determined using inputs from dorsaVi’s project management methodology, including effort expended and effort to complete. Revenue from grants is recognised in accordance with the recognition and measurement requirements of AASB 120 “Accounting for Government Grants and Disclosure of Government Assistance”. Revenue from grants does not include refundable research and development tax offsets. These are accounted for within Income Tax Expense. Interest revenue is recognised when it becomes receivable on a proportional basis taking into account the interest rates applicable to the financial assets. Device rental income is recognised on a straight-line basis over the term of the rental term. All revenue is stated net of the amount of goods and services tax (GST). (e) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of three months or less held at call with financial institutions, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. (f) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct material, direct labour and a proportion of manufacturing overheads based on normal operating capacity. (g) Plant and Equipment Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and any accumulated impairment loss. Plant and Equipment Plant and equipment is measured on a cost basis. Depreciation The depreciable amount of all fixed assets is depreciated over their estimated useful lives commencing from the time the asset is held ready for use. Class of Fixed Asset Testing equipment at cost Leased devices at cost Office equipment at cost Furniture, fixtures and fittings at cost Tooling at cost Depreciation Rates 10-67% 20% 10-67% 10-20% 10% Depreciation Basis Diminishing value Straight line Diminishing value Diminishing value Straight line (h) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. Operating Leases Lease payments for operating leases are recognised as an expense on a straight-line basis over the term of the lease. 36 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (i) Intangibles Goodwill Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identifiable or separately recognised. Goodwill is not amortised but is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Goodwill is carried at cost less any accumulated impairment losses. Patents Patents, trademarks and licenses are recognised at cost and depreciated on a straight-line basis over their effective lives, which is estimated to be 20 years. Research Expenditure on research activities is recognised as an expense when incurred. Development Development costs are capitalised when the entity can demonstrate all of the following: the technical feasibility of completing the asset so that it will be available for use or sale; the intention to complete the asset and use or sell it; the ability to use or sell the asset; how the asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset; and the ability to measure reliably the expenditure attributable to the asset during its development. Capitalised development expenditure is carried at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation is calculated using a straight-line method to allocate the cost of the intangible asset over its estimated useful life, which range from 5 to 10 years. Amortisation commences when the intangible asset is available for use. Other development expenditure is recognised as an expense when incurred. (j) Impairment of Non-Financial Assets Goodwill, intangible assets not yet ready for use and intangible assets with indefinite useful lives are not subject to amortisation and are therefore tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. For impairment assessment purposes, assets are generally grouped at the lowest levels for which there are largely independent cash flows - Cash Generating Units (CGU). Accordingly, most assets are tested for impairment at the cash-generating unit level. Because it does not generate cash flows independently of other assets or groups of assets, goodwill is allocated to the CGU or units that are expected to benefit from the synergies arising from the business combination that gave rise to the goodwill. Assets other than goodwill, intangible assets not yet ready for use and intangible assets with indefinite useful lives are assessed for impairment whenever events or circumstances arise that indicate the asset may be impaired. An impairment loss is recognised when the carrying amount of an asset or CGU exceeds the asset’s or CGU’s recoverable amount. The recoverable amount of an asset or CGU is defined as the higher of its fair value less costs to sell and value in use. Refer to Note 2 for a description of how management determines value in use. Impairment losses in respect of individual assets are recognised immediately in profit or loss unless the asset is carried at a revalued amount such as property, plant and equipment, in which case the impairment loss is treated as a revaluation decrease in accordance with the applicable Standard. Impairment losses in respect of CGU’s are allocated first against the carrying amount of any goodwill attributed to the CGU with any remaining impairment loss allocated on a pro rata basis to the other assets comprising the relevant CGU. 37 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (k) Income Tax Current income tax expense or revenue is the tax payable on the current period's taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities. Current Income Tax expense or revenue incudes refundable research and development tax offsets. Deferred Tax Balances Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rates when the assets are expected to be recovered or liabilities are settled. Deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Tax Consolidation dorsaVi Ltd (parent entity) and its wholly owned subsidiary, (Australian Workplace Compliance Pty Ltd), have applied tax consolidation legislation and formed a tax-consolidated group from 1 July 2014. The parent entity and subsidiary in the tax-consolidated group have entered into a tax funding agreement such that each entity in the tax-consolidated group recognises the assets, liabilities, expenses and revenues in relation to its own transactions, events and balances only. This means that: ! The parent entity recognises all current and deferred tax amounts relating to its own transactions, events and balances only; ! The subsidiary recognises current or deferred tax amounts arising in respect of their own transactions, events and balances; ! Current tax liabilities and deferred tax assets arising in respect of tax losses, are transferred from the subsidiary to the head entity as inter-company payables or receivables. The tax-consolidated group also has a tax sharing agreement in place to limit the liability of the subsidiary in the tax-consolidated group arising under the joint and several liability requirements of the tax consolidation system, in the event of default by the parent entity to meet its payment obligations. (l) Provision Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. (m) Employee Benefits (i) Short-Term Employee Benefit Obligations Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at the amounts based on remuneration rates which are expected to be paid when the liability is settled. The expected cost of short- term employee benefits in the form of compensated absences such as annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Long-Term Employee Benefit Obligations The provision for employee benefits in respect of long service leave and annual leave which, are not expected to be settled within twelve months of the reporting date, are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. Employee benefit obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur. 38 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (iii) Retirement Benefit Obligations Defined Contribution Superannuation Plan The Group makes contributions to defined contribution superannuation plans in respect of employee services rendered during the year. These superannuation contributions are recognised as an expense in the same period when the employee services are received. (iv) Share-Based Payments The Group operates share-based payment employee share and option schemes. The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting period, with a corresponding increase to an equity account. The fair value of shares is measured at the market bid price at grant date. In respect of share-based payments that are dependent on the satisfaction of performance conditions, the number of shares and options expected to vest is reviewed and adjusted at each reporting date. The amount recognised for services received as consideration for these equity instruments granted is adjusted to reflect the best estimate of the number of equity instruments that eventually vest. (v) Bonus Plan The Group recognises a provision when a bonus is payable in accordance with the employee’s contract of employment, and the amount can be reliably measured. (n) Borrowing Costs Borrowing costs can include interest expense calculated using the effective interest method, finance charges in respect of finance leases, and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Borrowing costs are expensed as incurred. (o) Financial Instruments Classification The Group classifies its financial instruments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the instruments were acquired. Management determines the classification of its financial instruments at initial recognition. Loans and Receivables Loans and receivables are measured at fair value at inception and subsequently at amortised cost using the effective interest rate method. Financial Liabilities Financial liabilities include trade payables, other creditors, loans from third parties and loans or other amounts due to director-related entities. Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Impairment of Financial Assets Financial assets are tested for impairment at each financial year end to establish whether there is any objective evidence for impairment. For loans and receivables, impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The amount of the loss reduces the carrying amount of the asset and is recognised in profit or loss. The impairment loss is reversed 39 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 through profit or loss if the amount of the impairment loss decreases in a subsequent period and the decrease can be related objectively to an event occurring after the impairment was recognised. (p) Foreign Currency Translations and Balances Functional and Presentation Currency The financial statements of each entity within the Group are measured using the currency of the primary economic environment in which that entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars which is the Group’s functional and presentation currency. Transactions and Balances Transactions in foreign currencies of entities within the consolidated group are translated into functional currency at the rate of exchange ruling at the date of the transaction. Foreign currency monetary items that are outstanding at the reporting date (other than monetary items arising under foreign currency contracts where the exchange rate for that monetary item is fixed in the contract) are translated using the spot rate at the end of the financial year. Except for certain foreign currency hedges, all resulting exchange differences arising on settlement or re-statement are recognised as revenues and expenses for the financial year. Foreign Subsidiaries Entities that have a functional currency different to the presentation currency are translated as follows: ! Assets and liabilities are translated at the closing rate on reporting date; ! Income and expenses are translated at actual exchange rates or average exchange rates for the period, where appropriate; and ! All resulting exchange differences are recognised in other comprehensive income. (q) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (r) Comparatives Where necessary, comparative information has been reclassified and repositioned for consistency. (s) Rounding of Amounts In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the directors’ report and in the financial statements have been rounded to the nearest dollar. (t) Accounting Standards Issued but not yet Effective at 30 June 2017 The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of these new and amended pronouncements. The Group’s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below. — AASB 9: Financial Instruments (December 2014), AASB 2014-7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2014), AASB 2014-8: Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) – Application of AASB 9 (December 2009) and AASB 9 (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2018). These Standards will replace AASB 139: Financial Instruments: Recognition and Measurement. Key changes that may affect the Group on application of AASB 9 and associated amending Standards 40 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 include: — Simplifying the general classifications of financial assets into those carried at amortised cost and those carried at fair value; — Permitting entities to irrevocably elect on initial recognition to present gains and losses on an equity instrument that is not held for trading in other comprehensive income (OCI); — Simplifying the requirements for embedded derivatives, including removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost; — Introducing a new model for hedge accounting that permits greater flexibility in the ability to hedge risk, particularly with respect to non-financial items; and — Requiring impairment of financial assets carried at amortised cost to be based on an expected loss approach. Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial instruments, it is impracticable at this stage to provide a reasonable estimate of such impact. — AASB 15: Revenue from Contracts with Customers, AASB 2014-5: Amendments to Australian Accounting Standards arising from AASB 15, AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of AASB 15 and AASB 2016-3: Amendments to Australian Accounting Standards – Clarifications to AASB 15 and AASB 2016-7 (applicable for annual reporting periods commencing on or after 1 January 2018). AASB 15 will provide (except in relation to some specific exceptions, such as lease contracts and insurance contracts) a single source of accounting requirements for all contracts with customers, thereby replacing all current accounting pronouncements on revenue. These Standards provide a revised principle for recognising and measuring revenue. Under AASB 15, revenue is recognised in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the provider of the goods or services expects to be entitled. To give effect to this principle, AASB 15 requires the adoption of the following 5-step model: Identify the contract(s) with a customer; Identify the performance obligations under the contract(s); ! ! ! Determine the transaction price; ! Allocate the transaction price to the performance obligations under the contract(s); and ! Recognise revenue when (or as) the entity satisfies the performance obligations. AASB 15 also provides additional guidance to assist entities in applying the revised principle to licences of intellectual property, warranties, rights of return, principal/agent considerations and options for additional goods and services. Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group’s reported revenue, it is impracticable at this stage to provide a reasonable estimate of such impact. — AASB 16: Leases (applicable for annual reporting periods commencing on or after 1 January 2019). AASB 16 will replace AASB 117: Leases and introduces a single lessee accounting model that will require a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Right-of-use assets are initially measured at their cost and lease liabilities are initially measured on a present value basis. Subsequent to initial recognition: — Right-of-use assets are accounted for on a similar basis to non-financial assets, whereby the right- of-use asset is accounted for in accordance with a cost model unless the underlying asset is accounted for on a revaluation basis, in which case if the underlying asset is: ! Investment property, the lessee applies the fair value model in AASB 140: Investment Property to the right-of-use asset; or ! Property, plant or equipment, the lessee can elect to apply the revaluation model in AASB 116: Property, Plant and Equipment to all of the right-of-use assets that relate to that class of property, plant and equipment; and — Lease liabilities are accounted for on a similar basis as other financial liabilities, whereby interest expense is recognised in respect of the liability and the carrying amount of the liability is reduced to reflect lease payments made. AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, under AASB 16 a lessor would continue to classify its leases as operating leases or finance leases subject to whether the lease transfers to the lessee substantially all of the risks and rewards incidental to ownership of the underlying asset, and would account for each type of lease in a manner consistent with the current approach under AASB 117. 41 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Although the directors anticipate that the adoption of AASB 16 may have an impact on the Group’s accounting for its operating leases, it is impracticable at this stage to provide a reasonable estimate of such impact. — AASB 2016-2: Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107 (applicable for annual reporting periods commencing on or after 1 January 2017). This Amending Standard amends AASB 107: Statement of Cash Flows to require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. To the extent necessary to satisfy this objective, entities will be required to disclose the following changes in liabilities arising from financing activities: — Changes from financing cash flows; — Changes arising from obtaining or losing control of subsidiaries or other businesses; — The effect of changes in foreign exchange rates; — Changes in fair values; and Other changes. This Standard is not expected to significantly impact the Group’s financial statements. — AASB 2016-5: Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment Transactions (applicable for annual reporting periods commencing on or after 1 January 2018). This Amending Standard amends AASB 2: Share-based Payment to address: — The accounting for the effects of vesting and non-vesting conditions on the measurement of cash- settled share-based payments; — The classification of share-based payment transactions with a net settlement feature for withholding tax obligations; and — The accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled. This Standard is not expected to significantly impact the Group’s financial statements. — AASB Interpretation 22: Foreign Currency Transactions and Advance Consideration (applicable for annual reporting periods commencing on or after 1 January 2018). Interpretation 22 clarifies that, in applying AASB 121: The Effects of Changes in Foreign Exchange Rates, the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. Accordingly, if there are multiple payments or receipts in advance, the entity is required to determine a date of the transaction for each payment or receipt of advance consideration. This Interpretation is not expected to significantly impact the Group’s financial statements. — AASB Interpretation 23: Uncertainty over Income Tax Treatments (applicable for annual reporting periods commencing on or after 1 January 2019). Interpretation 23 clarifies how to apply the recognition and measurement requirements in AASB 112 Income Taxes when there is uncertainty over income tax treatments. If the entity concludes that it is probable that the taxation authority will accept the uncertain tax treatment, the entity determines current tax and deferred tax consistently with the tax treatment used or planned to be used in its income tax filings. Whereas, if the entity concludes that it is not probable that the taxation authority will accept an uncertain tax treatment, the entity reflects the effect of uncertainty in the determination of current tax and deferred tax, based on either ‘the most likely amount’ or ‘the probability-weighted amount’ of tax (depending on which method the entity expects to better predict the resolution of the uncertainty). 42 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 NOTE 2: SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS Certain accounting estimates include assumptions concerning the future, which, by definition, will seldom represent actual results. Estimates and assumptions based on future events have a significant inherent risk, and where future events are not as anticipated there could be a material impact on the carrying amounts of the assets and liabilities discussed below: (a) Impairment of Non-Financial Assets other than Goodwill All assets are assessed for impairment at each reporting date by evaluating whether indicators of impairment exist in relation to the continued use of the asset by the Group. Impairment triggers include declining product or manufacturing performance, technology changes, adverse changes in the economic or political environment or future product expectations. If an indicator of impairment exists, the recoverable amount of the asset is determined. The recoverable amount of a CGU is based on value in use calculations. Value in use calculations are based on projected cash flows approved by management covering a maximum five-year period. Management’s determination of cash flow projections are based on past performance and its expectations of the future. (b) Income Tax Deferred tax assets and liabilities are based on the assumption that no adverse change will occur in the income tax legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences. (c) Employee Benefits The calculation of long term employment benefits requires estimation of the retention of staff, future wage levels and timing of the settlement of employee entitlements. The estimates are based on historical trends. (d) Share Based Payments Calculation of share based payments requires estimation of the timing of the exercise of the underlying equity instrument. The estimates are based on historical trends. NOTE 3: FINANCIAL RISK MANAGEMENT The Group is exposed to a variety of financial risks comprising: Interest rate risk ! Currency risk ! ! Credit risk ! Liquidity risk The Board of directors has overall responsibility for identifying and managing operational and financial risks. The Group holds the following financial instruments: Financial Assets Cash and cash equivalents Trade receivables Other receivables Related party receivables Financial Liabilities Trade payables Other payables Related party payables 2017 $ 8,609,602 1,490,542 893,466 26,607 2016 $ 6,029,185 989,262 805,089 26,607 11,020,217 7,850,143 304,012 625,072 1,000 930,084 469,601 243,404 1,000 714,005 43 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (a) Currency Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to foreign currency risk through the operation of wholly owned subsidiaries in the United Kingdom and the United States of America. Whilst operations in these geographical regions are in their infancy, the Group has not established a hedging policy to mitigate adverse currency risk. Sensitivity If foreign exchange rates were to increase/decrease by 10% from rates used to determine fair values of all financials instruments as at the reporting date, assuming all other variables that might impact on fair value remain constant, then the impact on loss for the year and equity is as follows: +/- 100 basis points Impact on loss after tax Impact on equity (b) Interest Rate Risk 2017 $ 121,637 121,637 2016 $ 134,407 134,407 Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market interest rates. The Group’s exposure to interest rate risk in relation to future cash flows and the effective weighted average interest rates on classes of financial assets and financial liabilities, is as follows: 2017 Financial Instruments Financial Assets Cash Flexi Deposit Floating Deposit Term Deposit Term Deposit Trade receivables Other receivables Related party receivables Financial Liabilities Trade payables Other payables Related party payables Interest Bearing $ 2,534,495 3,500,000 2,500,000 26,602 48,505 - - - 8,609,602 - - - - Non-interest Bearing $ - - - - - 1,490,542 893,466 26,607 2,410,615 304,012 625,072 1,000 930,084 Total Carrying Amount $ 2,534,495 3,500,000 2,500,000 26,602 48,505 1,490,542 893,466 26,607 11,020,217 Weighted Average Effective Interest Rate 1.50% Floating 2.55% Fixed 2.47% Floating 2.65% Fixed 2.10% Fixed 0.00% 0.00% 0.00% 304,012 625,072 1,000 930,084 0.00% 0.00% 0.00% 44 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 2016 Financial Instruments Financial Assets Cash Flexi Deposit Floating Deposit Term Deposit Term Deposit Trade receivables Other receivables Related party receivables Financial Liabilities Trade payables Other payables Related party payables Interest Bearing $ 1,964,185 2,000,000 2,000,000 25,000 40,000 - - - 6,029,185 - - - - Non-interest Bearing $ - - - - - 989,262 805,089 26,607 1,820,958 469,601 243,404 1,000 714,005 Total Carrying Amount $ 1,964,185 2,000,000 2,000,000 25,000 40,000 989,262 805,089 26,607 7,850,143 469,601 243,404 1,000 714,005 Weighted Average Effective Interest Rate 1.75% Floating 2.55% Fixed 2.72% Floating 2.95% Fixed 2.65% Fixed 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% No other financial assets or financial liabilities are expected to be exposed to interest rate risk. There are no variable interest borrowings in the Group. The Group is exposed to variable interest cash and cash deposits held; however, fluctuations due to interest rates are considered immaterial. (c) Credit Risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date of recognised financial assets is the carrying amount of those assets, net of any provisions for impairment of those assets, as disclosed in consolidated statement of financial position and notes to the consolidated financial statements. The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Group. The Group minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a number of known and existing customers and reputable organisations. (i) Cash Deposits Credit risk for cash deposits is managed by holding all cash deposits with major Australian banks. (ii) Trade Receivables Credit risk for trade receivables is managed by setting credit limits and completing credit checks for new customers. Outstanding receivables are regularly monitored for payment in accordance with credit terms. The ageing analysis of trade and other receivables is provided in Note 9. As the Group undertakes transactions with a large number of customers and regularly monitors payment in accordance with credit terms, the financial assets that are neither past due nor impaired, are expected to be received in accordance with the credit terms. (iii) Other Receivables Other receivables relate to research and development tax concessions receivable from the Australian Taxation Office and do not pose a material credit risk. 45 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (d) Liquidity Risk The Group’s approach to managing liquidity risk is to ensure, as far as possible, that, at all times, it has sufficient liquidity to meet its liabilities. The Group has cash reserves and expects to settle all financial liabilities within six months of year end. (e) Fair Value The fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in the consolidated statement of financial position and notes to the consolidated financial statements. NOTE 4: REVENUE AND OTHER INCOME Revenue from Continuing Operations Device and consumables sales Device rental income Consulting income Other Income Grant income Interest income Foreign exchange gain NOTE 5: LOSS FROM CONTINUING OPERATIONS Losses before income tax has been determined after: Cost of sales Finance costs Depreciation Amortisation of patents and intangibles Employee benefits expense - Share based payments - Other employee benefits Operating lease rental Research and development expense NOTE 6: INCOME TAX (a) Current tax Components of Tax Benefit Prima Facie Tax Payable (b) The prima facie tax refundable on loss before income tax is reconciled to the income tax benefit as follows: Prima facie income tax refundable on loss before income tax at 30% (2016: 30%) Add tax effect of: - Accounting research and development expenditure - Other non-allowable items - Share based payments expense - Tax losses not recognised - Unrealised foreign exchange loss - Deferred tax assets not recognised 46 2017 $ 981,378 573,558 1,911,091 3,466,027 258,370 148,588 24,897 431,855 3,897,882 1,068,139 - 91,916 82,761 371,121 3,931,522 4,302,643 283,078 1,845,839 2016 $ 621,600 660,940 1,737,388 3,019,928 86,455 129,165 2,590 218,210 3,238,138 841,416 3,094 82,815 33,120 165,072 4,597,224 4,762,296 274,997 1,507,701 (841,199) (678,465) (1,415,234) (1,774,671) 553,752 9,252 111,336 720,753 152,728 73,713 1,621,534 452,310 5,664 49,522 1,308,309 156,229 - 1,972,034 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Less tax effect of: - Amortisation of capital raising costs - Research and development tax offset - Effect of foreign tax rates - Deferred tax assets not recognised Income tax benefit attributable to loss Deferred Tax Assets not brought to Account (c) Temporary differences Operating tax losses NOTE 7: DIVIDENDS There were no dividends paid during the period. NOTE 8: CASH AND CASH EQUIVALENTS Cash at bank and on hand Deposits at call NOTE 9: RECEIVABLES CURRENT Trade receivables Provision for doubtful debts Accrued income Research and development tax offset refundable Amounts receivable from: - Superspine Forrest Hill Unit Trust 2017 $ 127,044 841,199 79,256 - 1,047,499 (841,199) 2016 $ 108,549 678,465 82,245 6,569 875,828 (678,465) 183,283 5,534,457 5,717,740 109,570 4,813,704 4,923,274 2,534,495 6,075,107 8,609,602 1,964,185 4,065,000 6,029,185 1,571,003 (80,461) 1,490,542 52,022 841,444 893,466 1,007,893 (18,631) 989,262 126,624 678,465 805,089 26,607 2,410,615 26,607 1,820,958 Trade receivables ageing analysis at 30 June is: Gross 2017 $ Impairment 2017 $ Gross 2016 $ Impairment 2016 $ Not past due Past due 31-60 days Past due 61-90 days Past due more than 91 days 1,091,650 133,331 204,391 141,631 1,571,003 - - - (80,461) (80,461) 816,733 47,051 22,739 121,370 1,007,893 - - - (18,631) (18,631) Trade receivables are non-interest bearing with 30-day terms. An impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. Trade receivables not impaired are expected to be received. 47 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 2017 $ 2016 $ 317,157 - 317,157 231,461 15,320 246,781 NOTE 10: INVENTORIES CURRENT At Cost Finished goods Work in progress NOTE 11: OTHER ASSETS Prepayments 146,125 136,056 NOTE 12: INTANGIBLE ASSETS Patents at cost Less accumulated amortisation Intangibles at cost Less accumulated amortisation Goodwill at cost (a) Reconciliations 745,402 (105,462) 1,910,856 (55,707) 112,110 2,607,199 597,084 (71,383) 429,085 (7,025) 112,110 1,059,871 Reconciliation of the carrying amounts of intangible assets at the beginning and end of the current financial year: Goodwill Patents Intangibles Opening balance Additions Amortisation expense 2017 $ 112,110 2016 $ 112,110 - - - - 2017 $ 525,701 148,318 2016 $ 412,554 2017 $ 422,060 139,242 1,481,771 (34,079) (26,095) (48,682) Closing balance 112,110 112,110 639,940 525,701 1,855,149 2016 $ - 429,085 (7,025) 422,060 Development expenditure capitalised during the year relates to product that had progressed from the research phase to where it has been determined that the product will be developed for progressive release to the market (refer Note 1 (i)). NOTE 13: PLANT AND EQUIPMENT Plant and Equipment Testing equipment at cost Accumulated depreciation Leased devices at cost Accumulated depreciation Office equipment at cost Accumulated depreciation 2017 $ 126,485 (84,997) 41,488 257,144 (106,553) 150,591 231,166 (147,862) 83,304 2016 $ 107,986 (68,944) 39,042 227,867 (59,195) 168,672 190,902 (126,453) 64,449 48 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Furniture, fixtures and fittings at cost Accumulated depreciation Tooling at cost Accumulated depreciation Total plant and equipment (a) Reconciliations 2017 $ 63,691 (5,215) 58,476 67,530 (20,295) 47,235 381,094 2016 $ 10,544 (3,624) 6,920 45,949 (14,790) 31,159 310,242 Reconciliation of the carrying amounts of plant and equipment at the beginning and end of the current financial year: 39,042 18,500 (16,054) 41,488 168,672 29,276 (47,357) 150,591 64,449 40,264 (21,409) 83,304 6,920 53,147 (1,591) 58,476 31,159 21,581 (5,505) 47,235 310,242 133,492 29,276 (91,916) 381,094 50,610 3,311 (14,879) 39,042 152,184 53,812 (37,324) 168,672 82,198 7,735 (25,484) 64,449 7,745 - (825) 6,920 31,963 3,499 (4,303) 31,159 324,700 14,545 53,812 (82,815) 310,242 Testing Equipment Opening carrying amount Additions Depreciation expense Closing Carrying Amount Leased Devices Opening carrying amount Transfers from inventory Depreciation expense Closing Carrying Amount Office Equipment Opening carrying amount Additions Depreciation expense Closing Carrying Amount Furniture, Fixtures And Fittings Opening carrying amount Additions Depreciation expense Closing Carrying amount Tooling Opening carrying amount Additions Depreciation expense Closing Carrying Amount Total Plant And Equipment Opening carrying amount Additions Transfers from inventory Depreciation expense Closing Carrying Amount 49 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 NOTE 14: PAYABLES CURRENT Unsecured Liabilities Trade payables Unearned income Sundry creditors and accruals Loan from related parties NOTE 15: PROVISIONS CURRENT Employee benefits NON-CURRENT Employee benefits (a) Aggregate employee benefits liability (b) Number of employees at year end NOTE 16: SHARE CAPITAL The Group’s share capital is as follows: 2017 $ 2016 $ 304,012 229,571 395,501 1,000 930,084 469,601 24,502 218,902 1,000 714,005 385,696 279,114 30,340 18,892 416,036 41 298,006 28 Ordinary Shares Parent Equity 2017 Parent Equity 2016 No of Shares $ No of Shares $ Beginning of the financial year Issued during the financial year - Employee share scheme (A) - Other shares issued (B) - Shares issued (C) - Cost of raising capital 149,914,616 30,709,796 121,800,000 23,855,099 - - 17,391,243 - - 40,161 7,999,972 (309,411) 500,000 - 27,614,616 - - 56,435 7,179,800 (381,538) End of the financial year 167,305,859 38,440,518 149,914,616 30,709,796 ! Shares issued under the Employee Share Ownership Plan: ! In the prior year 500,000 ordinary shares were issued to employees of the Group at an average market price of 26 cents. All these shares are subject to non-recourse loans. Refer to Note 21, Share Based Payments. (i) Shares Issued under the Employee Share Ownership Plan: During the year a number of employees, previously issued shares under the Employee Share Ownership Plan (ESOP) repaid their non-recourse loans and took possession of their share entitlement. (ii) Shares Issued in a Capital Raising: In December 2016 and January 2017, the Group: ! ! ! Issued 10,869,565 fully paid ordinary shares to institutional and sophisticated investors at $0.46 per share raising $5,000,000 before costs; Issued 4,347,828 fully paid ordinary shares to major shareholder, Starfish Technology Fund II Trust A and Starfish Technology Fund II Trust B, at $0.46 per share raising $2,000,001; and Issued 2,173,850 fully paid ordinary shares under a share purchase plan to shareholders at $0.46 per share raising $999,971. 50 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Rights of each Type of Share Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders’ meetings, each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. Capital Management When managing capital, management's objective is to ensure the Group continues as a going-concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. This is achieved through the monitoring of historical and forecast performance and cash flows. During 2017, management paid dividends of $nil (2016: $nil). Employee Share Ownership Plan (ESOP) The Group continued to offer employee participation in short-term and long-term incentive schemes as part of the remuneration packages for the employees of the Group. Refer to Note 21, Share Based Payments, for detailed disclosures. NOTE 17: RESERVES AND ACCUMULATED LOSSES Share-based payment reserve Foreign currency translation reserve Notes 17(a) 17(b) 2017 $ 584,162 174,124 758,286 2016 $ 228,367 (134,871) 93,496 Accumulated losses 17(c) (26,073,132) (22,212,210) (a) Share-based Payment Reserve (i) Nature and Purpose of Reserve This reserve is used to record the fair value of options and shares issued to employees as part of their remuneration. The balance is transferred to share capital when options are granted and balance is transferred to retained earning when options lapse. Movements in Reserve (ii) Balance at beginning of year Movement taken to comprehensive income during the year: - Employee share ownership plan - Equity instruments lapsed Balance at end of year Foreign Currency Translation Reserve (b) Balance at beginning of year Movement taken to comprehensive income during the year Balance at end of year Accumulated Losses (c) Balance at beginning of year Net loss attributable to members of dorsaVi Ltd Reversal of share based payment reserve Balance at end of year 228,367 405,267 371,121 (15,326) 584,162 (134,871) 308,995 174,124 165,072 (341,972) 228,367 (326,570) 191,699 (134,871) (22,212,210) (3,876,248) 15,326 (26,073,132) (17,317,080) (5,237,102) 341,972 (22,212,210) 51 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 NOTE 18: CASH FLOW INFORMATION (a) Reconciliation of Cash 2017 $ 2016 $ Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash at bank and on hand Deposits at call 2,534,495 6,075,107 8,609,602 1,964,185 4,065,000 6,029,185 (b) Reconciliation of Cash Flow used in Operations with Loss after Income Tax Loss from ordinary activities after income tax (3,876,248) (5,237,102) Adjustments and Non-cash Items Amortisation Depreciation Share based payments Movement in debtor provision Foreign currency translation through reserve Changes in Assets and Liabilities (Increase) / decrease in receivables (Increase) / decrease in other assets Increase in inventories Increase / (decrease) in payables (Increase) / decrease in research and development tax offset receivable Increase in provisions Cash flows used in operating activities NOTE 19: COMMITMENTS AND CONTINGENCIES 82,761 91,916 371,121 61,830 308,995 (563,110) 64,533 (99,655) 216,082 (162,979) 118,030 489,524 (3,386,724) Operating Lease Commitments (a) Non-cancellable operating leases contracted for but not capitalised in the financial statements: Payable - Not later than one year - Later than one year and not later than five years 138,521 1,575 140,096 33,120 82,815 165,072 (4,151) 191,699 (679,770) 43,319 (162,636) (352,527) (29,917) 2,176 (710,799) (5,947,901) 99,802 - 99,802 Description of Leasing Arrangement: - Operating lease of premises in Australia - Month by month Agreement - Operating lease of storage in Australia - Expires 18 November 2018 - Operating lease of premises in Europe - Expires 20 June 2018 - Operating lease of premises in USA – Expires 30 April 2018 Capital Expenditure Commitments (b) Acquisition of intangible asset Total capital expenditure commitments 170,000 170,000 - - Contingent Asset and Liabilities (c) There are no contingent assets or contingent liabilities at balance date. 52 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 NOTE 20: LOSS PER SHARE Reconciliation of loss used in calculating loss per share: Loss from continuing operations Loss used in calculating basic earnings per share Loss used in calculating diluted earnings per share 2017 $ 2016 $ (3,876,248) (3,876,248) (3,876,248) (5,237,102) (5,237,102) (5,237,102) 2017 2016 No of Shares No of Shares Weighted average number of ordinary shares used in calculating basic earnings per share Effect of dilutive securities: Equity instruments Adjusted weighted average number of ordinary shares used in calculating diluted earnings per share 158,497,079 - - 144,346,723 - - 158,497,079 144,346,723 NOTE 21: SHARE BASED PAYMENTS (a) Employee Shares The Board established an Employee Share Ownership Plan (ESOP). This plan was established by the Group to facilitate the acquisition of Shares, Options and Performance Rights by those employed, or otherwise engaged by, or holding a position of office in, dorsaVi. They key objective of the plan is to provide an incentive for employees to align their interests with those of the shareholders. Other objectives of the ESOP include: ! To attract, motivate and retain quality employees and Directors of dorsaVi; ! To create a commitment and united purpose between the employees and Directors and dorsaVi; and ! To add wealth for all shareholders of dorsaVi through the motivation of dorsaVi’s employees and Directors. This plan allows for dorsaVi to offer employees non-recourse and interest-free loans to acquire fully paid shares. On 20 September 2013, the Group’s shareholders approved the giving of such financial assistance. Only a person who is an Eligible Person may be invited and authorised by the Board to participate in this plan. An Eligible person means: ! An employee of dorsaVi or a subsidiary of dorsaVi; or ! A Director of dorsaVi or a subsidiary of dorsaVi who holds a salaried employment or office in dorsaVi or a subsidiary of dorsaVi; or ! A contractor engaged by dorsaVi or a subsidiary of dorsaVi and whom the Group has determined is an Eligible Person to participate in this plan. There is no maximum limit on the number of Securities that may be acquired by Eligible Persons under the ESOP. However, the Board intends to restrict further issues of Securities to no more than 5% of the Group’s issued share capital. This limit will be maintained unless shareholder approval is subsequently sought to increase this level. No ESOP shares were issued to employees during the year ended 30 June 2017. Between 1 July 2015 and 30 June 2016, 500,000 Shares were granted under the ESOP at an average market price of 26 cents, subject to a non-recourse loan. These shares carry a full entitlement to dividends and capital returns. There is no ability for the Group to offset dividends paid against the non-recourse loan. The ESOP Shares are subject to restriction agreements imposing loan repayment obligations, and, that the holders of Shares are not able to trade them within 12 months of issuance. After 12 months, 1/3rd of the issued shares can be traded. Contingent upon continued employment with the Group and meeting loan repayment obligations, the remaining shares become available for trading at a monthly rate of 1/36th of the shares issued over the subsequent 24 months. 53 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (b) Employee Options Under the Group’s Employee Share Ownership Plan 2013, dorsaVi agreed to grant options to 1,300,000 ordinary shares of the Group during the period 1 July 2016 to 30 June 2017. Of the options granted, 750,000 are subject to vesting conditions in accordance with each option agreement. During the year a total of 1,977,778 options were cancelled. (c) Employee Performance Rights During the period 1 July 2016 to 30 June 2017 and under the Group’s Employee Share Ownership Plan 2013, dorsaVi agreed to grant 3,749,000 performance rights that may vest into ordinary shares of the Group. Performance rights are subject to performance vesting conditions in accordance with each agreement. The performance rights do not vest into shares unless the performance conditions are met. During the year ended 20 June 2017 no performance rights vested. The performance rights vest into shares at $nil. Details of shares, options and performance rights granted are as follows: 2017 Grant Date Expiry Date Exercise Price 3-Jul-14 2-Sep-14 21-Oct-14 5-Nov-14 25-Feb-15 17-Aug-15 30-Sep-15 30-Sep-15 30-Sep-15 11-Dec-15 24-Mar-16 8-Jun-16 29-Nov-16 29-Nov-16 29-Nov-16 29-Nov-16 15-May-17 15-May-17 15-May-17 15-May-17 15-May-17 15-May-17 15-May-17 15-May-17 15-May-17 5-Jun-17 5-Jun-17 5-Jun-17 5-Jun-17 5-Jun-17 5-Jun-17 5-Jun-17 5-Jun-17 TOTAL 3-Jul-19 1-Sep-19 14-Jul-16 5-Nov-19 25-Feb-20 17-Aug-20 30-Sep-20 30-Sep-21 30-Sep-22 11-Dec-16 24-Mar-21 8-Jun-21 1-Oct-17 1-Oct-18 1-Oct-19 29-Nov-19 15-May-22 1-Oct-22 1-Oct-23 1-Oct-24 1-Jul-24 1-Oct-22 1-Oct-23 1-Oct-24 1-Jul-24 1-Jul-17 1-Oct-17 1-Oct-18 1-Oct-19 1-Jul-19 1-Jan-18 1-Jan-19 1-Jan-20 $0.46 $0.40 $0.40 $0.40 $0.36 $0.26 $0.28 $0.28 $0.28 $0.38 $0.40 $0.34 $0.33 $0.33 $0.33 $0.33 $0.33 - - - - - - - - - - - - - - - - Balance at 1/7/2016 250,000 100,000 900,000 20,000 80,000 500,000 250,000 250,000 250,000 277,778 200,000 50,000 - - - - - - - - - - - - - - - - - - - - - Granted during the Year - - - - - - - - - - - - 150,000 150,000 150,000 450,000 550,000 133,333 133,333 133,334 350,000 79,000 39,000 39,000 117,000 250,000 350,000 350,000 350,000 775,000 83,334 83,334 333,332 3,127,778 5,049,000 Balance at 30/6/2017 Expired Exercised during during the Year the Year 250,000 - - 100,000 - - - 900,000 - 20,000 - - 80,000 - - 500,000 - - - 250,000 - - 250,000 - - 250,000 - - 277,778 - 200,000 - - - 50,000 - 150,000 - - 150,000 - - 150,000 - - 450,000 - - 550,000 - - 133,333 - - 133,333 - - 133,334 - - 350,000 - - 79,000 - - 39,000 - - 39,000 - - 117,000 - - 250,000 - - 350,000 - - 350,000 - - 350,000 - - 775,000 - - 83,334 - - 83,334 - - - 333,332 - - 1,977,778 6,199,000 Exercisable at the end of the Year 250,000 91,666 - 20,000 80,000 500,000 - - - - 100,000 - - - - - 550,000 - - - - - - - - - - - - - - - - 1,591,666 54 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 2016 Grant date Expiry Date Exercise Price Balance at 1/7/2015 Granted during the Year Exercised during the Year Expired during the Year Balance at 30/6/2016 8-Apr-14 6-May-14 3-July-14 2-Sep-14 21-Oct-14 5-Nov-14 25-Feb-15 17-Aug-15 30-Sep-15 30-Sep-15 30-Sep-15 11-Dec-15 24-Mar-16 8-Jun-16 TOTAL 11-Dec-15 6-May-17 3-July-19 1-Sep-19 14-Jul-16 5-Nov-19 25-Feb-20 17-Aug-20 30-Sep-20 30-Sep-21 30-Sep-22 11-Dec-16 24-Mar-21 8-Jun-21 $0.51 $0.49 $0.46 $0.40 $0.40 $0.40 $0.36 $0.26 $0.28 $0.28 $0.28 $0.10 $0.40 $0.34 1,000,000 100,000 250,000 100,000 900,000 20,000 80,000 - - - - - - - - - - - - - - 500,000 250,000 250,000 250,000 277,778 200,000 50,000 2,450,000 1,777,778 - 1,000,000 100,000 - - - - - - - - - - - - - - - - - - - - - - - - - - 1,100,000 - - 250,000 100,000 900,000 20,000 80,000 500,000 250,000 250,000 250,000 277,778 200,000 50,000 3,127,778 Exercisable at the end of the Year - - 250,000 58,333 318,750 20,000 80,000 500,000 250,000 - - 277,778 100,000 2,083 1,856,944 Other additional information associated with these share performance rights and option grants include: ! The weighted average remaining contractual life for equity entitlements outstanding at the end of the period was 6 years. ! The weighted average value of the equity entitlements at grant date was $0.34. This excluded any consideration of the impact of the exercise (or vesting) conditions. ! The fair value was determined using the binomial tree method or the Black-Scholes option-pricing models. ! The share price at grant date ranged from: $0.26 to $0.46 ! Expected price volatility of the Group’s shares: 80% ! Dividends: $nil ! Risk free interest rate: 1.81% to 2.15% (c) Expenses Recognised from Share-Based Payment Transactions The expense recognised in relation to the share-based payment transactions was recorded within employee benefits expense in the statement of comprehensive income were as follows: Equity instruments issued under employee share plan Shares issued under employee share plan Total expenses recognised from share-based payment transactions NOTE 22: DIRECTORS' AND EXECUTIVE COMPENSATION Compensation by Category Short-term employment benefits Post-employment benefits Share-based payments 2017 $ 339,866 31,255 371,121 2016 $ 80,062 85,010 165,072 1,771,315 119,838 290,885 2,182,038 1,802,300 118,210 116,311 2,036,821 55 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 NOTE 23: SUBSIDIARIES AND RELATED PARTY DISCLOSURES The consolidated financial statements include the financial statements of dorsaVi Ltd and its controlled entities listed below: dorsaVi Europe Ltd dorsaVi USA, Inc. Australian Workplace Compliance Pty Ltd Country of incorporation Ownership interest held by DVL 2017 % 2016 % 100 100 100 100 100 100 UK USA AUS ! dorsaVi Europe Ltd was incorporated on 3 February 2014. ! dorsaVi USA, Inc. was incorporated on 19 May 2014. ! Australian Workplace Compliance Pty Ltd was purchased on 3 July 2014. (a) Transactions with Entities with Associates: Superspine Forrest Hill Unit Trust is considered an associate of dorsaVi Ltd, as dorsaVi Ltd has a 25% ownership in the entity. There is a loan receivable from Superspine Forrest Hill Unit Trust of $26,607 (2016: $26,607) at year-end. There is also loan payable at balance date for $1,000 (2016: $1,000) included in Payables at Note 14. (b) Transactions with Directors, Key Management Personnel and Other Related Parties: During the year ended 30 June 2017, dorsaVi Ltd paid $54,120 (2016: $49,163) to Starfish Technology Fund II, LP on behalf of Michael Panaccio for director’s fees. Starfish Ventures Pty Ltd is a related party as it is connected with a director of dorsaVi Ltd. During the year ended 30 June 2017, Starfish Ventures Pty Ltd charged rent to dorsaVi Ltd. Total value of these rental charges was $121,970 (2016: $105,995). The rent was charged to dorsaVi on normal terms and conditions. The balance outstanding at balance date was $14,916 (2016: $20,772) included in Trade Payables at Note 14. During the year ended 30 June 2017, dorsaVi Ltd paid $nil (2016: $20,011) to Simon Heaysman, paid $nil (2016: $2,224) to Dane Heaysman (both inclusive of expense claim reimbursements) and paid $104,038 (2016: $97,754) to Safety Assess Pty Ltd, a related company of Dane Heaysman. These amounts are on normal commercial terms and were paid to these parties in their capacity as ViSafe Assessors on various ViSafe projects throughout the financial year. These individuals and company are related to dorsaVi through their relationship to their father, Mr Mark Heaysman. NOTE 24: AUDITOR'S REMUNERATION Amounts Paid and Payable to Pitcher Partners Melbourne for: Audit and Other Assurance Services (i) An audit or review of the financial report of the entity and any other entity in the consolidated entity Total remuneration for audit and other assurance services Other Non-audit Services (ii) Taxation and other Compliance Services Total remuneration for non-audit services Total remuneration of Pitcher Partners Melbourne 2017 $ 2016 $ 79,400 79,400 107,125 107,125 26,831 26,831 106,231 24,595 24,595 131,720 56 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 NOTE 25: PARENT ENTITY INFORMATION Summarised Statement of Financial Position (a) Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Contributed capital Share-based payment reserve Accumulated losses Total equity Summarised Statement of Comprehensive Income (b) Loss for the year Other comprehensive income for the year Total comprehensive income for the year NOTE 26: SEGMENT INFORMATION (a) Description of Segments 2017 $ 2016 $ 20,108,383 2,988,293 23,096,676 15,575,009 1,370,113 16,945,122 1,859,915 30,340 1,890,255 21,206,421 1,856,846 18,892 1,875,738 15,069,384 38,440,518 584,162 (17,818,259) 21,206,421 30,709,796 228,367 (15,868,779) 15,069,384 (1,964,808) - (1,964,808) (3,124,993) - (3,124,993) The Group’s chief operating decision maker has identified the following reportable segments: ! Segment 1: Australia ! Segment 2: Europe ! Segment 3: United States of America Management differentiates operating segments based on geographical areas and regulatory environments. The type of products and services from which each reportable segment derives its revenue is considered the same. The operating segments have been identified based on internal reports reviewed by the Group’s chief operating decision makers in order to allocate resources to the segment and assess its performance. (b) Segment Information The Group’s chief operating decision maker’s use segment revenue and segment result to assess the financial performance of each operating segment. Amounts for segment information are measured in the same way in the financial statements. They include items directly attributable to the segment and those that can reasonably be allocated to the segment based on the operations of the segment. There has been no inter-segment revenue or expenses during the year. 57 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Segment information is reconciled to financial statements and underlying profit disclosure notes as follows: 2017 Australia $ Europe $ USA $ Total $ Segment Revenue Total Segment Revenue Segment Revenue from External Source Segment Result Total Segment Result Segment Result from External Source 2,037,596 2,037,596 675,438 675,438 1,184,848 1,184,848 3,897,882 3,897,882 (1,964,808) (1,964,808) (468,145) (468,145) (1,443,295) (1,443,295) (3,876,248) (3,876,248) Items Included within the Segment Result: Grant income Interest income Depreciation and amortisation expense Income tax benefit 258,370 148,564 (174,677) 802,940 - 24 - 38,259 - - - - 23,338,117 1,031,158 1,044,604 258,370 148,588 (174,677) 841,199 25,413,879 (10,942,087) 14,471,792 Total Segment Assets Elimination Consolidated Segment Assets Total Assets include: Additions to Non-current Assets Total Segment Liabilities Elimination Consolidated Segment Liabilities 2016 Segment Revenue Total Segment Revenue Segment Revenue from External Source Segment Result Total Segment Result Segment Result from External Source Items included within the segment result: Grant Income Interest Income Interest Expense Depreciation and Amortisation Expense Income Tax Benefit Total Segment Assets Elimination Consolidated Segment Assets Total Assets include: Additions to Non-current Assets Total Segment Liabilities Elimination Consolidated Segment Liabilities 1,763,581 - - 1,763,581 (1,969,528) (3,407,529) (6,911,150) (12,288,207) 10,942,087 (1,346,120) Australia $ Europe $ USA $ Total $ 2,056,587 2,056,587 727,749 727,749 453,802 453,802 3,238,138 3,238,138 (3,124,993) (3,124,993) (567,605) (567,605) (1,544,504) 1,544,504 (5,237,102) (5,237,102) 86,455 129,122 (3,094) (115,935) 678,465 - 43 - - - - - - - - 16,870,149 1,082,326 816,183 86,455 129,165 (3,094) (115,935) 678,465 18,768,658 (9,165,565) 9,603,093 582,872 - - 582,872 (1,773,465) (3,257,191) (5,146,920) (10,177,576) 9,165,565 (1,012,011) 58 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 (c) Major Customers In 2017 no customer contributed greater than 10% of the Group’s total revenue. In the prior year, one major customer contributed external revenue of $333,993 which was greater than 10% of the Group’s total revenue. Revenue from this customer was included in the Europe segment. NOTE 27: SUBSEQUENT EVENTS With the exception of the following, no matters or circumstances have arisen since the end of the financial year that have significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. ! On 14 July 2017, dorsaVi Ltd received 510(k) Clearance by the US Food and Drug Administration (FDA) for the next generation ViMove2 sensor designed to measure, record and analyse movement and muscle activity of the lower back. ! On 27 July 2017, the Remuneration Committee and the Board completed their assessments of the performance of key management personnel for the year ended 30 June 2017. Of the 795,666 performance rights and performance options previously granted in respect of that year it was confirmed that performance outcomes would result in 407,363 (51%) of these rights and options vesting. In accordance with performance agreements these rights and options will vest on 1 October 2017 and 1 January 2018. ! On 14 August 2017, dorsaVi Ltd issued 250,000 fully paid ordinary shares, at $nil per share, to employees, under the dorsaVi ESOP. The issue of these shares arose on the vesting of 250,000 performance rights previously granted as a result of those employees meeting the performance conditions attached to the rights. ! On 28 August 2017, dorsaVi Ltd announced that Herb Elliott had advised the Board of his intention to retire as Chairman and as a director of dorsaVi at the Company’s Annual General Meeting (AGM) to be held on 23 November 2017. Mr Greg Tweedly, the current Chair of the Audit and Risk Committee, will succeed Herb Elliott as Chairman at the AGM. 59 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Directors’ Declaration The directors declare that the financial statements and notes set out on pages 30 to 59 in accordance with the Corporations Act 2001: a) Comply with Accounting Standards and the Corporations Regulations 2001, and other mandatory professional reporting requirements; b) As stated in Note 1(a) the consolidated financial statements also comply with International Financial Reporting Standards; and c) Give a true and fair view of the financial position of the Group as at 30 June 2017 and of its performance for the year ended on that date. In the directors’ opinion, there are reasonable grounds to believe that dorsaVi Ltd will be able to pay its debts as and when they become due and payable. This declaration has been made after receiving the declarations required to be made by the chief executive officer and chief financial officer to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2017. This declaration is made in accordance with a resolution of the directors. Herb Elliott Director and Chairman Andrew Ronchi Director and CEO Melbourne Date: 28 August 2017 Melbourne Date: 28 August 2017 60 dorsaVi Ltd and controlled entities  ABN 15 129 742 409  INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd  Report on the Audit of the Financial Report  Opinion   We have audited the financial report of dorsaVi Ltd “the Company” and controlled entities “the Group”, which  comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of  profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated statement of cash flows for the year then ended, and notes to the financial statements, including  a summary of significant accounting policies, and the directors’ declaration.   In our opinion, the accompanying financial report of the dorsaVi Ltd and controlled entities is in accordance with  the Corporations Act 2001, including:  (a) (b) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial  performance for the year then ended; and   complying with Australian Accounting Standards and the Corporations Regulations 2001.   Basis for Opinion   We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.  Our  responsibilities  under  those  standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of  our report. We are independent of the Group in accordance with the auditor independence requirements of the  Corporations  Act  2001  and  the  ethical  requirements  of  the  Accounting  Professional  and  Ethical  Standards  Board’s APES 110 Code of Ethics for Professional Accountants “the Code” that are relevant to our audit of the  financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.   We confirm that the independence declaration required by the Corporations Act 2001, which has been given to  the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s  report.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our  opinion.   Key Audit Matters   Key audit matters are those matters that, in our professional judgement, were of most significance in our audit  of the financial report of the current period. These matters were addressed in the context of our audit of the  financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on  these matters.   An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000  Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners is an association of independent firms Melbourne  |  Sydney  |  Perth  |  Adelaide  |  Brisbane|  Newcastle An independent member of Baker Tilly International 61                                              dorsaVi Ltd and controlled entities  ABN 15 129 742 409  INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd  Key Audit Matter  Recognition of revenue‐ $3,897,882  Refer to Note 4 ‘Revenue and other income’  The Group’s three largest revenue streams are:  The sale of devices and consumables,    Rental of devices; and,    The provision of consulting services.  service  stream  revenue  Consulting  (FY17:  $1,911,091,  FY16:  $1,737,388)  includes  contracts  that account for revenue based on the percentage  of completion method, calculated on management’s  estimation of work completed to balance date and  against set project milestones.  The  accurate  recording  of  consulting  service  revenue  is  highly  dependent  on  management’s  internal  project  management  system,  in  order  to  track the completion of milestones and tasks.  Key  elements  of  the  internal  project  management  system includes:   Accurately  estimating  total  effort  to  complete  project at initiation of the contract;    Management’s  estimation  of  work  completed   to date; and  Estimate  of  the  cost  to  complete,  including  identification of potential project over‐runs.  We focused on this area as a key audit matter due to  the number and type of estimation events over the  course of the contract life, in determining revenue  recognition for consulting services.  How our audit addressed the key audit matter  Our procedures included amongst others:   We evaluated managements’ process regarding the  recognition  of  revenue  for  consulting  services,  which included a review of the project management  system  utilised.  This  included  obtaining  an  understanding of the milestone and task completion  tracking capability, and the internal project delivery  function.   We selected a sample of contracts, and performed  the following procedures:  o We  obtained  and  reviewed  the  original  contract and associated terms;  o We assessed the revenue recognised under  the  percentage  of  completion  method,  to  date,  effort  including  remaining  and  an  assessment  of  any  applicable  changes  to  scope  or  delivery  issues;  the  effort  o We  agreed  progress  payments  made  by  for  projects  with  billing  customers  milestones in order to assess the likelihood  of  the  recovery  for  the  works  completed;  and  o We evaluated contract performance in the  period  since  balance  date  to  determine  whether  there  have  been  any  material  adverse changes in the delivery of projects.  An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000  Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners is an association of independent firms Melbourne  |  Sydney  |  Perth  |  Adelaide  |  Brisbane|  Newcastle An independent member of Baker Tilly International 62                                          dorsaVi Ltd and controlled entities  ABN 15 129 742 409  INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd  Key Audit Matter  Capitalisation of development costs ‐ $1,481,771 Refer to Note 12 ‘Intangible Assets’  The research and development of new and existing  technology  is  part  of  the  Group’s  operations.  Each  project undertaken represents an investment made  by the business, for which future economic benefits  are expected to be derived.    The capitalisation of any development costs is highly  subject  to  management  judgement  and  is  also  subject  to  various  recognition  criteria  as  per  AASB  138 Intangible assets.  Key management considerations to be made include  the following:   Stage  of  the  development  cycle  ‐ research   vs  development;  for   Ability  to  accurately  record  and  allocate  costs  including  incurred  employee costs; and  Technical and commercial viability of individual  projects undertaken.  individual  projects,   We focused on this area as a key audit matter due to  the number and type of judgement and estimation  events  required  for  each  of  the  development  projects.   How our audit addressed the key audit matter  Our procedures included amongst others:  We  selected  from  a  sample  of  transactions  which  had  been included within the capitalised development costs  and subsequently performed the following:   We  and  reconciliations for the amounts capitalised;  reviewed  management  obtained   We  tested  the  mathematical  accuracy  of  reconciliations  prepared  for  costs  that  had  been  capitalised;   Reviewing  the  employee  costs  allocated  to  the  different  development  projects,  and  testing  a  sample  of  employee  rates  and  captured  hours  for  the  internal  amounts  capitalised  and  traced  to  timesheets;  testing  contractor  costs   Reviewing the external contractor costs allocated to  the  different  development  projects,  and  sampling  and  supporting  information to substantiate the expenditure;   We  evaluated  management’s  process  surrounding  the  capitalisation  of  development  costs.  This  included  reviewing  development  projects  against  the recognition criteria as per AASB 138 Intangible  assets; and  to   As  part  of  our  assessment,  we  challenged  management  of  both  the  development  and  operations  teams  to  assess  the  technical  and  commercialisation  commercial  expectations of the development costs capitalised.  viability/  Other Information   The  directors  are  responsible  for  the  other  information.  The  other  information  comprises  the  information  included in the Company’s annual report for the year ended 30 June 2017, but does not include the financial  report and our auditor’s report thereon.   Our opinion on the financial report does not cover the other information and accordingly we do not express any  form of assurance conclusion thereon.   In connection with our audit of the financial report, our responsibility is to read the other information and, in  doing  so,  consider  whether  the  other  information  is  materially  inconsistent  with  the  financial  report  or  our  knowledge obtained in the audit or otherwise appears to be materially misstated.   If,  based  on  the  work  we  have  performed,  we  conclude  that  there  is  a  material  misstatement  of  this  other  information, we are required to report that fact. We have nothing to report in this regard.   An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000  Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners is an association of independent firms Melbourne  |  Sydney  |  Perth  |  Adelaide  |  Brisbane|  Newcastle An independent member of Baker Tilly International 63                                      dorsaVi Ltd and controlled entities  ABN 15 129 742 409  INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd  Responsibilities of the Directors for the Financial Report   The directors of the Company are responsible for the preparation of the financial report that gives a true and  fair  view  in  accordance  with  Australian  Accounting  Standards  and  the  Corporations  Act  2001  and  for  such  internal control as the directors determine is necessary to enable the preparation of the financial report that  gives a true and fair view and is free from material misstatement, whether due to fraud or error.   In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue  as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis  of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic  alternative but to do so.   Auditor’s Responsibilities for the Audit of the Financial Report   Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from  material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our  opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in  accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.  Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,  they could reasonably be expected to influence the economic decisions of users taken on the basis of this  financial report.   As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement  and maintain professional scepticism throughout the audit. We also:    Identify and assess the risks of material misstatement of the financial report, whether due to fraud or  error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is  sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material  misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve  collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.    Obtain an understanding of internal control relevant to the audit in order to design audit procedures that  are appropriate in the circumstances, but not for the purpose of expressing an opinion on the  effectiveness of the Group’s internal control.    Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates  and related disclosures made by the directors.    Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based  on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that  may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a  material  uncertainty  exists,  we  are  required  to  draw  attention  in  our  auditor’s  report  to  the  related  disclosures  in  the  financial  report  or,  if  such  disclosures  are  inadequate,  to  modify  our  opinion.  Our  conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,  future events or conditions may cause the Group to cease to continue as a going concern.    Evaluate the overall presentation, structure and content of the financial report, including the disclosures,  and  whether  the  financial  report  represents  the  underlying  transactions  and  events  in  a  manner  that  achieves fair presentation.   Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business  activities  within  the  Group  to  express  an  opinion  on  the  financial  report.  We  are  responsible  for  the  direction,  supervision  and  performance  of  the  Group  audit.  We  remain  solely  responsible  for  our audit  opinion.   An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000  Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners is an association of independent firms Melbourne  |  Sydney  |  Perth  |  Adelaide  |  Brisbane|  Newcastle An independent member of Baker Tilly International 64                          dorsaVi Ltd and controlled entities  ABN 15 129 742 409  INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd  We communicate with the directors regarding, among other matters, the planned scope and timing of the audit  and significant audit findings, including any significant deficiencies in internal control that we identify during our  audit.   We  also  provide  the  directors  with  a  statement  that  we  have  complied  with  relevant  ethical  requirements  regarding  independence,  and  to  communicate  with  them  all  relationships  and  other  matters  that  may  reasonably be thought to bear on our independence, and where applicable, related safeguards.   From the matters communicated with the directors, we determine those matters that were of most significance  in the audit of the financial report of the current period and are therefore the key audit matters. We describe  these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or  when, in extremely rare circumstances, we determine that a matter should not be communicated in our report  because the adverse consequences of doing so would reasonably be expected to outweigh the public interest  benefits of such communication.   Report on the Remuneration Report  Opinion on the Remuneration Report   We have audited the Remuneration Report included in pages 18 to 28 of the directors’ report for the year ended  30 June 2017. In our opinion, the Remuneration Report of dorsaVi Ltd, for the year ended 30 June 2017, complies  with section 300A of the Corporations Act 2001.   Responsibilities   The directors of the Company are responsible for the preparation and presentation of the Remuneration Report  in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the  Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.   F V RUSSO  Partner    28 August 2017  PITCHER PARTNERS  Melbourne   An independent Victorian Partnership ABN 27 975 255 196 Level 19, 15 William Street, Melbourne VIC 3000  Liability limited by a scheme approved under Professional Standards Legislation Pitcher Partners is an association of independent firms Melbourne  |  Sydney  |  Perth  |  Adelaide  |  Brisbane|  Newcastle An independent member of Baker Tilly International 65                                                                                  dorsaVi Ltd and controlled entities ABN: 15 129 742 409 SHAREHOLDER INFORMATION Corporate Governance The Group’s Corporate Governance Statement can be obtained at http://dorsavi.com/investor-relations/ Overview The Group’s securities are listed for quotation in the form of Ordinary Shares on the Australian Securities Exchange (ASX) and trade under the symbol “DVL”. The shareholder information below was applicable as at 14 August 2017. The Group’s share capital was as follows: Type of Security Ordinary Shares (Shares) Options Performance Rights Substantial Holders Names of Holders Number of Securities 167,555,859 1,600,000 3,499,000 Number of Holders 817 4 9 Number of Shares Held % of Total Shares Starfish Technology Fund II, LP, Starfish Ventures, Michael Panaccio and Christiana Panaccio and Micana Family Trust 72,767,755 43.43% Unmarketable Parcels Based on the closing market price on 14 August 2017, there were 79 shareholders holding less than a marketable parcel (i.e. a parcel of securities of less than $500). Options and Performance Rights (not listed on ASX) There were 1,600,000 unquoted options on issue to purchase ordinary shares under the Group’s Incentive Stock Option Agreement. The Options have been issued in accordance with the terms and conditions of the dorsaVi Ltd 2013 Share Ownership Plan. There were 3,499,000 unquoted Performance Rights granted, but not vested into ordinary shares, under the Group’s Incentive Agreements. The Performance Rights have been granted in accordance with the terms and conditions of the dorsaVi Ltd 2013 Share Ownership Plan. Restricted Securities and Escrow Agreements There are no securities which are restricted or subject to escrow agreements. 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. Distribution Schedule Number of Shares 1 – 1,000 1,001 - 10,000 10,001 – 100,000 100,001 – 1,000,000 1,000,001 and above Total Number of Holders 28 348 282 140 19 817 66 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Required Statements a) b) There is no current on-market buy-back of the Group’s securities. The Group’s securities are not quoted on any exchange other than the ASX. dorsaVi’s Top 20 Shareholders Set out below is a schedule of the 20 largest holders of each class of securities quoted. Name of Registered Holder 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. STARFISH TECHNOLOGY FUND II LP AR BSM PTY LTD UBS NOMINEES PTY LTD STARFISH TECHNOLOGY FUND II NOMINEES A PTY LTD STARFISH TECHNOLOGY FUND II NOMINEES B PTY LTD CITICORP NOMINEES PTY LIMITED MS GABRIELLE BANAY BENTALE PTY LTD J P MORGAN NOMINEES AUSTRALIA LIMITED DANIEL RONCHI GARSIND PTY LTD MOZLEY PTY LTD ANDREW RONCHI MORRMAC PTY LTD LEVENSON INVESTMENTS PTY LTD DR BSM PTY LTD MR FRANCIS ROSS SELLENGER + MRS DIANA ELIZABETH SELLENGER MRS ROSALIND LAWRENCE MR WILLIAM HARRIS + MRS JANE HARRIS MR MARK STEPHEN HEAYSMAN Total shares held by top 20 shareholders Total shares held by all other shareholders No. of Shares Held 60,597,345 7,021,814 6,439,439 5,203,782 5,203,781 4,467,435 3,634,491 3,598,637 3,206,157 2,401,138 1,984,357 1,340,218 1,309,732 1,294,231 1,258,147 1,233,353 1,205,385 1,089,923 1,060,000 989,375 114,538,740 53,017,119 % of Total Shares 36.17 4.19 3.84 3.11 3.11 2.67 2.17 2.15 1.91 1.43 1.18 0.80 0.78 0.77 0.75 0.74 0.72 0.65 0.63 0.59 68.36 31.64 67 dorsaVi Ltd and controlled entities ABN: 15 129 742 409 Corporate Directory Board of Directors and Company Secretary Mr Herbert Elliott Mr Ashraf Attia Dr Michael Panaccio Dr Andrew Ronchi Chairman Non-Executive Director Non-Executive Director Chief Executive Officer and Executive Director Non-Executive Director Company Secretary Mr Gregory Tweedly Mr Brendan Case Chief Executive Officer Chief Financial Officer Executive Team Dr Andrew Ronchi Mr Damian Connellan Mr Mark Heaysman Ms Meagan Blackburn Ms Zoe Whyatt Mr Matthew May Ms Megan Connell Mr Muhammad Umer Registered Office in Australia C/- Pitcher Partners, Level 19, 15 William Street, Melbourne, VIC 3000 Tel. +61 3 8610 5000 Principal Administrative Office Level 1, 120 Jolimont Rd, Melbourne East, VIC 3002 Tel. 1800 367 7284 Auditor Pitcher Partners Level 19, 15 William Street, Melbourne, VIC 3000 Tel: +61 3 8610 5000 Investor Relations Ms Rebecca Wilson Buchan Consulting T: +61 3 9866 4722 Share Registry Computershare Investor Services Pty Limited GPO BOX 242, Melbourne, VIC 3001 Tell: + 61 3 9415 5000 Annual General Meeting Date and Place The Annual General Meeting will be held Thursday, 23 November 2017 at 10:00 am at: Offices of Pitcher Partners, Level 19, 15 William Street, Melbourne, Victoria, 3000 68 GD4543 DS - Annual Report Cover A4 2pp – BACK COVER GoDesign.net.au info@dorsavi.com | www.dorsavi.com Australia +61 3 9652 2198 Level 1, 120 Jolimont Road East Melbourne, VIC, 3002 United Kingdom +44 20 3457 0777 2 Angel Square, London, EC1V 1NY United States 800-961-0772 315 W 36th Street, New York, NY 10018 dorsaVi, ViSafe, myViSafe, ViMove, ViMove2, myViMove and ViPerform are trademarks of dorsaVi Limited. © dorsaVi Ltd 2017. 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