dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
APPENDIX 4E - YEAR ENDED 30 JUNE 2020
dorsaVi Ltd and controlled entities
APPENDIX 4E
PRELIMINARY FINANCIAL REPORT
FOR THE YEAR ENDED
30 JUNE 2020
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 2020
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 2020
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
APPENDIX 4E - YEAR ENDED 30 JUNE 2020
Details of the reporting period and the previous corresponding period
Reporting period:
Year ended 30 June 2020
Previous corresponding period:
Year ended 30 June 2019
Results for announcement to the market
Revenue
2,397,059
3,223,869
(826,810)
($)
($)
($)
(%)
(26%)
June 2020
June 2019
Change
Change
Loss from ordinary activities after tax attributable to
members
(7,593,079)
(4,020,751)
(3,572,328)
89%
Loss for the period attributable to members
(7,593,079)
(4,020,751)
(3,572,328)
89%
Net Tangible asset per share
Explanation of Results
June 2020
(cents)
June 2019
(cents)
0.20
1.43
Change
(cents)
(1.23)
dorsaVi Ltd was impacted in the 6 months to 30 June 2020 by the COVID-19 pandemic and focused on: protecting its people,
maintaining recurring revenue and controlling cost.
Total revenue decreased 26% year on year with most of this decline occurring in the six months to 30 June 2020.
The loss from continuing operations after income tax for the 2019 financial year was $7,593,079 (2019: $4,020,751), an
increase of 89% on the 2019 financial year.
Total expenditure was $10,447,502 for the 2020 financial year (2019: $7,811,269). The 2020 expenditure includes a provision
for impairment of intangible assets of $4,018,354 (2019: $nil).
The Directors have assessed the $4,018,354 carrying value of its Intangible Assets (patents and capitalised development
expenditure) for impairment based on value in use calculations. Given the recent change in the Group’s business strategy (i.e.
transition to a Software as a Service (SaaS) recurring revenue strategy), the Group’s forecasts have been updated based upon
reasonable and prudent assumptions including growth rates, discount rates and terminal values. This has resulted in a
provision for impairment of $4,018,354.
The directors believe that the recurring revenue business strategy will maximise the group’s growth and financial performance
prospects, and, should future performance exceed the forecasts, the current impairment provision may be reversed in future
periods.
Without the provision for impairment total expenditure for 2020 would have been $6,429,148 (2019: $7,811,269). This
reduction of $1,382,121 was largely due to cost control measures undertaken by the Group throughout the financial year with
employee benefits expense reducing 24% to $3,040,365 (2019: $3,979,898).
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 2020
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Refer to the attached annual report
Consolidated Statement of Financial Position
Refer to the attached annual report
Consolidated Statement of Changes in Equity
Refer to the attached annual report
Consolidated Statement of Cash Flows
Refer to the attached annual report
Dividends
The board has declared no dividend for the years ended 30 June 2020 (2019: $Nil). There are no dividend reinvestment plans
in operation.
Statement of Accumulated Losses
Consolidated Entity
2020
$
2019
$
Balance at the beginning of year
(33,315,228)
(29,769,466)
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
(7,593,079)
53,730
(40,854,577)
(4,020,751)
474,989
(33,315,228)
-
-
(40,854,577)
(33,315,228)
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 2020.
Audit of the Financial Report
The financial report has been audited and an unqualified opinion has been issued with an Emphasis of Matter in relation to
Going Concern.
Date: 26 August 2020
Finance Disclosure Committee
dorsaVi Ltd
ANNUAL REPORT
2020
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
dorsaVi Ltd
(ABN: 15 129 742 409)
Annual Report
For the Year Ended 30 June 2020
CONTENTS
CHAIRMAN’S REVIEW
CEO REPORT
FINANCIAL REPORT
Financial Report
Directors’ Report
Auditor’s Independence Declaration
Financial Report for the Year Ended 30 June 2020
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members of dorsaVi Ltd
Shareholder Information
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CHAIRMAN’S REVIEW
Dear Shareholders
I am pleased to present dorsaVi Ltd’s (dorsaVi) 2020 annual report to our shareholders.
With workplace health costs growing at unsustainable rates and injuries in the workplace continuing to be a major issue,
efficient, technology-based solutions aiming to reduce health costs and minimise injuries in the workplace are attractive
offerings. dorsaVi’s data driven solutions have been shown to improve health outcomes in clinical trials and reduce injuries in
workplaces. dorsaVi is therefore very well positioned to expand their product uptake through the major markets.
FY20 was a year of adapting to change for dorsaVi considering Coronavirus (COVID-19). The Company continued to focus
on building recurring revenue, reducing costs through operational changes and navigating the challenges posed by COVID-
19. The Company has been able to show continued growth in challenging circumstances, growing recurring revenue through
FY20, with the workplace market showing stronger resilience than the clinical market and noting that there was a reduction in
total revenues during FY20 of close to 20%.
The relocation of our CEO, Andrew Ronchi, to the US market, has allowed the Company to gain an in-depth knowledge of the
US workplace and clinical markets and to focus on strategic deals with major corporates. The appointment of our General
Manager of Operations, Matthew May, has allowed a focus on business operations and cost efficiency. Our Chief Technical
Officer, David Erikson, is providing senior product guidance for the architectural design for dorsaVi’s current and future
products to ensure that the Company’s products are in line with global medical device and data security requirements.
The operational changes made in FY19 to reduce costs have been continued into FY20 and have been made even more
stringent, especially during COVID-19 times. The Company’s non-executive directors received shareholder approval at the
2019 AGM, to accept options in lieu of directors’ fees, applicable from 1 March 2019. All staff across the Company have taken
a reduction to their usual hours during COVID-19 and the executive team have taken significant salary reductions to assist the
Company through this unprecedented time. I would like to thank the Directors, executive team and the dorsaVi staff for
accepting these changes during this difficult time and acknowledge the support of both the Australian and the US Governments
in supporting businesses with Government stimulus packages during this time.
During FY20, the Company signed important deals in the workplace market including BHP Australia, PERMA (New York
insurer), Northwell Health, VISY Board and Sydney Water, some of which are repeat customers. Many of our workplace clients
have expanded their myViSafe™ offering across their wider business, providing evidence that the recurring revenue product
is well positioned to scale. Workplace recurring revenue has stayed firm during the COVID-19 period with most customers
continuing to pay their monthly subscriptions for the use of myViSafe™. In the last quarter of FY20, dorsaVi secured a
partnership with major workers compensation insurer, QBE Australia. Insurers continue to be an important channel partner for
dorsaVi, introducing our technology and data insights to companies with an appetite to reduce manual handling injuries. This
deal assists both the insurer and its clients, as it can lead to fewer claims and lower premiums.
In the clinical market the effect of COVID-19 was more immediate as some of our clinical customers requested their
subscriptions be put on hold. We also saw a temporary slowing of new sales, noting that later in Q4 sales activity started to
build again. There continues to be demand, especially in the US market, for dorsaVi’s data driven clinical solutions,
Professional Suite™ and Movement Suite™, with the most popular module being the Athletic Movement Index. The large
clinical franchise groups in the US market continue to be a major strategic opportunity for dorsaVi, with some of these groups
piloting the dorsaVi products. One group, Select Medical, has dorsaVi products in over 75 of their 2,000 sites. Other strategic
deals in the clinical market include a 2nd stage deal with Stryker, and a new pilot project with Medtronic. These synergistic
projects with global medical device companies are further evidence that the data insights captured and interpreted by dorsaVi’s
technology provide valuable and clinically relevant data for clinical practice.
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We look forward to the new financial year knowing that sales activity has risen through Q4, hoping to leverage this trend into
next year. We have put in place a frugal cost structure to ensure we protect our valuable cash reserves during these uncertain
times. We will continue to focus on growing our recurring revenue in both the workplace and the clinical markets. We are
optimistic that we will be able to execute on our strategies and will continue to update shareholders on our progress.
On behalf of my fellow Board members, I would like to thank CEO, Andrew Ronchi, and his team for their hard work, their
adapting to change and their dedication to dorsaVi. The Company’s leading technologies can assist patient’s recovery and
drive improvement in workplace practices with the goal of reducing injuries in the workplace.
To our shareholders, we are grateful for your continued support.
Greg Tweedly
Chairman
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ABN: 15 129 742 409
CEO REPORT
Introduction
The FY20 has been a year that has demanded change and the necessity to adapt to a ‘new normal’ given the economic
consequences of a global Coronavirus (COVID-19) pandemic.
COVID-19 has increased the need for the adoption of digital solutions on the health and safety culture of the workplace. This
has highlighted the need for companies to adapt to delivering both health and safety services and solutions remotely. dorsaVi
has worked diligently over the past 3 years to ensure that our products are deliverable remotely, sold online and that our data
is handled in an automated fashion, direct to the user. The dorsaVi business model is demonstrating resilience and leading
through this period, evidenced by our recently released Q4 results.
The Company modelled different scenarios of how COVID-19 could impact the business and we have been pleased with the
retention of the recurring revenue through this period, with Q4 recurring revenue showing growth on Q3. This helps to validate
the sticky nature of our recurring revenue, and the high value placed on our products by our existing customers.
The other factor that allows dorsaVi to look forward with some optimism is that we have a diversified sales strategy across
three geographies, the UK, US and Australia. As we have recently experienced in Victoria, the COVID-19 impact is
unpredictable with more stringent lockdown measures implemented in Victoria. In the US, each state is determining their own
management of COVID-19 and are broadly re-opening. This is important to dorsaVi as a significant portion of its recurring
revenue is generated in the US market.
dorsaVi has been focused on four strategic initiatives for FY20: i) growing recognised recurring revenue; ii) reducing cost of
goods sold); iii) driving operational efficiencies; and iv) innovating product and systems in-line with market and data privacy
requirements. This typically includes:
i) Growth in Recognised Recurring Revenue (RRR)
It is important to acknowledge that while total revenue for FY20 reduced by 19.7% when compared to FY19, recurring revenue
grew by 17.4%. The Company’s strategy to transition from a heavy historical reliance on consulting revenue to a more
sustainable Software-as-a-Service (SaaS) recurring revenue provides some background to this result.
Our RRR for FY20 (unaudited) was $1.5m, an increase of 17.4% to FY19 ($1.28m). From a workplace product perspective,
recurring revenue grew 69% on FY19 (increasing from $303k FY19 to $513k FY20). This growth is a direct result of companies
engaging in dorsaVi’s myViSafe™ product, signing on to utilise the small, wearable sensors and an App-based product that
allows safety professionals and corporations to manage injuries in a more efficient and engaging way.
Figure 1: Growth in recurring revenue over the past 4
years
The drivers for continued growth of recurring revenue
include: aligning pricing models for core products with a
focus on subscription fees and longer term contracts;
continued focus on the large US workplace and clinical
markets; continued engagement of a US based marketing
agency to customise marketing initiatives in this growth
market; and the focus on selling Professional Suite™
(clinical) and myViSafe™ (workplace) products (our SaaS
style products).
in recurring
the year-on-year growth
Aligned with
revenue, retention of our products in the market is an
important factor. Positively, the retention rate for our
products has remained strong during the difficult COVID-
19 environment. The clinical product has a retention rate
of >80%, while the workplace product’s retention rate has
maintained a strong >90%.
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ii) Reducing Cost of Goods Sold (COGS)
As recurring revenue increases and operational efficiencies are improved across the business, we will continue to work hard
to drive the reduction in COGS annually. This will ensure that once dorsaVi reaches a cash neutral position there is a healthy
margin on our products. Our COGS have reduced from 30.8% in FY17 to 4.8% in FY20, which is an outstanding result, noting
the effect of COVID-19 in reducing the consulting revenue faster than anticipated (which has a higher COGS than our
subscription revenue products). We anticipate COGS as a percentage of sales would be in the 8-10% range as consulting
revenue increases coming out of the COVID-19 period.
Figure 2: Reduction in COGS over the past 4 years
There are four factors that are driving the reduction in
COGS and each of
these are sustainable and
significantly improve the overall efficiency of dorsaVi’s
business. The four factors are noted below:
a) Transitioning from consulting to subscription based
revenue: Historically, the consulting projects for the
workplace market involve additional time on site,
scoping of jobs with the customer, data analytics and
interpretation, and the delivery of the report/solution in a
workshop. These projects usually have a COGS of 35-
40% and it’s been critical to ensure the value of the data
and analytics for our customers. The future for dorsaVi
is being able to hand-over the workplace product to the
customers, conduct online training with these customers to enable them to use the automated reports.
b) App-based products produced at a lower cost: dorsaVi’s newer products (myViSafe™ for the workplace market and
Professional Suite™ for the clinical market) are produced at a lower cost than our previous hardware and software.
c) More efficient production process: The technical team have created a more efficient and automated calibration process,
reducing COGS and improving product output.
d) Online sales and training of customers: Moving our sales and training away from face-to-face to online for both the workplace
and clinical products, has reduced both travel and HR expenses. This enables our sales and account managers to focus on
impacting their sales activity. The ability to sell online and to train new customers remotely has significantly improved business
efficiency.
iii) Driving Operational Efficiencies
The Company continues to improve operational efficiency and its goal for FY21 is to continue to drive down operating costs
by a further 20-40%.
As referenced in the Chairman’s report, the Company’s non-executive directors accepted options in lieu of directors’ fees
applicable from 1 March 2019.
From my own perspective, as CEO of dorsaVi, I have benefited from living in the US over the past 2.5 years. This experience
has provided the opportunity to build important strategic, sales and investor relationships. During the COVID-19 period, our
selling moved exclusively to online which will allow me to return to Australia, maintain the critical US relationships and continue
to sell online into the US and also creates a significant cost saving for the Company. Our team of US based staff will provide
continuity and resume face-to-face contact with customers once conditions around COVID-19 return to more normal practices.
Our General Manager has done an outstanding job in relation to reducing operational expenses across the business over the
past two years. As an example, our salespeople work from home in all locations. This remote working environment has
eliminated office spend in the UK and US. Matt May has driven positive change in our organisation’s business systems, leading
to year-on-year improvement.
From a technical perspective, our Chief Technical Officer has been with the business a little over 2 years and has brought in
many technical efficiencies that have allowed dorsaVi to reduce the operational costs relating to the technical team and also
reductions in the subscription and software related costs involved across our business.
Each of our staff members across the Company have reduced their normal working hours during COVID-19 and the executive
team have taken significant salary reductions through this unprecedented time. Other operational initiatives include: a
reduction in corporate and marketing overheads and securing the tenure of a US-based marketing agency to provide more
customised marketing initiatives to the large US clinical and workplace markets.
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iv) Innovate our Products and Systems in-line with Market and Data Privacy Requirements
One of my important roles whilst living in the US has been to understand the customer needs of our workplace and clinical
customers. I attended over 10 conferences in the US in the past 2.5 years, was invited to speak at another 4 conferences on
wearables in the workplace and held a membership role on an advisory council of the National Safety Council, Work to Zero
initiative. Each of these interactions allowed me to validate, test, iterate and understand in depth what our existing and
potential customers are looking for in dorsaVi’s next generation product. This helped me understand what features they like,
those features they did not utilise and, critically, which features they must have going forward. Some of these features were
already on our product roadmap and others have been incorporated into our plans to ensure our subsequent products meet
the future needs of all our important customers.
Financial Summary
The growth in recurring revenue is significantly longer than the time to secure once-off and consulting revenue. dorsaVi has
now built close to a $1m base in recurring revenue from the clinical market and over $500k of recurring revenue in the
workplace (a 69% increase from FY19). This $1.5m base of recurring revenue across the clinical and workplace markets has
been the Company’s focus and this will continue, noting that 74% of the FY20 revenue was from recurring revenue, increasing
from 51% in FY19. The focus on recurring revenue has led to a transition away from consulting projects and thus there is a
short-term reduction in total sales revenue as the recurring revenue base builds. The sales revenue for FY20 was $2,019,220,
a 19.7% reduction on our FY19 revenue of $2,514,992.
Figure 3: Proportion of recurring revenue versus
once-off revenue over the past 4 years
Historically, when dorsaVi secured a workplace
services contract valued at, say, $120k, the contract
would be recognised across two quarters ($60k each
quarter) without any further revenue unless additional
work was won from the customer.
With the change to recurring revenue, any contracts
won within the same corporate group with our
myViSafe™ product, for a 3-year period, in the first two
quarters of this contract dorsaVi will recognise $10k
each quarter. The benefit is seen in the longer term,
being able to recognise revenue for the next 3 years
from this one group, therefore providing more stable
and predictable revenue growth.
Total cash expenses reduced from $7.7m FY19 to $5.7m FY20, a reduction of $2m (26%) mainly due to cost reductions and
operational efficiencies introduced during the year. We believe these reductions in expenses are sustainable and operational
efficiency and cost reductions continue to be an ongoing focus for the business.
Our closing cash as at 30 June 2020 was $1.69m, compared to cash at 31 March 2020 of $1.92m.
dorsaVi’s Workplace Solutions (OHS)
The growing trend for Workplace conferences to offer entire sessions dedicated to ‘Workplace Wearables’ means our potential
customers now have a greater understanding of the value of movement or wearable sensors. dorsaVi’s workplace solutions
sit in the category of ergonomic or manual handling wearables, aimed at understanding workplace risk of a task or work
environment with the goal of finding a data driven solution.
Insurers and corporate groups are interested in data insights to understand their worker’s risk profile and enable them to
investigate whether the data driven solutions can solve their company’s manual handling injury problems. AIG and more
recently QBE in Australia, are examples of insurers utilising dorsaVi’s workplace solution products to reduce risk in the
workplace and improve productivity. Corporate groups also have a strong interest in scalable wearable solutions that they can
distribute through their workforce. This is particularly relevant given the changes brought about by COVID-19, with corporates
wanting ‘self-managed’ solutions rather than onsite consulting projects.
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Figure 4: myViSafe™ sensor, app and desktop
dashboard
During FY20, the Company signed a number of important
deals in the workplace market including a new engagement
with BHP Australia looking to understand exact risks on
their workers in the mining sector. PERMA, a New York
insurer have taken on the myViSafe™ product to enable
their team of ergonomists to visit their clients and place
sensors on their workers to measure, assess risk and
mitigate their manual handling issues. Northwell Health, a
large hospital group on the US east coast, have taken on
myViSafe™ to mitigate their workplace injuries amongst
their healthcare workers. In FY20, VISY Board and Sydney
Water in Australia have also signed new workplace deals.
Our workplace recurring revenue has remained solid, with the majority of customers continuing to pay their monthly
subscriptions for the use of myViSafe™. This has provided stability in workplace recurring revenue and is part of the reason
why the workplace recurring revenue for FY20 has continued to increase, despite the COVID-19 economic impact. The
recurring revenue for the workplace market has increased from $303k in FY19 to $513k in FY20, an increase of $210k or 69%.
Figure 5: dorsaVi’s workplace recurring revenue over the past 3
years
dorsaVi secured a new partnership in Q4 with major workers
compensation insurer, QBE Australia, who has pre-allocated $250k in
funds over an initial 12-month period to enable their customers access
to dorsaVi’s workplace products.
Recent market analysis in the US workplace market, suggests there
are approximately 230,000 corporates with over 100 workers that
could utilise dorsaVi’s applications. This equates the total size of the
direct addressable market to over $2.5B per annum.
During COVID-19, there has been minimal impact on monthly
workplace subscriptions yet there has been a significant reduction in
consulting revenue as our staff have not been able to interact with
employees directly. Across both the consulting product (ViSafe™)
and the recurring revenue product (myViSafe™), new sales reduced
significantly in Q3. It has been encouraging to see a return in new sales growth in Q4, albeit below the normal cadence of
sales.
dorsaVi Clinical market
Throughout the clinical market the effect of COVID-19 was more immediate with 10-15% of our clinical customers requesting
their subscriptions be put on hold. We also saw a reduction in new sales in Q3 and Q4, noting that later in Q4 the clinical sales
activity started to build again with the clinical recurring revenue for Q4 being $265k, a $36k increase (or 15.7%) on Q3 FY20
($229k).
dorsaVi’s new clinical product, the App-based Professional Suite™, has been designed as a ‘set and go’ type of product which
has a rapid set up time feature (15 seconds to commence a session with patients) and was designed by Physios for Physios.
It can immediately interpret data and includes a patient App whereby the patient is able to access their reports and exercises
anywhere. The online sales and training aspect of Professional Suite™ has been critical to its uptick in purchasing by Physios.
The large clinical franchise groups in the US market continue to be a major strategic opportunity for dorsaVi with many of
these groups already using dorsaVi’s clinical products. The most popular software module is the Athletic Movement Index
(AMI), which is a screening and ‘return to play’ tool that is used to assess and manage sports related injuries. Groups like
Select Medical, Team Rehab, HSS and HSHS are examples of large clinical groups in the US market with dorsaVi’s clinical
products across multiple sites.
In the US Physical Therapy (PT) market, there are approximately 105,000 PT clinics that could utilise dorsaVi’s applications.
Potential revenue generation from each clinic would be $3k per year per dorsaVi kit, noting that many franchise groups require
multiple dorsaVi kits. This makes the total size of the direct addressable market approximately $500m per annum.
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The recurring revenue for the clinical market increased from $978k in FY19 to $991k in FY20, an increase of $13k or 1%,
noting that Q3 and Q4 were impacted by COVID-19 subscription suspensions and a reduction in new sales.
In the same clinical market, there are strategic deals which include global medical device companies. As examples of these
deals, Stryker and Medtronic, are both using dorsaVi’s sensors, algorithms and software to gain new data insights for their
businesses. The current Stryker project is an extension from the first project which delivered results that were very positive to
Stryker. The 2nd stage Stryker project is an evaluation agreement in which Stryker’s staff will utilise and evaluate dorsaVi’s
sensors, algorithms and software to assess patients and share this data with leading clinicians.
A separate strategic deal was signed with Medtronic who are looking to pilot dorsaVi’s technology for a specific use case in
the orthopaedics area. Medtronic adds to other global medical device companies, like Stryker and Johnson & Johnson, who
are choosing dorsaVi’s technology above other technology providers to drive innovation in their businesses. This provides an
indicative test for dorsaVi, illustrating the technology is market leading.
In relation to the size of the opportunity in the orthopaedic market, there are approximately 1.5 million hip and knee
replacements performed each year in the US and if every patient undergoing a hip or knee replacement used a sensor kit, this
would be a market size of over $1.2b per annum.
dorsaVi’s strength in the clinical market relates to the FDA clearance, clinically validated algorithms, and the traction of current
products in the US market that generate recurring revenue. We look forward to reporting further progress in the clinical and
the orthopaedic markets.
We are excited by the steadily growing base of recurring revenue that is derived from both the workplace and clinical markets
and will strive to make our business as successful as possible by continuing to innovate, optimise and drive efficiencies across
our product offerings and business processes to secure new strategic deals in the workplace and the clinical markets.
We recognise that further challenges are likely to arise as the business works its way through COVID-19. We will remain
vigilant on managing these changes to our business and will pro-actively deal with these changes as they arise.
Andrew Ronchi
Chief Executive Officer
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FINANCIAL REPORT
For the Year Ended 30 June 2020
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Financial Report
For the Year Ended 30 June 2020
TABLE OF CONTENTS
Financial Report
Directors’ Report
Auditor’s Independence Declaration
Financial Report for the Year Ended 30 June 2020
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
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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 2020 and auditor’s report thereon.
Directors
The names of directors in office at any time during or since the end of the year are:
Name
Greg Tweedly
Ashraf Attia
Caroline Elliott
Michael Panaccio
Andrew Ronchi
Designation
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer, Executive Director
Appointed
29 October 2013
14 July 2008
24 November 2017
16 May 2008
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 the development and sale 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 from continuing operations, after income tax, attributable to the members of dorsaVi Ltd was
$7,593,079 (2019: $4,020,751).
Review of Operations
The Group consists of four entities:
1. dorsaVi Ltd;
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.
As at 30 June 2020, net assets of the Group were $459,029 (2019: $6,989,294).
Total revenue for the 2020 financial year was $2,397,059 (2019: $3,223,869). Sales revenue was $2,019,220 (2019:
$2,514,992).
Clinical
Clinical income was $1,125,151 for the 2020 financial year (2019: $1,336,817).
Workplace
Workplace income, utilising ViSafe technology, was $894,069 for the 2020 financial year (2019: $956,624).
The COVID-19 pandemic has significantly impacted total sales revenues in the six months to 30 June 2020. Sales revenues
for the six months to 30 June 2020 were $860,011 as compared to $1,226,503 for the six months to 30 June 2019.
Expenditure
Total expenditure was $10,447,502 for the 2020 financial year (2019: $7,811,269). The 2020 expenditure includes a
provision for impairment of intangible assets of $4,018,354 (2019: $nil).
The Directors have assessed the $4,018,354 carrying value of its Intangible Assets (patents and capitalised development
expenditure) for impairment based on value in use calculations. Given the recent change in the Group’s business strategy
(i.e. transition to a Software as a Service recurring revenue strategy), the Group’s forecasts have been updated based upon
reasonable and prudent assumptions including growth rates, discount rates and terminal values. This has resulted in a
provision for impairment of $4,018,354.
dorsaVi Annual Report 2020
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ABN: 15 129 742 409
The directors believe that the recurring revenue business strategy will maximise the Group’s growth and financial
performance prospects, and, should future performance exceed the forecasts, the current impairment provision may be
reversed in future periods.
Without the provision for impairment total expenditure for 2020 would have been $6,429,148 (2019: $7,811,269). This
reduction of $1,382,121 was largely due to cost control measures undertaken by the Group throughout the financial year
with employee benefits expense reducing by 24% to $3,040,365 (2019: $3,979,898).
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 dorsaVi’s products already benefit from reimbursement in some circumstances, there is no guarantee that the
use of dorsaVi’s products will receive further reimbursement.
▪ General economic conditions, movements in interest and inflation rates and currency exchange rates may have an
adverse effect on dorsaVi’s activities, as well as on its ability to fund those activities. In particular, much of its future
income is expected to come from the US and European markets and therefore dorsaVi’s activities will be affected by
currency exchange fluctuations. The COVID-19 pandemic has significantly impacted economic conditions in the six
months to 30 June 2020 and is expected to continue to have an economic impact in the near future.
▪ dorsaVi is not currently profitable. Proceeds from the initial float 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.
Significant Changes in the State of Affairs
The following changes in the state of affairs occurred during the period:
•
•
•
•
•
•
•
•
•
On 18 November 2019, dorsaVi Ltd announced that it had been granted a “measuring reaction forces” patent in the
USA.
On 28 November 2019, dorsaVi Ltd launched a capital raising comprising:
o
The issue of 1,155,000 convertible notes at an issue price of $1 per convertible note with interest of 10%
per annum and a maturity date of 6 December 2022 raising $1,155,000 before costs;
The placement of 20,740,741 fully paid ordinary shares at $0.027 per share raising $560,000 before issue
costs; and
A share purchase plan to be offered to all eligible shareholders at $0.028 per share and closing on 19
December 2019.
o
o
On 5 December 2019, dorsaVi Ltd announced (as approved by shareholders on 28 November 2019):
o
The issue of 1,280,488 options to non-executive directors, in lieu of directors’ fees, at an exercise price of
$0.086 per share and an expiry date of 4 December 2024; and
The issue of 1,116,703 options to non-executive directors, in lieu of directors’ fees, at an exercise price of
$0.072 per share and an expiry date of 4 December 2024.
o
On 6 December 2019, dorsaVi Ltd announced the placement of 3,703,704 fully paid ordinary shares raising $100,000
before costs and the issue of 1,155,000 convertible notes.
On 9 December 2019, dorsaVi Ltd announced the placement of 3,703,704 fully paid ordinary shares raising $100,000
before costs.
On 19 December 2019, dorsaVi Ltd completed a share purchase plan to eligible shareholders and issued 6,670,000
fully paid ordinary shares at $0.028 per share raising $186,760 before costs.
On 7 January 2020, dorsaVi Ltd announced (as approved by shareholders on 28 November 2019) the issue of
1,846,856 options to non-executive directors, in lieu of directors’ fees, at an exercise price of $0.036 per share and
an expiry date of 7 January 2025.
On 28 January 2020, a general meeting of shareholders approved the allotment of 13,333,333 fully paid ordinary
shares to related parties of dorsaVi Ltd raising $360,000 before costs.
On 7 April 2020, dorsaVi Ltd announced (as approved by shareholders on 28 November 2019) the issue of 4,801,827
options to non-executive directors, in lieu of directors’ fees, at an exercise price of $0.024 per share and an expiry
date of 7 April 2025.
After Balance Date Events
dorsaVi Annual Report 2020
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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 with the exception of the following:
•
On 7 July 2020, dorsaVi Ltd announced (as approved by shareholders on 28 November 2019) the issue of 3,693,714
options to non-executive directors, in lieu of directors’ fees, at an exercise price of $0.018 per share and an expiry
date of 7 July 2025.
Likely Developments
The following likely developments, in the business of the Group, are expected to influence its future financial results:
▪ The Group expects to increase, year on year, the annuity revenue proportion of total clinical and workplace revenue.
▪ The Group expects that product, released globally in recent years, will continue to support revenue growth.
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
There were no options over unissued ordinary shares granted to executives by dorsaVi Ltd during the financial year. During
the financial year, 1,871,071 performance rights were granted to executives and, of these, 1,439,321 vested into shares and
1,750 lapsed. Further details regarding performance rights and shares granted as remuneration are provided in the
Remuneration Report below.
There were 12,739,588 options over unissued ordinary shares granted to non-executive directors during or since the
financial year end in lieu of the payment of directors’ fees. 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
Exercise Price of
Options
Expiry Date of the
Options
24 March 2016
15 May 2017
15 May 2017
15 May 2017
4 December 2019
4 December 2019
7 January 2020
7 April 2020
7 July 2020
200,000
500,000
55,000
24,166
1,280,488
1,116,703
1,846,856
4,801,827
3,693,714
13,518,754
$0.40
$0.33
$0.33
$0.33
$0.086
$0.072
$0.036
$0.024
$0.018
24 March 2021
15 May 2022
1 October 2022
1 October 2023
4 December 2024
4 December 2024
7 January 2025
7 April 2025
7 July 2025
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.
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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
18 September 2019
18 September 2019
18 September 2019
115,000
115,000
200,000
430,000
-
-
-
Vesting Date of
Performance Rights
1 October 2020
1 October 2021
1 September 2022
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
During the year ended 30 June 2020 and to the date of this report, 2,826,601 shares were allocated on the vesting of
2,826,601 performance rights. These shares were allocated from previously issued shares to employees that had been
forfeited. During the year ended 30 June 2020 and to the date of this report, 155,470 performance rights were cancelled.
There remain 430,000 performance rights that do not convert to issued shares unless performance conditions are met, and
they vest.
Information on Directors and Company Secretary
Greg Tweedly, B. Com, CPA, GAICD – Non-executive Chairman
Greg Tweedly is Chairman of dorsaVi Ltd 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, Deputy Chair of Environment Protection Authority Victoria, 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 2020.
Ashraf Attia, BSc (Eng)(Hons), MSc (Med. Eng), Dip (Mktg), FAICD – Non-executive Director
Ash Attia was appointed as a director of dorsaVi on 14 July 2008 and chairs the Nomination and Remuneration Committee
and serves on the Audit and Risk Committee.
Ash has had senior management experience in multinational operations for over 30 years within the medical devices,
biotechnology and diagnostics industries. He is currently Chief Executive Officer of Bionic Vision Technologies, a company
developing an implantable device to restore sight to the blind. Ash was most recently Vice President of Asia Pacific, Middle
East and Israel at TransMedics Inc, a company based in Boston, USA, and is carrying out revolutionary work in the area of
heart, lung and Liver organ transplants and preservation. He has held several senior executive roles with global medical
devices organizations and has special expertise in the areas of commercialization, business development, clinical,
regulatory, R&D, strategic marketing, sales and distribution management.
No other directorships of listed companies were held during the three years to 30 June 2020.
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 founding directors 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
dorsaVi Annual Report 2020
15
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
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, SIRTeX Medical Ltd, Protagonist
Therapeutic Inc and Energy Response Pty Ltd.
No other Directorships of listed companies were held during the three years to 30 June 2020. Michael is also a director of
Starfish Ventures Pty Ltd.
Caroline Elliott, B. Ec, CA, GAICD – Non-executive Director
Caroline Elliott is chair of the Audit and Risk Committee and was appointed to the Board on 24 November 2017.
Caroline is currently a Director of the National Film and Sound Archive of Australia, St John’s Ambulance Australia (Vic) and
Wiltrust Nominees Pty Ltd. She has previously held non-executive director roles at Cell Therapies Pty Ltd, Peter MacCallum
Cancer Centre and the Public Transport Ombudsman Limited. She is currently the Chief Executive Officer at apparel
business, The Propel Group Pty Ltd, and was previously the CFO and Company Secretary at Optal Ltd.
No other directorships of listed companies were held during the three years to 30 June 2020.
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 has
also been founding partner in two physiotherapy centres, the largest of these employing 28 staff (including 13
physiotherapists). Andrew completed 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 2020.
Brendan Case, MComLaw (Melb), BEc, CPA, Grad Dip App Fin, Dip FP, FCIS
Brendan Case has served as dorsaVi Ltd’s secretary since 29 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:
G Tweedly
A Attia
C Elliott
M Panaccio
A Ronchi
G Tweedly
A Attia
M Panaccio
Board of Directors
Audit and Risk Committee
Eligible to Attend
16
16
16
16
16
Attended
16
16
14
16
16
Eligible to Attend
-
2
2
2
-
Attended
-
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 the date of this report.
Names of Holders
M Panaccio
A Ronchi
G Tweedly
A Attia
C Elliott
dorsaVi Annual Report 2020
Ordinary Shares
101,819,921
13,099,827
815,129
461,518
370,370
Options
2,918,381
-
3,984,445
2,918,381
2,918,381
16
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
The directors have no interests in performance rights. As approved by shareholders at the 2019 Annual General Meeting
(AGM), non-executive directors have been progressively granted 12,739,588 options over ordinary shares in dorsaVi Ltd
over the course of the year ended 30 June 2020 and up to the date of this report. The details of each non-executive
director’s entitlement to options granted and a summary of the related terms is included in Table 5 of this report.
Indemnification and Insurance of Directors and Officers
The Group has insured its Directors, Secretary and executive officers for the financial year ended 30 June 2020. 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.
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 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
▪ 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
2020
$
14,901
14,901
2019
$
18,727
18,727
dorsaVi Annual Report 2020
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Remuneration Report (Audited)
The Directors present the Group’s 2020 Remuneration Report, which details the remuneration information for dorsaVi Ltd’s,
Directors and other Key Management Personnel (KMP).
A.
Details of the Key Management Personnel
Period of Responsibility
Position
Non-Executive Directors:
Greg Tweedly
Caroline Elliott
Ashraf Attia
Michael Panaccio
Executive Director:
Andrew Ronchi
Executives:
Matthew May
Damian Connellan
David Erikson
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
Full Year
B.
Remuneration Policies
Nomination and Remuneration Committee
Chairman, Non-Executive Director
Independent, Non-Executive Director
Independent, Non-Executive Director
Non-Executive Director
Chief Executive Officer/Director
General Manager
Chief Financial Officer
Chief Technology Officer
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, Executive Director/Chief Executive Officer (CEO)
and each Executive reporting to the CEO. The current members of the Nomination and Remuneration Committee are:
Ashraf Attia, 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. 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 merit and individual skill matching the role requirements with their experience and
responsibilities;
▪ Align the interests of executives with 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.
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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 Non-Executive Directors with the necessary skills and experience for the Group’s Board. This
remuneration is reviewed with regard to market practice and Non-Executive 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
previously 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 2020 is
detailed in Table 1 of this section of the report.
As approved at the 2019 AGM, Non-Executive Directors were, in lieu of the payment of directors’ fees, granted 12,739,588
options over ordinary shares. Refer table 5 below for details of the options granted.
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 Executives with 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). STI and LTI are currently only provided to KMP by way of share-based payments and include no cash
component.
Fixed Remuneration
Objective
Fixed remuneration is reviewed annually by the Board and 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.
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.
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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 in 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 have been granted, under the ESOP. Refer Table 5 for details of options and performance
rights granted to Executives under the ESOP.
Employment Agreements
The Group has entered into employment agreements with all Executives, including the CEO. The Group may terminate an
Executive’s employment agreement by providing 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
Matthew May
Damian Connellan
David Erikson
Notice Period
6 months
3 months
3 months
3 months
dorsaVi Annual Report 2020
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CEO Remuneration
At the commencement of the 2020 financial year, Andrew Ronchi’s fixed remuneration was US$221,499, including medical
benefits insurance, plus director’s fees of A$10,000 per annum. Subsequent to the start of the 2020 financial year Andrew
Ronchi agreed to reduce his fixed remuneration to US$203,712, including medical benefits insurance, plus director’s fees of
A$5,000 per annum. In addition, Andrew Ronchi has previously, as approved at a meeting of shareholders, been granted
performance rights. During 2020; 513,000 performance rights vested into shares and 87,000 lapsed. As at 30 June 2020;
no performance rights remain outstanding. Upon termination of Andrew Ronchi’s employment contract, he will be subject to
a restraint of trade for a maximum of 12 months.
Details of Key Management Personnel Remuneration
Non-Executive Directors’ Remuneration: Table 1
C.
(a)
2020
Non-Executive Directors
G Tweedly
A Attia
C Elliott
M Panaccio (i)
Short-Term
Salary fees
$
Post-employment
Pension Plan
$
Share-based
payments (ii)
Options
$
TOTAL
$
Total performance
related
Options as %
of total
%
%
-
-
-
-
-
-
-
-
80,096
58,667
58,667
58,667
80,096
58,667
58,667
58,667
-
-
256,097
256,097
-
-
-
-
-
100%
100%
100%
100%
(i)
(ii)
Michael Panaccio provides his services via Starfish Ventures Pty Ltd.
Includes fees for the period 1 March 2019 through 30 June 2019, subsequently approved by shareholders at the 2019 AGM.
2019
Non-Executive Directors
C Elliott
A Attia
M Panaccio (i)
G Tweedly
TOTAL
Total performance related
Share based payments
as % of total
Short-Term
Salary fees
$
Post-employment
Pension Plan
$
$
34,833
34,833
34,276
47,558
151,500
3,309
3,309
-
4,518
11,136
38,142
38,142
34,276
52,076
162,636
%
-
-
-
-
-
%
-
-
-
-
-
(i)
Michael Panaccio provides his services via Starfish Technology Fund II, LP.
(b)
Executives’ Remuneration: Table 2
Short-Term
Post-
employment
Share-based
payments
Total
Total
performance
related
Share based
payments as % of
total
2020
Executive Director:
A Ronchi (iii)
Executives:
D Connellan
D Erikson
M May
Salary, fees
$
Other (i)
$
Pension Plan
$
Equity (ii)
$
$
%
285,473
31,996
5,000
30,356
352,825
8.6
71,205
188,009
210,128
754,815
-
-
-
31,996
-
17,861
19,962
42,823
19,091
14,737
2,690
66,874
90,296
220,607
232,780
896,508
21.1
6.7
1.2
7.5
%
8.6
21.1
6.7
1.2
7.5
(i) Other benefits include the payment of certain health insurance premiums in the US.
(ii) Share based payments comprise the grant of performance rights and shares, and, for accounting purposes, are valued the same as options.
(iii) Foreign currency amounts are converted into AUD at the average exchange rates applicable throughout the year.
Short-Term
Post-employment
Total
dorsaVi Annual Report 2020
21
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
2019
Executive Director:
A Ronchi (iii)
Executives:
M Blackburn (v)
D Connellan
M Connell (iv)
D Erikson
M May
Z Whyatt (iii), (vi)
Salary, fees
$
Other (i)
$
Pension Plan
$
Share based
payments
Equity (ii)
$
$
%
Total performance
related
Share based
payments as % of
total
389,709
30,445
21,250
91,079
532,483
17.1
89,837
51,527
145,091
190,000
240,000
16,842
-
-
-
-
-
3,183
8,439
-
11,935
18,050
20,531
1,138
1,358
-
695
-
48,544
891
99,634
51,527
157,721
208,050
309,075
22,054
1,123,006
33,628
81,343
142,567
1,380,544
1.4
-
0.4
-
15.7
4.0
10.3
%
17.1
1.4
-
0.4
-
15.7
4.0
10.3
(i) Other benefits include the payment of certain health and disability related insurance premiums in the US and UK.
(ii) Share based payments comprise mixture of the grant of options, performance rights, and loan shares backed by an interest free, non-recourse loan. For accounting
purposes, all these equity instruments are valued the same as options.
(iii) Foreign currency amounts are converted into AUD at the average exchange rates applicable throughout the year.
(iv) Resigned, 22 March 2019.
(v) Resigned, 21 December 2018.
(vi) Resigned, 10 August 2018.
D.
(a)
Relationship between Remuneration and Group Performance
Remuneration Not Dependent on Satisfaction of Performance Condition
The non-executive 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 may include short-term and long-term incentive plans. Performance-based remuneration granted to key
management personnel has regard to Group performance over a twelve month to 3-year period.
Summary of the performance conditions for KMP with performance-linked equity instruments: Table 3
KMP
Andrew Ronchi
Matthew May
Damian Connellan
David Erikson
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
The conditions were selected to promote the creation of shareholder wealth during the period.
(c)
Consequences of Group’s Performance on Shareholder Wealth
Summary of Group Performance and Key Performance Indicators: Table 4
Company Performance
Revenue
% increase/(decrease)
Loss after tax
% (increase)/decrease
Change in share price
Dividend paid to shareholders
Return of capital
Total remuneration of KMP
Total performance based remuneration
2020
2,397,059
(26%)
2019
3,223,869
(27%)
2018
4,394,271
13%
2017
3,897,882
20%
2016
3,238,138
75%
(7,593,079)
(4,020,751)
(3,727,073)
(3,876,248)
(5,237,102)
(89%)
(68%)
-
-
1,152,605
66,874
(8%)
(58%)
-
-
1,543,180
142,567
4%
(59%)
-
-
2,433,653
369,702
26%
7%
-
-
2,182,038
290,885
35%
4%
-
-
2,450,850
98,264
dorsaVi Annual Report 2020
22
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
E.
(a)
Key Management Personnel’s Share-Based Compensation
Details of Compensation Equity
Table 5
2020
Grant Date (i), (ii)
Number
Granted
Non-Executive Directors:
G Tweedly:
Vested during
the year
Year in
which equity
may vest
Value per
unit at grant
date
$
0.026
0.026
0.026
0.010
0.029
0.026
0.026
0.026
0.010
0.029
0.026
0.026
0.026
0.010
0.029
0.026
0.026
0.026
0.010
0.029
400,486
349,261
577,625
1,501,824
1,155,249
293,334
255,814
423,077
1,100,001
846,155
293,334
255,814
423,077
1,100,001
846,155
293,334
255,814
423,077
1,100,001
846,155
400,486
349,261
577,625
1,501,824
1,155,249
293,334
255,814
423,077
1,100,001
846,155
293,334
255,814
423,077
1,100,001
846,155
293,334
255,814
423,077
1,100,001
846,155
150,000
450,000
0.45
0.45
63,000
450,000
20,000
125,000
200,000
0.27
0.31
0.31
100,000
70,000
115,000
115,000
200,000
200,000
1,071,071
15,555,659
0.04
0.04
0.04
0.04
0.04
0.04
0.01
-
75,750
200,000
100,000
68,250
-
-
-
200,000
1,071,071
14,967,659
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2020
2025
2020
2020
2020
2020
2021
2022
2023
2020
2020
Terms and conditions for each grant
Lapsed/re-
moved during
the year
Exercise
Price
Expiry
Date
First
Exercise
Date
Last
Exercise
Date
$
0.086
0.072
0.036
0.024
0.018
0.086
0.072
0.036
0.024
0.018
0.086
0.072
0.036
0.024
0.018
0.086
0.072
0.036
0.024
0.018
-
-
0.40
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
87,000
-
-
49,250
-
-
1,750
-
-
-
-
-
138,000
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
N/A
N/A
5-Nov-24
N/A
N/A
N/A
N/A
1-Oct-20
1-Oct-21
1-Sep-22
4-Dec-20
4-Dec-20
7-Jan-20
7-Apr-20
7-Jul-20
4-Dec-20
4-Dec-20
7-Jan-20
7-Apr-20
7-Jul-20
4-Dec-20
4-Dec-20
7-Jan-20
7-Apr-20
7-Jul-20
4-Dec-20
4-Dec-20
7-Jan-20
7-Apr-20
7-Jul-20
N/A
N/A
N/A
N/A
N/A
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
4-Dec-24
4-Dec-24
7-Jan-25
7-Apr-25
7-Jul-25
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1-Oct-20
1-Oct-21
1-Sep-22
N/A
N/A
1-Oct-20
1-Oct-21
1-Sep-22
N/A
N/A
N/A
N/A
N/A
N/A
Vest
%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
42%
100%
100%
61%
100%
100%
98%
-
-
-
100%
100%
28-Nov-19
28-Nov-19
7-Jan-20
7-Apr-20
7-Jul-20
A Attia:
28-Nov-19
28-Nov-19
7-Jan-20
7-Apr-20
7-Jul-20
C Elliott:
28-Nov-19
28-Nov-19
7-Jan-20
7-Apr-20
7-Jul-20
M Panaccio:
28-Nov-19
28-Nov-19
7-Jan-20
7-Apr-20
7-Jul-20
Executives:
A Ronchi:
29-Nov-16
29-Nov-16
M May:
5-Nov-14
5-Jun-17
5-Jun-17
D Erikson:
18-Sep-19
18-Sep-19
18-Sep-19
18-Sep-19
18-Sep-19
D Connellan:
18-Sep-19
25-Jun-20
(i) The options granted to non-executive directors are in lieu of the payment of directors’ fees.
(ii) The performance rights granted to executives are subject to performance and retention conditions.
dorsaVi Annual Report 2020
23
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
2019
Grant Date (i)
Executives:
A Ronchi:
29-Nov-16
29-Nov-16
29-Nov-16
M May:
5-Nov-14
5-Jun-17
5-Jun-17
5-Jun-17
M Blackburn: (ii)
5-Jun-17
5-Jun-17
5-Jun-17
M Connell: (iii)
5-Jun-17
5-Jun-17
5-Jun-17
Z Whyatt: (iv)
15-May-17
15-May-17
15-May-17
15-May-17
15-May-17
Number
Granted
Value per
unit at
grant date
$
Vested during
the year
Year in which
equity may vest
150,000
150,000
450,000
20,000
125,000
125,000
200,000
100,000
100,000
150,000
50,000
50,000
150,000
500,000
78,333
133,333
133,334
350,000
3,015,000
0.45
0.45
0.45
0.27
0.31
0.31
0.31
0.31
0.31
0.31
0.31
0.31
0.31
0.33
0.33
0.33
0.33
0.33
11,250
-
-
-
22,500
-
-
22,500
-
-
11,500
-
-
-
-
24,166
-
-
91,916
2019
2020
2020
2019
2019
2020
2020
2019
2020
2020
2019
2020
2020
2017
2018
2019
2020
2020
Vest
%
8%
-
-
100%
18%
-
-
23%
-
-
23%
-
-
100%
100%
18%
-
-
(i) The options and performance rights granted are subject to performance and retention conditions.
(ii) M Blackburn resigned, 21 December 2018.
(iii) M Connell resigned, 22 March 2019.
(iv) Z Whyatt resigned, 10 August 2018.
Terms and conditions for each grant
Forfeited during
the year
Exercise
Price
Expiry
Date
First
Exercise
Date
Last
Exercise
Date
$
-
-
-
138,750
-
-
N/A
1-Oct-19
29-Nov-19
N/A
1-Oct-19
29-Nov-19
N/A
1-Oct-19
29-Nov-19
-
0.40
5-Nov-19
-
-
-
-
-
-
-
-
-
N/A
1-Oct-19
1-Jul-19
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1-Oct-19
1-Jul-19
1-Oct-19
1-Jul-19
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0.33
0.33
0.33
-
-
15-May-22
1-Oct-22
15-May-17
1-Oct-17
15-May-22
1-Oct-22
1-Oct-23
1-Oct-18
1-Oct-23
N/A
N/A
N/A
N/A
N/A
N/A
102,500
-
-
77,500
100,000
150,000
38,500
50,000
150,000
-
-
109,167
133,334
350,000
1,399,751
As at 30 June 2020, no options have been exercised and, accordingly, no shares have been issued as a result of options
previously vested.
F.
(a)
Key Management Personnel’s Equity Holdings
Number of Equity Holdings held by Key Management Personnel
As at 30 June 2020, no key management personnel held options, under the Group’s Employee Share Ownership Plan 2013.
The non-executive directors, as approved at the 2019 AGM, were granted 12,739,588 options over ordinary shares in lieu of
the payment of directors’ fees, refer table 5 above.
As at 30 June 2020, key management personnel held 430,000 performance rights under the Group’s Employee Share
Ownership Plan 2013, which, on vesting, convert to 430,000 ordinary shares of the Group. As at 30 June 2020, none of
these performance rights had vested and converted to shares.
dorsaVi Annual Report 2020
24
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
2020 is as follows:
Table 7
2020
Non-Executive Directors
A Attia
C Elliott
M Panaccio
M Panaccio (relevant interest)
G Tweedly
Executive Director
A Ronchi
Executives
D Connellan
D Erikson
M May
Balance 30
June 2019
Vested on
Achievement
of KPI
Participation
in share
Issue
Net
Change
Other
Balance 30
June 2020
281,518
- 180,000
- - 370,370
- 12,469,259
89,280,662
-
1,000,000
- 700,000
115,129
-
- 461,518
- 370,370
- 101,749,921
70,000
- 815,129
(930,000)
8,886,323
513,000
3,700,504
- 13,099,827
- 1,271,071
- 168,250
275,750
195,000
2,228,071
99,758,632
700,000
-
-
18,120,133
- 1,971,071
- 168,250
- 470,750
119,176,836
(930,000)
G.
(a)
Loans to Key Management Personnel
Aggregate of Loans Made
There were no loans made to key management personnel during the 2020 financial year (2019: $Nil). There were no
outstanding loans to key management personnel as at 30 June 2020 (30 June 2019: $Nil).
H.
(a)
Other Transactions with Key Management Personnel
Transactions with Key Management Personnel of the Entity or its Parent and their Personally Related
Entities
During the year, dorsaVi Ltd did not enter into any transactions with key management personnel or their personally related
entities.
(b)
Transactions with Other Related Parties
Starfish Ventures Pty Ltd is considered a related party in accordance with the definition under AASB 124: Related Parties.
During the first five months of the year ended 30 June 2019, Starfish Ventures Pty Ltd leased property and charged rent to
dorsaVi Ltd. The Rental arrangement ceased in November 2018. Total value of rental charges during the year ended 30
June 2020 was $Nil (2019: $83,570). The rent was charged to dorsaVi on normal terms and conditions. The balance
outstanding at balance date was $Nil (2019: $Nil).
During the year ended 30 June 2020, dorsaVi Ltd paid $Nil (2019: $34,276) to Starfish Technology Fund II, LP on behalf of
Michael Panaccio for director’s fees. As approved by shareholders at the 2019 AGM, Non-Executive Directors were granted
options over ordinary shares in lieu of the payment of directors’ fees as from 1 March 2019. During the year ended 30 June
2020, Starfish Ventures Pty Ltd was granted 2,918,381 options (refer table 5) on behalf of Michael Panaccio (2019: Nil).
dorsaVi Annual Report 2020
25
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
I.
Use of Remuneration Consultants
During the year the Board did not engage remuneration consultants.
J.
Voting and Comments made at the Group’s 2019 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
Greg Tweedly
Chairman
Andrew Ronchi
Director and CEO
Melbourne
Date: 26 August 2020
Melbourne
Date: 26 August 2020
dorsaVi Annual Report 2020
26
dorsaVi Ltd and controlled entities
ABN 15 129 742 409
AUDITOR’S INDEPENDENCE DECLARATION
To the Directors of dorsaVi Ltd
In relation to the independent audit for the year ended 30 June 2020, 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.
S SCHONBERG
Partner
26 August 2020
PITCHER PARTNERS
Melbourne
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
27
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Financial Report for the Year Ended 30 June 2020
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Revenue and other income:
Sales revenue
Other income
Less: Expenses:
Cost of sales
Advertising expenses
Conference expenses
Consultancy expenses
Depreciation and amortisation expenses
Employee benefits expenses
Provision for impairment of intangibles
Finance costs
Change in fair value of derivative liability
Occupancy expenses
Professional fees
Software expenses
Travel expenses
Other expenses
Loss before income tax benefit
Income tax benefit
Loss from continuing operations
Notes
2020
$
2019
$
4
4
2,019,220
2,514,992
377,839
708,877
2,397,059
3,223,869
5
(96,967)
(448,597)
5
5
5
(212,323)
(185,009)
(83,460)
(137,852)
(55,644)
(218,940)
(1,039,647)
(965,854)
(3,040,365)
(3,979,898)
(4,018,354)
(167,451)
-
(32,136)
(278,151)
-
(100,084)
(198,495)
(486,184)
(459,934)
(291,562)
(330,821)
(141,929)
(207,899)
(435,381)
(645,834)
(10,447,502)
(7,811,269)
(8,050,443)
(4,587,400)
6
457,364
566,649
(7,593,079)
(4,020,751)
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
19,511
19,511
(7,573,568)
(500,365)
(500,365)
(4,521,116)
Loss per share for loss from continuing operations attributable to
equity holders of the parent entity:
Basic loss per share
Diluted loss per share
22
22
(3.49 cents)
(3.49 cents)
(2.15 cents)
(2.15 cents)
The above statement should be read in conjunction with the accompanying notes.
dorsaVi Annual Report 2020
28
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$
2019
$
Current assets
Cash and cash equivalents
Receivables
Inventories
Other assets
Total current assets
Non-current assets
Intangible assets
Plant and equipment
Total non-current assets
Total assets
Current liabilities
Payables
Borrowings
Lease liability
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liability
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
8
9
10
11
12
13
14
15
16
17
15
16
17
18
19
19
1,685,288
931,220
683,139
149,721
3,449,368
-
378,411
378,411
3,827,779
1,240,480
181,941
144,269
206,911
1,773,601
1,482,993
102,715
9,441
1,595,149
3,368,750
459,029
2,766,419
1,363,607
308,520
142,578
4,581,124
4,069,915
577,695
4,647,610
9,228,734
1,513,207
-
125,524
340,133
1,978,864
-
235,470
25,106
260,576
2,239,440
6,989,294
41,080,353
233,253
(40,854,577)
40,381,715
(77,193)
(33,315,228)
459,029
6,989,294
The above statement should be read in conjunction with the accompanying notes.
dorsaVi Annual Report 2020
29
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated Entity
Share capital
Reserves
$
$
Accumulated
losses
$
Total Equity
$
Balance as at 1 July 2018
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
Employee share ownership plan
Equity instruments lapsed
38,455,224
-
731,407
(29,769,466)
- (4,020,751)
9,417,165
(4,020,751)
- (500,365)
- (500,365)
- (500,365)
(4,020,751)
(4,521,116)
2,088,616
(162,125)
-
-
- 166,754
- (474,989)
(308,235)
1,926,491
- 2,088,616
- (162,125)
- 166,754
474,989
474,989
-
2,093,245
Balance as at 30 June 2019
40,381,715
(77,193)
(33,315,228)
6,989,294
Balance as at 1 July 2019
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
Employee share ownership plan
Equity instruments lapsed
40,381,715
-
(77,193)
(33,315,228)
- (7,593,079)
6,989,294
(7,593,079)
- 19,511
- 19,511
- 19,511
(7,593,079)
(7,573,568)
746,760
(48,122)
-
-
- 344,665
- (53,730)
290,935
698,638
- 746,760
- (48,122)
- 344,665
53,730
53,730
-
1,043,303
Balance as at 30 June 2020
41,080,353
233,253
(40,854,577)
459,029
The above statement should be read in conjunction with the accompanying notes.
dorsaVi Annual Report 2020
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dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Grants and sundry income received
Interest received
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
Proceeds from convertible note issue
Cost of raising capital and issuing convertible note
Proceeds from borrowings
Repayment of borrowings
Payment of principal portion lease liability
Net cash provided by financing activities
Reconciliation of cash
Cash at beginning of the financial year
Net decrease in cash held
Cash at end of the year
Notes
2020
$
2019
$
2,300,250
(5,331,856)
(104,844)
278,252
99,587
579,057
(2,179,554)
3,593,957
(6,716,175)
(32,136)
140,225
46,610
884,476
(2,083,043)
20 (b)
(4,073)
(784,729)
(788,802)
(34,023)
(969,139)
(1,003,162)
746,760
1,155,000
(105,872)
240,317
(34,970)
(114,010)
1,887,225
2,088,616
-
(162,125)
-
-
(40,724)
1,885,767
2,766,419
(1,081,131)
1,685,288
3,966,857
(1,200,438)
2,766,419
20 (a)
The above statement should be read in conjunction with the accompanying notes.
dorsaVi Annual Report 2020
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dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Notes to the Financial Statements
TABLE OF CONTENTS
NOTE 1:
NOTE 2:
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS
NOTE 3:
FINANCIAL RISK MANAGEMENT
NOTE 4:
NOTE 5:
REVENUE FROM CONTRACTS WITH CUSTOMERS 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:
BORROWINGS
NOTE 16:
LEASE LIABILITY
NOTE 17:
PROVISIONS
NOTE 18:
SHARE CAPITAL
NOTE 19:
RESERVES AND ACCUMULATED LOSSES
NOTE 20:
CASH FLOW INFORMATION
NOTE 21:
COMMITMENTS AND CONTINGENCIES
NOTE 22:
LOSS PER SHARE
NOTE 23:
SHARE BASED PAYMENTS
NOTE 24:
SUBSIDIARIES AND RELATED PARTY DISCLOSURES
NOTE 25:
AUDITOR'S REMUNERATION
NOTE 26:
PARENT ENTITY INFORMATION
NOTE 27:
SEGMENT INFORMATION
NOTE 28:
SUBSEQUENT EVENTS
dorsaVi Annual Report 2020
33
41
41
45
45
46
46
46
46
47
47
47
48
50
50
51
51
51
52
53
54
55
55
58
58
59
59
60
32
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 30 JUNE 2020
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 the Corporations Act
2001, Australian Accounting Standards, Interpretations and other applicable authoritative pronouncements of the Australian
Accounting Standards Board (AASB).
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: 86 Denmark Street, Kew, Victoria, 3101. 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 directors’ report.
Compliance with International Financial Reporting Standards:
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)
New and Revised Accounting Standards Effective at 30 June 2020
The Group has applied all new and revised Australian Accounting Standards that apply to annual reporting periods
beginning on or after 1 July 2019. AASB 16 Leases was adopted during the year ended 30 June 2019.
The group has elected to early adopt AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related
Rent Concessions in the current reporting period, with effect from 1 July 2019 (the beginning of the current reporting period).
AASB 2020-4 amends AASB 16 Leases to provide an optional practical expedient to lessees from assessing whether a rent
concession related to COVID-19 is a lease modification. Lessees can elect to account for such rent concessions in the
same way as they would if they were not lease modifications. The practical expedient only applies to rent concessions
occurring as a direct consequence of the COVID-19 pandemic and only if all the following conditions are met:
(a)
the change in lease payments results in revised consideration for the lease that is substantially the same as, or less
than, the consideration for the lease immediately preceding the change;
(b) any reduction in lease payments affects only payments due on or before 30 June 2021; and
(c)
there is no substantive change to other terms and conditions of the lease.
In accordance with AASB 2020-4, the group has elected to apply the practical expedient not to assess whether rent
concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications, and to account for any
changes in lease payments resulting from the rent concessions as if the changes were not lease modifications. Any gains
arising from COVID-19 related rent concessions are recognised in profit or loss.
(c)
Going Concern
The financial report has been prepared on a going concern basis. The Group incurred a loss from ordinary activities after
income tax of $7,593,079 during the year ended 30 June 2020 (2019: $4,020,751) after providing for the impairment of
intangible assets of $4,018,354 (2019: $nil). The group had a net decrease in cash of $1,081,131 (2018: decrease
$1,200,438) after raising additional share capital of $746,760 and issuing convertible notes totalling $1,155,000 before
costs. As at 30 June 2020, the Group’s current assets exceed current liabilities by $1,675,767 (2019: $2,602,260).
Throughout the year the Group has continued its strong focus on cost management and creating a sustainable cost base for
dorsaVi Annual Report 2020
33
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
the business. There remains an emphasis on expansion into the US market and building annuity revenue streams through
the launch of Software as a Service (SaaS) platforms. Opportunities for future growth are expected to come from product
exposure in the US market and the scalability of annuity products.
COVID-19 had a detrimental effect on the ability to grow revenues in the 2nd half of the year. Whilst the timing of COVID-
19’s impact remains uncertain, the effect on sales revenue is considered to be temporary. COVID-19 has also caused the
company to more aggressively reduce costs than would have otherwise been the case, and the company has also been the
recipient of various COVID-19 government assistance packages. The Group is also considering means by which additional
equity or debt funding may be obtained. There are inherent uncertainties associated with the forecast assumptions
regarding the ability to sustain and grow revenues and contain and reduce costs, and ability to obtain additional debt or
equity funding if required.
In determining the basis for preparation of the financial report, the Directors have assessed the financial performance, future
operating plans, financial forecasts, existing financial position and additional funding opportunities potentially available to the
Group. The Directors believe there are reasonable grounds to expect the Group to be able to continue as a going concern
for at least 12 months from the date of issue of the financial report, which contemplates continuity of normal business
activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
As a result of the above, the Directors have concluded that the going concern basis is appropriate.
Given the circumstances detailed above, there exists a material uncertainty that may cast significant doubt on the ability of
the Group to continue as a going concern and therefore, whether it will be able to realise its assets and extinguish its
liabilities in the normal course of business, and at the amounts stated in the financial report.
(d)
Principles of Consolidation
The consolidated financial statements are those of the Group, comprising the financial statements of the parent entity and all
of the entities which the parent controls. The Group controls an entity when it is exposed, or has rights, to variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The 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.
(e)
Revenue from contracts with customers
The Group derives revenue from the sale of wearable sensors and software. The devices, when used with Group software,
allow the accurate measurement of movement at a variety of different places on the human body or the activity of muscles.
Revenue from integrated sales of devices and software:
The Group’s contracts with customers are typically integrated and requires the provision of devices and software which is
not separately identifiable and so is considered a bundle of goods and services. Revenue from the sale or lease of devices
and licencing of software is recognised over the licence term.
Revenue from consulting:
Revenue from consulting contracts is recognised over time, as the services are provided to the customer, based on service
hours performed as a percentage of estimated total service hours under the contract. Recognising revenue on the basis of
service hours is considered an appropriate method of recognising revenue as it is consistent with the manner in which
services are provided to the customer.
Revenue from the sale of consumables:
The Group sells various consumables goods to customers to support their ongoing use of their wearable sensors. Revenue
from the consumables is recognised at the point in time when control of the goods is transferred to the customer, which
generally occurs at the time of delivery. Customers are, either, required to pay in full for all goods received at the time of
purchase, or, are invoiced on a monthly basis depending on the contract. Outstanding invoices are due for payment within
30 days of the invoice date.
Consideration included in the measurement of revenue:
The consideration to be received from customers is generally fixed and based on the customer contract.
dorsaVi Annual Report 2020
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dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Receivables from contracts with customers:
A receivable from a contract with a customer represents the Group’s unconditional right to consideration arising from the
transfer of goods or services to the customer (i.e. only the passage of time is required before payment of the consideration is
due). Subsequent to initial recognition, receivables from contracts with customers are measured at amortised cost and are
tested for impairment.
Contract assets:
A contract asset represents the Group’s right to consideration (not being an unconditional right recognised as a receivable)
in exchange for goods or services transferred to the customer. Contract assets are measured at the amount of
consideration that the Group expects to be entitled in exchange for goods or services transferred to the customer.
Contract liabilities:
A contract liability represents the Group’s obligation to transfer goods or services to the customer for which the company has
received consideration (or an amount of consideration is due) from the customer. Amounts recorded as contract liabilities
are subsequently recognised as revenue when the Group transfers the contracted goods or services to the customer.
(f)
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.
(g)
Inventories
Inventories are measured at the lower of cost and net realisable value. Cost comprises all costs of purchase, cost of
conversion and other costs incurred in bringing inventories to their present location and condition.
(h)
Plant and Equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation and any
accumulated impairment loss.
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
Leased devices
Office equipment
Furniture, fixtures and fittings
Right to use asset
Tooling
(i)
Leases
Lease assets:
Depreciation Rates
10-50%
20%
10-67%
10-20%
31%
10%
Depreciation Basis
Diminishing value
Straight line
Diminishing value
Diminishing value
Straight line
Straight line
At the commencement date of a lease (other than leases of 12-months or less and leases of low value assets), the company
recognises a lease asset representing its right to use the underlying asset and a lease liability representing its obligation to
make lease payments.
Lease assets are initially recognised at cost, comprising the amount of the initial measurement of the lease liability, any
lease payments made at or before the commencement date of the lease, less any lease incentives received, any initial direct
costs incurred by the company, and an estimate of costs to be incurred by the company in dismantling and removing the
underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the
terms and conditions of the lease, unless those costs are incurred to produce inventories.
Subsequent to initial recognition, lease assets are measured at cost (adjusted for any remeasurement of the lease liability),
less accumulated depreciation and any accumulated impairment loss.
dorsaVi Annual Report 2020
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dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Lease assets are depreciated over the shorter of the lease term and the estimated useful life of the underlying asset,
consistent with the estimated consumption of the economic benefits embodied in the underlying asset.
Lease liabilities:
At the commencement date of a lease (other than leases of 12-months or less and leases of low value assets), the company
recognises a lease asset representing its right to use the underlying asset and a lease liability representing its obligation to
make lease payments.
Lease liabilities are initially recognised at the present value of the future lease payments (i.e. the lease payments that are
unpaid at the commencement date of the lease). These lease payments are discounted using the interest rate implicit in the
lease, if that rate can be readily determined, or otherwise using the company’s incremental borrowing rate.
Subsequent to initial recognition, lease liabilities are measured at the present value of remaining lease payments (i.e. the
lease payments that are unpaid at the reporting date). Interest expense on lease liabilities is recognised in profit or loss
(presented as a component of finance costs). Lease liabilities are remeasured to reflect changes to lease terms, changes to
lease payments and any lease modifications not accounted for as separate leases.
The group has elected to early adopt AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related
Rent Concessions in the current reporting period, with effect from 1 July 2019 (the beginning of the current reporting period).
Refer Note 1(b) for more detail.
Variable lease payments not included in the measurement of lease liabilities are recognised as an expense when incurred.
Leases of 12-months or less and leases of low value assets:
Lease payments made in relation to leases of 12-months or less and leases of low value assets (for which a lease asset and
a lease liability has not been recognised) are recognised as an expense on a straight-line basis over the lease term.
(j)
Intangibles
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 10 and 20 years.
Research:
Expenditure on research activities is recognised as an expense when incurred.
Development Expenditure:
Development expenditure encompasses the cost of developing new products including mobile applications, algorithms,
sensors, hardware and firmware. Development expenditure is 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.
(k)
Impairment of Non-Financial Assets
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.
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.
dorsaVi Annual Report 2020
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dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
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 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.
(l)
Income Tax
Current income tax benefit is the tax receivable 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 benefit incudes refundable research and
development tax offsets.
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 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.
(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.
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(iii)
Retirement Benefit Obligations:
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. 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 include interest expense calculated using the effective interest method, finance charges in respect of
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
Initial recognition and measurement:
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
instrument. For financial assets, this is equivalent to the date that the Group commits itself to either the purchase or sale of
the asset.
Financial instruments are initially measured at fair value adjusted for transaction costs, except where the instrument is
classified as fair value through profit or loss, in which case transaction costs are immediately recognised as expenses in
profit or loss.
Classification of financial assets:
Financial assets recognised by the Group are subsequently measured in their entirety at either amortised cost or fair value,
subject to their classification and whether the Group irrevocably designates the financial asset on initial recognition at fair
value through other comprehensive income (FVtOCI) in accordance with the relevant criteria in AASB 9.
Financial assets not irrevocably designated on initial recognition at FVtOCI are classified as subsequently measured at
amortised cost, FVtOCI or fair value through profit or loss (FVtPL) on the basis of both:
the Group’s business model for managing the financial assets; and
(a)
the contractual cash flow characteristics of the financial asset.
(b)
Classification of financial liabilities:
Financial liabilities classified as held-for-trading, contingent consideration payable by the Group for the acquisition of a
business, and financial liabilities designated at FVtPL, are subsequently measured at fair value.
All other financial liabilities recognised by the Group are subsequently measured at amortised cost.
Trade and other receivables:
Trade and other receivables arise from the Group’s transactions with its customers and are normally settled within 30 days.
Consistent with both the Group’s business model for managing the financial assets and the contractual cash flow
characteristics of the assets, trade and other receivables are subsequently measured at amortised cost.
Impairment of financial assets:
The following financial assets are tested for impairment by applying the ‘expected credit loss’ impairment model:
dorsaVi Annual Report 2020
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ABN: 15 129 742 409
(a)
(b)
(c)
debt instruments measured at amortised cost;
debt instruments classified at fair value through other comprehensive income; and
receivables from contracts with customers and contract assets.
The Group applies the simplified approach under AASB 9 to measuring the allowance for credit losses for both receivables
from contracts with customers and contract assets. Under the AASB 9 simplified approach, the Group determines the
allowance for credit losses for receivables from contracts with customers and contract assets on the basis of the lifetime
expected credit losses of the financial asset. Lifetime expected credit losses represent the expected credit losses that are
expected to result from default events over the expected life of the financial asset.
For all other financial assets subject to impairment testing, when there has been a significant increase in credit risk since the
initial recognition of the financial asset, the allowance for credit losses is recognised on the basis of the lifetime expected
credit losses. When there has not been an increase in credit risk since initial recognition, the allowance for credit losses is
recognised on the basis of 12-month expected credit losses. ’12-month expected credit losses’ is the portion of lifetime
expected credit losses that represent the expected credit losses that result from default events on a financial instrument that
are possible within the 12 months after the reporting date.
The Group consider a range of information when assessing whether the credit risk has increased significantly since initial
recognition. This includes such factors as the identification of significant changes in external market indicators of credit risk,
significant adverse changes in the financial performance or financial position of the counterparty, significant changes in the
value of collateral, and past due information.
The Group assumes that the credit risk on a financial asset has not increased significantly since initial recognition when the
financial asset is determined to have a low credit risk at the reporting date. The Group considers a financial asset to have a
low credit risk when the counterparty has an external ‘investment grade’ credit rating (if available) of BBB or higher, or
otherwise is assessed by the Group to have a strong financial position and no history of past due amounts from previous
transactions with the Group.
The Group determines expected credit losses using a provision matrix based on the Group’s historical credit loss
experience, adjusted for factors that are specific to the financial asset as well as current and future expected economic
conditions relevant to the financial asset. When material, the time value of money is incorporated into the measurement of
expected credit losses. There has been no change in the estimation techniques or significant assumptions made during the
reporting period.
The Group has identified expected credit loss rates for the purpose of measuring expected credit losses. These credit loss
rates have been selected based on the Group’s historical experience. Because contract assets are directly related to
unbilled work in progress, contract assets have a similar credit risk profile to receivables from contracts with customers.
Accordingly, the Group applies the same approach to measuring expected credit losses of receivables from contracts with
customers as it does to measuring impairment losses on contract assets.
The measurement of expected credit losses reflects the Group’s ‘expected rate of loss’, which is a product of the probability
of default and the loss given default, and its ‘exposure at default’, which is typically the carrying amount of the relevant
asset. Expected credit losses are measured as the difference between all contractual cash flows due and all contractual
cash flows expected based on the Group’s exposure at default, discounted at the financial asset’s original effective interest
rate.
Financial assets are regarded as ‘credit-impaired’ when one or more events have occurred that have a detrimental impact
on the estimated future cash flows of the financial asset. Indicators that a financial asset is ‘credit-impaired’ include
observable data about the following:
(a)
(b)
(c)
significant financial difficulty of the issuer or the borrower;
breach of contract;
the lender, for economic or contractual reasons relating to the borrower’s financial difficulty, has granted
concessions to the borrower that the lender would not otherwise consider; or
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
(d)
The gross carrying amount of a financial asset is written off (i.e. reduced directly) when the counterparty is in severe
financial difficulty and the Group has no realistic expectation of recovery of the financial asset. Financial assets written off
remain subject to enforcement action by the Group. Recoveries, if any, are recognised in profit or loss.
(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.
dorsaVi Annual Report 2020
39
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Transactions and Balances:
Transactions undertaken in foreign currencies are recognised in the Group’s 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 in the financial year in which they arose.
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.
dorsaVi Annual Report 2020
40
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 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. The Directors have determined that there is one
CGU applicable to the cash flows generated. 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.
(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
The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity
instruments on the date at which they are granted. The value of equity instruments granted is determined according to the
fair value of goods or services received unless that fair value cannot be estimated reliably, in which case the fair value is
determined by reference to the underlying value of equity instruments granted.
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
Finance liabilities:
Trade payables
Borrowings
Lease liability
Other payables
2020
$
2019
$
1,685,288
284,886
646,334
2,616,508
2,766,419
617,700
745,907
4,130,026
79,656
1,664,934
246,984
1,160,824
3,152,398
228,668
-
360,994
1,284,539
1,874,201
dorsaVi Annual Report 2020
41
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(a)
Currency Risk
The Group undertakes transactions denominated in foreign currencies. 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 and transactions occurring with countries in currencies that differ to the presentation currency
of the Group.
Whilst operations in these geographical regions are in their infancy, the Group has not established a hedging policy to
mitigate adverse currency risk.
The carrying amount of foreign currency denominated monetary assets and monetary liabilities at reporting date are:
Current assets
Current liabilities
Sensitivity:
2020
$
2019
$
USD
GBP
USD
GBP
366,204
224,352
141,853
202,301
244,044
(41,743)
450,706
251,895
198,811
483,970
352,753
131,217
If foreign exchange rates were to increase/decrease by 10% from rates used in the profit or loss during the financial year,
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:
+/- 10%
Impact on loss after tax
Impact on equity
(b)
Interest Rate Risk
2020
$
96,780
96,780
2019
$
131,019
131,019
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:
dorsaVi Annual Report 2020
42
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
2020
Financial Instruments
Financial assets
Cash
Term Deposit
Term Deposit
Term Deposit
Trade receivables
Other receivables
Non-interest
bearing
$
Total carrying
amount
$
Weighted average
effective interest
rate
Interest Bearing
$
1,556,908
51,381
27,932
49,067
-
-
-
-
1,556,908
51,381
27,932
49,067
284,886
646,334
2,616,508
0.70% Floating
2.65% Fixed
2.20% Fixed
1.92% Fixed
0.00%
0.00%
-
-
1,685,288
284,886
646,334
931,220
Financial liabilities
Trade payables
Insurance finance facility
Paycheck Protection Program loan
Convertible note
Lease liability
Other payables
-
79,656
52,455
152,892
1,459,587
246,984
-
-
-
-
-
1,911,918
1,160,824
1,240,480
79,656
52,455
152,892
1,459,587
246,984
1,160,824
3,152,398
0.00%
3.9% Fixed
1% Fixed
10% Fixed
12% Fixed
0.00%
2019
Financial Instruments
Financial assets
Cash
Flexi Deposit
Term Deposit
Term Deposit
Term Deposit
Trade receivables
Other receivables
Financial liabilities
Trade payables
Lease liability
Other payables
Interest
Bearing
$
Non-interest
bearing
$
Total carrying
amount
$
1,638,124
999,856
51,381
27,932
49,126
-
-
2,766,419
-
-
-
-
-
617,700
745,907
1,363,607
1,638,124
999,856
51,381
27,932
49,126
617,700
745,907
4,130,026
Weighted average
effective interest
rate
0.70% Floating
1.80% Fixed
2.66% Fixed
2.20% Fixed
2.61% Fixed
0.00%
0.00%
-
360,994
-
360,994
228,668
-
1,284,539
1,513,207
228,668
360,994
1,284,539
1,874,201
0.00%
12.00% Fixed
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.
dorsaVi Annual Report 2020
43
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(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 and unbilled debtors in relation to accrued income.
(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 when they fall due.
(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.
dorsaVi Annual Report 2020
44
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
NOTE 4:
REVENUE FROM CONTRACTS WITH CUSTOMERS AND OTHER INCOME
Revenue recognised at a point in time:
Clinical income
Workplace income
Project income
Revenue recognised over time:
Clinical income
Workplace income
Revenue from contracts with customers is disclosed in the segment note as follows:
Clinical income
Workplace income
Project income
Other income:
Grant and other income
Interest income
Foreign exchange gain
2020
$
2019
$
134,482
381,529
-
516,011
359,020
653,576
221,551
1,234,147
990,669
512,540
1,503,209
2,019,220
977,797
303,048
1,280,845
2,514,992
1,125,151
894,069
-
2,019,220
1,336,817
956,624
221,551
2,514,992
278,252
99,587
-
377,839
2,397,059
140,225
46,610
522,042
708,877
3,223,869
Revenue from device sales is recognised over time and not at a point in time in accordance with AASB 15. Foreign
exchange gains or losses on the translation of foreign operations, previously recorded through the statement of
comprehensive profit or loss are now accounted for through a reserve, refer Note 19.
NOTE 5:
LOSS FROM CONTINUING OPERATIONS
Loss before income tax has been determined after:
Depreciation
Amortisation of patents and intangibles
Provision for impairment of patents and intangibles
Employee benefits expense:
- Share based payments
- Other employee benefits
Less employee benefits capitalised
Employee benefits expense
Operating lease rental
Research and development expense
Cost of sales
Bad debts
203,357
836,290
4,018,354
5,058,001
344,665
3,353,872
3,698,537
658,172
3,040,365
182,377
783,477
-
965,854
166,754
4,514,547
4,681,301
701,403
3,979,898
-
1,051,411
96,967
27,375
198,495
1,302,641
448,597
171,092
dorsaVi Annual Report 2020
45
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
INCOME TAX
NOTE 6:
(a) Components of tax benefit
Current tax
(b) Prima facie tax payable
The prima facie tax refundable on loss before income tax is reconciled to the
income tax benefit as follows:
Prima facie income tax refundable on loss before income tax at 27.5% (2019:
27.5%)
Add tax effect of:
- Accounting R&D expenditure
- Other non-allowable items
- Impairment of intangibles
- Deferred tax assets/liabilities not recognised
- Share based payments expense
- Tax losses not recognised
Less tax effect of:
- R&D tax offset
- Deduction under s40-880
- Under provision for tax in the prior year
- Effect of foreign tax rates
- Deferred tax assets not recognised
Income tax benefit attributable to loss
(c) Deferred tax assets not brought to account
Temporary differences
Operating tax losses
NOTE 7:
DIVIDENDS
There were no dividends paid during the period.
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Deposits at call
NOTE 9:
RECEIVABLES
CURRENT
Receivables from contracts with customers
Allowance for credit losses
Contract assets
R&D tax offset refundable
2020
$
2019
$
(457,364)
(566,649)
(2,213,872)
(1,261,535)
281,293
-
1,105,047
27,255
94,783
786,660
2,295,038
444,955
49,566
12,409
31,601
-
538,531
(457,365)
371,997
172
-
-
45,857
1,059,944
1,477,970
566,649
-
-
12,529
203,906
783,084
(566,649)
229,734
7,832,197
8,061,931
202,563
6,846,669
7,049,232
2020
$
1,556,908
128,380
1,685,288
2019
$
1,638,124
1,128,295
2,766,419
374,727
(89,841)
284,886
744,311
(126,611)
617,700
201,379
444,955
931,220
179,259
566,648
1,363,607
dorsaVi Annual Report 2020
46
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Credit losses:
The group applies the simplified approach under AASB 9 to measuring the allowance for credit losses for both receivables
from contracts with customers and contract assets. Under the AASB 9 simplified approach, the group determines the
allowance for credit losses for receivables from contracts with customers and contract assets on the basis of the lifetime
expected credit losses of the instrument. Lifetime expected credit losses represent the expected credit losses that are
expected to result from default events over the expected life of the financial asset.
The group determines expected credit losses using a provision matrix based on the group’s historical credit loss experience,
adjusted for factors that are specific to the financial asset as well as current and future expected economic conditions
relevant to the financial asset. When material, the time value of money is incorporated into the measurement of expected
credit losses. There has been no change in the estimation techniques or significant assumptions made during the reporting
period.
Life-time expected credit losses - receivables from contracts with customers:
Loss allowance at 1 July
Net remeasurement of loss allowance
Amounts written off
Loss allowance at 30 June
2020
$
2019
$
(126,611)
(27,375)
64,145
(89,841)
(80,978)
(171,092)
125,459
(126,611)
30 June 2020:
Estimated total gross carrying amount at
default
Expected credit loss rate
Expected credit loss
30 June 2019:
Estimated total gross carrying amount at
default
Expected credit loss rate
Expected credit loss
NOTE 10:
INVENTORIES
CURRENT
Finished goods, at cost
Work in progress, at cost
NOTE 11:
OTHER ASSETS
Not past
due
Past due
0-30 days
Past due
30-90 days
Past due
90+ days
Total
69,457
-%
-
107,223
-%
31
37,928
1%
475
160,119
56%
89,335
374,727
24%
89,841
178,090
1%
268,932
3%
1,781 8,068
82,061
10%
8,206
215,228
50%
108,5566
744,311
17%
126,611
2020
$
2019
$
661,342
21,797
683,139
265,751
42,769
308,520
Prepayments
149,721
142,578
NOTE 12:
INTANGIBLE ASSETS
Patents, at cost
Less accumulated amortisation
Less provision for impairment
Development expenditure, at cost
Less accumulated amortisation
Less provision for impairment
1,158,274
(255,624)
(902,650)
-
5,261,956
(2,146,252)
(3,115,704)
-
-
1,045,537
(197,440)
-
848,097
4,589,964
(1,368,146)
-
3,221,818
4,069,915
dorsaVi Annual Report 2020
47
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(a)
Reconciliations
Reconciliation of the carrying amounts of intangible assets at the beginning and end of the current financial year:
Total
Development Expenditure
Patents
2020
$
2019
$
2020
$
2019
$
2020
$
2019
$
Opening carrying amount
Additions
Amortisation expense
Provision for impairment
Closing carrying amount
848,097
112,737
(58,184)
(902,650)
786,575
111,381
(49,859)
3,221,818
671,992
(778,106)
- (3,115,704)
3,097,678
857,758
(733,618)
4,069,915
784,729
(836,290)
- (4,018,354)
3,884,253
969,139
(783,477)
-
- 848,097
- 3,221,818
-
4,069,915
Additions to intangibles during the year related 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 (j)). During the year the
Group have assessed carrying value of its intangible assets for impairment based on value in use calculations. Given the
recent change in the Group’s business strategy (i.e. transition to a SaaS recurring revenue strategy), the Group’s forecasts
have been updated based upon reasonable and prudent assumptions including growth rates (2.5%), discount rates (16%)
and terminal values. This has resulted in a provision for impairment of $4,018,354 in this financial year. Should future
performance exceed Group forecasts, the current impairment provision may be reversed in future periods.
NOTE 13:
PLANT AND EQUIPMENT
Testing equipment, at cost
Accumulated depreciation
Leased devices, at cost
Accumulated depreciation
Office equipment, at cost
Accumulated depreciation
Furniture, fixtures and fittings, at cost
Accumulated depreciation
Right to use asset, at cost (i)
Accumulated depreciation
Tooling, at cost
Accumulated depreciation
Total
2020
$
2019
$
128,760
(120,764)
7,996
128,635
(116,160)
12,475
267,743
(244,265)
23,478
267,743
(208,185)
59,558
290,239
(228,823)
61,416
286,291
(203,929)
82,362
63,691
(21,137)
42,554
63,691
(16,384)
47,307
401,718
(206,004)
195,714
401,718
(82,404)
319,314
94,258
(47,005)
47,253
378,411
94,258
(37,579)
56,679
577,695
(i) On 15 November 2018, the Group entered into a 39-month property lease. The agreement does not include variable
lease payments or residual guarantees. Standard extension options are not expected to be exercised.
dorsaVi Annual Report 2020
48
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(a)
Reconciliations
Reconciliation of the carrying amounts of plant and equipment at the beginning and end of the current financial year:
2019
$
2020
$
Testing equipment:
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
Leased devices:
Opening carrying amount
Depreciation expense
Closing carrying amount
Office equipment:
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
Furniture, fixtures and fittings:
Opening carrying amount
Depreciation expense
Closing carrying amount
Right to use asset:
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
Tooling:
Opening carrying amount
Depreciation expense
Closing carrying amount
Total:
Opening carrying amount
Additions
Depreciation expense
Closing carrying amount
12,475
125
(4,604)
7,996
20,321
-
(7,846)
12,475
59,558
(36,080)
23,478
109,086
(49,528)
59,558
82,362
3,948
(24,894)
61,416
76,225
34,023
(27,886)
82,362
47,307
(4,753)
42,554
52,594
(5,287)
47,307
319,314
-
(123,600)
195,714
-
401,718
(82,404)
319,314
56,679
(9,426)
47,253
66,105
(9,426)
56,679
577,695
4,073
(203,357)
378,411
324,331
435,741
(182,377)
577,695
dorsaVi Annual Report 2020
49
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
NOTE 14:
PAYABLES
CURRENT
Unsecured liabilities
Trade payables
Contract liabilities
Sundry creditors and accruals
NOTE 15:
BORROWINGS
CURRENT
Unsecured liabilities
Premium finance facility (i)
Convertible note host debt (iii)
NON-CURRENT
Unsecured liabilities
Paycheck Protection Program loan (ii)
Convertible note host debt (iii)
Derivative liability (iii)
2020
$
2019
$
79,656
866,136
294,688
1,240,480
228,668
1,070,347
214,192
1,513,207
52,455
129,486
181,941
-
-
-
152,892
-
620,376
709,725
1,482,993
1,664,934
-
-
-
-
(i)
(ii)
(iii)
In March 2020, the Group entered into a finance facility for the annual insurance liability of dorsaVi Ltd. The
facility is repayable monthly over a 10 month period ending in December 2020 at an interest rate of 3.9%.
Under USA federal government Covid19 relief measures, dorsaVi’s US subsidiary was, on 23 June 2020,
provided a Small Business Administration (SBA) Paycheck Protection Program (PPP) loan of US$104,930. The
facility is 60 month facility bearing fixed interest at the rate of 1% p.a. If certain conditions are met, within a
covered 24 week period commencing 25 June 2020, the SBA may forgive up to 100% of the PPP loan balance
and associated accrued interest. Systematic principal and interest payments, on any unforgiven loan balance,
commence after the amount of loan forgiveness is determined or 9 October 2021 whichever occurs first.
In December 2019 1,155,000 convertible notes were issued with a face value of $1 each. The notes will mature
in December 2022. Interest is payable at a rate of 10% p.a., monthly in arrears. As reflected in the above table,
and, in accordance with Accounting Standards, the convertible notes are considered a financial liability with a
host debt contract, held at amortised cost, and an embedded derivative liability, held at fair value through the
profit and loss. Accordingly, the derivative liability will be revalued at each reporting date.
Upon maturity the notes will convert into fully paid ordinary shares according to a 40 day VWAP calculation. In
accordance with the terms of the note agreement the maximum number of fully paid ordinary shares that can be
issued will be 38,500,000 and the minimum number will be 16,500,000.
dorsaVi Annual Report 2020
50
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
NOTE 16:
LEASE LIABILITY
On 15 November 2018, the Group entered into a 39-month property lease and, in accordance with AASB 16: Leases, a
lease liability and a corresponding non-current asset, Right of Use Asset, refer Note 13, have been recognised.
Future minimum lease payments and the present value of the net minimum lease payments:
2020
- Not later than one year
- Later than one year and not later than 5 years
Total minimum lease payments
- Future finance charges
Present value of minimum lease payment
Current lease liability
Non-current lease liability
NOTE 17:
PROVISIONS
CURRENT
Employee benefits
NON-CURRENT
Employee benefits
$
163,500
104,949
268,449
(21,465)
246,984
2019
$
160,000
268,449
428,449
(67,455)
360,994
144,269
102,715
246,984
125,524
235,470
360,994
206,911
340,133
9,441
25,106
(a) Aggregate employee benefits liability
216,352
365,239
NOTE 18:
SHARE CAPITAL
The Group’s share capital is as follows:
Ordinary Shares
Parent Equity
2020
Parent Equity
2019
No of Shares
$
No of Shares
$
Beginning of the financial year
Issued during the financial year:
- Employee share scheme (i)
- Shares issued in capital raising (ii)
- Cost of raising capital
End of the financial year
204,016,783
40,381,715
167,918,222
38,455,224
-
27,410,741
-
231,427,524
-
746,760
(48,122)
41,080,353
87,941
36,010,620
-
204,016,783
-
2,088,616
(162,125)
40,381,715
(i)
Shares Issued under the Employee Share Ownership Plan:
During the prior year performance rights previously granted to employees under the Employee Share Ownership Plan
(ESOP) vested into shares. The shares were issued for $Nil consideration.
dorsaVi Annual Report 2020
51
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(ii)
Shares Issued in a Capital Raising:
During the year ended 30 June 2020, the Group issued:
▪ 20,740,741 fully paid ordinary shares, at $0.027 per share, to sophisticated and institutional investors raising $560,000
before costs; and
▪ 6,670,000 fully paid ordinary shares, at $0.028 per share, under a share purchase plan to eligible shareholders, raising
$186,760 before costs.
During the year ended 30 June 2019, the Group issued 36,010,620 fully paid ordinary shares at $0.058 per share, under a 1
for 3 non-renounceable pro-rata rights offer to eligible shareholders, raising $2,088,616 before costs.
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.
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 23, Share Based Payments, for detailed disclosures.
NOTE 19:
RESERVES AND ACCUMULATED LOSSES
Notes
2020
$
2019
$
Share-based payment reserve
Foreign currency translation reserve
19(a)
19(b)
983,554
(750,301)
233,253
692,619
(769,812)
(77,193)
Accumulated losses
19(c)
(40,854,577)
(33,315,228)
(i)
Nature and Purpose of Reserves
The share based payment 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 the balance is transferred to
retained earnings when options lapse.
dorsaVi Ltd has monetary items receivable and payable to and from its subsidiaries. Under AASB 121: The Effects of
Changes in Foreign Exchange Rates, these items are reviewed annually. During the financial year ending 30 June 2020 it
was determined that these items would be treated as an investment in those foreign operation. As a result, exchange
differences on these items are recognised initially in other comprehensive income and reclassified from equity to profit or
loss on disposal of the net investment.
dorsaVi Annual Report 2020
52
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(ii) Movements in reserve
(a) Share-based payment reserve
Balance at beginning of year
Employee share ownership plan
Transfers to retained earnings
Balance at end of year
(b) Foreign currency translation reserve
Balance at beginning of year
Exchange differences on translation of foreign operations
Balance at end of year
(c) Accumulated losses
Balance at beginning of year
Net loss attributable to members of dorsaVi Ltd
Transfers from share based payment reserve
Balance at end of year
NOTE 20:
CASH FLOW INFORMATION
(a)
Reconciliation of Cash:
2020
$
2019
$
692,619
344,665
(53,730)
983,554
1,000,854
166,754
(474,989)
692,619
(769,812)
19,511
(750,301)
(269,447)
(500,365)
(769,812)
(33,315,228)
(7,593,079)
53,730
(29,769,466)
(4,020,751)
474,989
(40,854,577)
(33,315,228)
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
Cash on deposit
1,556,908
128,380
1,685,288
1,638,124
1,128,295
2,766,419
dorsaVi Annual Report 2020
53
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(b) Reconciliation of cash flow used in operations with loss after
income tax:
Loss from ordinary activities after income tax
(7,593,079)
(4,020,751)
2020
$
2019
$
Adjustments and non-cash items:
Amortisation
Depreciation
Provision for impairment of intangibles
Share Based Payments
Movement in debtor provision
Foreign exchange differences on operating assets
Unrealised foreign exchange differences through profit and loss
Change in fair value of derivative liability
Interest adjustment on convertible note host debt
Adjustment to carrying value of convertible note through the profit and loss
Changes in assets and liabilities:
Decrease in receivables
(Increase) / decrease in other assets
(Increase) / decrease in inventories
Increase in payables
(Increase) / decrease in R&D tax offset receivable
Increase / (decrease) in provisions
Cash flows used in operating activities
836,290
203,357
4,018,354
344,665
(36,770)
19,511
-
278,151
62,607
21,579
347,464
(7,143)
(374,619)
(272,727)
121,693
(148,887)
5,413,525
(2,179,554)
783,477
182,377
-
166,754
45,633
38,455
(538,820)
-
-
-
462,012
93,417
16,414
428,563
317,827
(58,401)
1,937,708
(2,083,043)
(c) Reconciliation of liabilities arising from financing activities:
Balance at the beginning of the year
New leases acquired
Interest accrued
Payments made
Balance at the end of the year
360,994
-
37,836
(151,846)
246,984
-
401,718
32,136
(72,860)
360,994
NOTE 21:
COMMITMENTS AND CONTINGENCIES
(a) Expenditure commitments
Acquisition of inventories, less than one year
Total expenditure commitments
(b) Contingent asset and liabilities
There are no contingent assets or contingent liabilities at balance date.
-
-
291,102
291,102
dorsaVi Annual Report 2020
54
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
NOTE 22:
LOSS PER SHARE
Reconciliation of loss used in calculating loss per share:
Loss from continuing operations
Loss used in calculating basic loss per share
Loss used in calculating diluted loss per share
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
NOTE 23:
SHARE BASED PAYMENTS
(a)
Employee Shares
2020
$
(7,593,079)
(7,593,079)
(7,593,079)
2019
$
(4,020,751)
(4,020,751)
(4,020,751)
2020
No of Shares
2019
No of Shares
217,396,418
186,924,883
-
-
217,396,418
186,924,883
In 2013 the Board established an ESOP 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 Ltd.
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 Ltd;
▪ To create a committed and united purpose between the employees and Directors and dorsaVi Ltd; and
▪ To add wealth for all shareholders of dorsaVi through the motivation of dorsaVi’s employees and Directors.
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 Ltd or a subsidiary of dorsaVi Ltd; or
▪ A Director of dorsaVi Ltd or a subsidiary of dorsaVi Ltd who holds a salaried employment or office in dorsaVi Ltd or a
subsidiary of dorsaVi Ltd; or
▪ A contractor engaged by dorsaVi Ltd 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.
(b)
Loan Shares and Options
The 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. Loan shares are treated as
options in accordance with accounting standards.
Loan 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.
During the year ended 30 June 2020 and to the date of this report no options over ordinary shares or loan shares were
granted to employees (2019: Nil) and 12,739,588 options over ordinary shares were granted to non-executive directors in
lieu of the payment of directors’ fees (2019: Nil). During the year a total of 50,000 options were cancelled (2019: 592,501
options cancelled). At 30 June 2020, 13,518,754 had been granted but not converted into ordinary shares (2019: 829,166).
dorsaVi Annual Report 2020
55
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
(c)
Employee Performance Rights
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 30 June 2020, 2,331,071
performance rights were granted (2019: Nil). During the year ended 30 June 2020, 2,826,601 (2019: 87,941) performance
rights vested into shares. During the year ended 30 June 2020, 155,470 performance rights lapsed (2019: 1,242,725). At
30 June 2020, 430,000 performance rights remain outstanding (2019: 1,081,000).
Details of shares, options and performance rights granted are as follows:
2020
Grant date
Expiry
date
Exercise
price
Balance at
1/7/2019
Granted during
the year
Vested
during the
year
Expired during
the year
Balance at
30/6/2020
Exercisable at
year end
5-Nov-24
5-Nov-14
25-Feb-25
25-Feb-15
24-Mar-21
24-Mar-16
1-Oct-19
29-Nov-16
29-Nov-19
29-Nov-16
15-May-17 15-May-22
1-Oct-22
15-May-17
1-Oct-23
15-May-17
1-Oct-19
15-May-17
1-Jul-19
15-May-17
1-Oct-19
5-Jun-17
1-Jul-19
5-Jun-17
18-Sep-19
18-Sep-19
1-Oct-19
18-Sep-19
1-Oct-20
18-Sep-19
1-Oct-21
18-Sep-19
18-Sep-22
18-Sep-19
4-Dec-24
4-Dec-19
4-Dec-24
4-Dec-19
7-Jan-25
7-Jan-20
7-Apr-25
7-Apr-20
25-Jun-20
25-Jun-20
7-Jul-25
7-Jul-20
TOTAL
$0.40
$0.36
$0.40
$0.33
$0.33
$0.33
20,000
50,000
200,000
- 150,000
- 450,000
550,000
55,000
24,166
- 39,000
- 117,000
- 125,000
- 200,000
- - 760,000
- - 70,000
- - 115,000
- - 115,000
- - 200,000
- 1,280,488
- 1,116,703
- 1,846,856
- 4,801,827
- - 1,071,071
- 3,693,714
15,070,659
1,980,166
20,000
- - - 20,000
50,000
- -
50,000
100,000
- - - 200,000
87,000
- -
- 63,000
- - -
- 450,000
500,000
- - 50,000
500,000
55,000
- - - 55,000
- - - 24,166
24,166
- -
- 21,530
17,470
- - -
- 117,000
49,250
- 75,750
- -
- - -
- 200,000
- - -
760,000
- -
1,750
68,250
-
- - 115,000
-
- - 115,000
-
- - 200,000
1,280,488
- 1,280,488
1,280,488
1,116,703
- 1,116,703
1,116,703
1,846,856
- 1,846,856
1,846,856
- 4,801,827
4,801,827
4,801,827
- - -
1,071,071
3,693,714
- 3,693,714
3,693,714
13,488,754
14,018,754
205,470
15,566,189
$0.086
$0.072
$0.036
$0.024
$0.018
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 3.2
years.
▪ The weighted average share price for performance rights vesting into shares during the year was $Nil (2019: $Nil).
▪ There were no options exercised during the year (2019: none exercised).
▪ The fair value was determined using the binomial tree method or the Black-Scholes option-pricing models:
a. The share price at grant date ranged from: $0.01 to $0.40
b. Expected price volatility of the Group’s shares: 80%
c. Dividends: $Nil
d. Risk free interest rate: 1.51% to 2.50%
dorsaVi Annual Report 2020
56
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
2019
Grant date
Expiry date
Exercise
price
Balance at
1/7/2018
Granted
during the
year
Vested
during the
year
Expired
during the
year
3-Jul-14
2-Sep-14
5-Nov-14
25-Feb-15
17-Aug-15
24-Mar-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
5-Jun-17
5-Jun-17
5-Jun-17
5-Jun-17
5-Jun-17
-
-
5-Nov-19
25-Feb-20
-
24-Mar-21
-
1-Oct-19
29-Nov-19
15-May-22
1-Oct-22
1-Oct-23
-
-
-
1-Oct-19
1-Jul-19
-
1-Oct-19
1-Jul-19
-
-
$0.46
$0.40
$0.40
$0.36
$0.26
$0.40
-
-
-
$0.33
$0.33
$0.33
$0.33
$0.33
-
-
-
-
-
-
-
-
250,000
100,000
20,000
80,000
500,000
200,000
150,000
150,000
450,000
550,000
55,000
133,333
133,334
350,000
39,000
39,000
117,000
275,000
275,000
500,000
83,334
333,332
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,250
-
-
-
-
-
-
-
9,775
-
-
56,500
-
-
10,416
-
250,000
100,000
-
30,000
500,000
-
138,750
-
-
-
-
109,167
133,334
350,000
29,225
-
-
218,500
150,000
300,000
72,918
333,332
Balance at
30/6/2019
Exercisable at
year end
-
-
-
-
20,000
50,000
20,000
50,000
-
-
200,000
-
150,000
450,000
550,000
55,000
24,166
-
-
-
39,000
117,000
-
125,000
200,000
-
-
100,000
-
-
-
550,000
55,000
24,166
-
-
-
-
-
-
-
-
-
-
TOTAL
4,783,333
-
87,941
2,715,226
1,980,166
799,166
(d)
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:
Share options
Performance rights
Total expenses recognised from share-based payment transactions
2020
$
256,097
88,568
344,665
2019
$
891
165,863
166,754
dorsaVi Annual Report 2020
57
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
NOTE 24:
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
UK
USA
AUS
2020
%
100
100
100
2019
%
100
100
100
▪ 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:
There were no transactions with associates or their entities during the year ended 30 June 2020 (2019: $nil).
(b)
Transactions with Directors, Key Management Personnel and Other Related Parties:
Starfish Ventures Pty Ltd is considered a related party in accordance with the definition under AASB 124: Related Parties.
During the first five months of the year ended 30 June 2019, Starfish Ventures Pty Ltd leased property and charged rent to
dorsaVi Ltd. The Rental arrangement ceased in November 2018. Total value of rental charges during the year ended 30
June 2020 was $Nil (2019: $83,570). The rent was charged to dorsaVi on normal terms and conditions. The balance
outstanding at balance date was $Nil (2019: $Nil).
During the year ended 30 June 2020, dorsaVi Ltd paid $Nil (2019: $34,276) to Starfish Technology Fund II, LP on behalf of
Michael Panaccio for director’s fees. As approved by shareholders at the 2019 AGM, non-executive directors were granted
options over ordinary shares in lieu of the payment of directors’ fees as from 1 March 2019. During the year ended 30 June
2020, Starfish Ventures Pty Ltd was granted 2,918,381 options on behalf of Michael Panaccio (2019: nil).
NOTE 25:
AUDITOR'S REMUNERATION
Audit and Other Assurance Services
Amounts paid and payable to Pitcher Partners (Melbourne) for:
(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
(ii)
Taxation and other compliance services
Total remuneration for non-audit services
Total remuneration of Pitcher Partners (Melbourne)
Other Non-audit Services
2020
$
109,900
109,900
14,901
14,901
124,801
2019
$
116,236
116,236
18,727
18,727
134,693
dorsaVi Annual Report 2020
58
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
NOTE 26:
PARENT ENTITY INFORMATION
(a) Summarised statement of financial position
Assets:
Current assets
Non-current assets
Total assets
Liabilities:
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity:
Share capital
Share-based payment reserve
Accumulates losses
Total equity
(b) Summarised statement of comprehensive income
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
NOTE 27:
SEGMENT INFORMATION
(a)
Description of Segments
2020
$
2019
$
4,135,287
378,411
4,513,698
17,818,775
4,647,610
22,466,385
2,095,663
2,146,073
1,339,542
3,435,205
1,078,493
25,106
2,171,179
20,295,206
41,080,353
983,554
(40,985,414)
1,078,493
40,381,715
692,619
(20,779,128)
20,295,206
(20,260,016)
(1,961,876)
-
-
(20,260,016)
(1,961,876)
For the years ended 30 June 2019 and 2020, management has differentiated operating segments based on product.
The Group’s chief operating decision maker has identified the following reportable segments:
▪ Segment 1: Clinical;
▪ Segment 2: Workplace; and
▪ Segment 3: Projects.
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. Assets and liabilities are reported to
management on a consolidated basis.
(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 during the year.
dorsaVi Annual Report 2020
59
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Segment information is reconciled to financial statements and underlying profit disclosure notes as follows:
2020
Segment revenue:
Segment revenue from external source
Non-segment revenue
Total revenue
Segment result:
Segment result from external source
Non-segment revenue
Non-segment expenses
Income tax benefit
Loss from continuing operations
2019
Segment revenue:
Segment revenue from external source
Non-segment revenue
Total revenue
Segment result:
Segment result from external source
Non-segment revenue
Non-segment expenses
Income tax benefit
Loss from continuing operations
Revenue by geographic location:
2020
Revenue by geographic location
Total revenue from external source
2019
Revenue by geographic location
Total revenue from external source
(c)
Major Customers
Clinical
$
Workplace
$
Projects
$
Total
$
1,125,151
894,069
-
-
-
-
2,019,220
377,839
2,397,059
1,054,240
868,013
-
-
-
-
-
-
1,922,253
-
-
377,839
- (10,350,535)
457,364
-
(7,593,079)
Clinical
$
Workplace
$
Projects
$
Total
$
1,336,817
-
956,624
-
221,551
-
2,514,992
708,877
3,223,869
1,086,076
816,371
-
-
-
-
-
-
163,948
-
-
-
2,066,395
708,877
(7,362,672)
566,649
(4,020,751)
Australia
$
Europe
$
USA
$
Total
$
902,619
902,619
436,250
436,250
1,058,190
1,058,190
2,397,059
2,397,059
1,608,442
1,608,442
290,607
290,607
1,324,820
1,324,820
3,223,869
3,223,869
In 2020 and 2019 no customer contributed greater than 10% of the Group’s total revenue.
NOTE 28:
SUBSEQUENT EVENTS
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 with the exception of the following:
•
On 7 July 2020, dorsaVi Ltd announced (as approved by shareholders on 28 November 2019) the issue of 3,693,714
options to non-executive directors, in lieu of directors’ fees, at an exercise price of $0.018 per share and an expiry
date of 7 July 2025.
dorsaVi Annual Report 2020
60
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 28 to 60 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 2020 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 2020.
This declaration is made in accordance with a resolution of the directors.
Greg Tweedly
Chairman
Andrew Ronchi
Director and CEO
Melbourne
Date: 26 August 2020
Melbourne
Date: 26 August 2020
dorsaVi Annual Report 2020
61
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 its controlled entities “the
Group”, which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and 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 dorsaVi Ltd, is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(b) 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 a Financial
Report section of our report. We are independent of the Company 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 (including Independence Standards) “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.
Material Uncertainty Related to Going Concern
We draw attention to Note 1(c) in the financial report that conditions exist that indicate a material
uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
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.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
dorsaVi Ltd and controlled entities
ABN 15 129 742 409
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd
Key Audit Matter
How our audit addressed the key audit
matter
Capitalisation of development expenditure within intangible assets
Refer to Note 12 - Intangible Assets - $NIL
The research and development of new and
existing
the Group’s
operations. Each project undertaken represents
an investment made by the business for which
future economic benefits are expected to be
derived.
Our procedures included amongst others:
• Obtaining
of
and
evaluating the accounting processes and
internal controls relating to the capitalisation
of development costs;
• Reviewing management reconciliations for
understanding
is part of
technology
an
The capitalisation of any development costs is
highly subjective and based on management
judgement and
to various
recognition criteria as detailed in AASB 138
Intangible assets.
is also subject
•
Key management judgements to be made include
the following:
•
Stage of the development cycle - research vs
development;
Ability to accurately record and allocate costs
incurred
including
employee costs; and
Technical and commercial viability of
individual projects undertaken.
individual projects,
•
•
for
We focused on capitalised development costs as
a key audit matter due to the number and type of
judgement and estimation events required.
`
the amounts capitalised, including:
•
Testing the mathematical accuracy of
reconciliations prepared for costs that
had been capitalised;
Selecting a sample of transactions from the
and
development
capitalised
performing the following:
costs
• Reviewing employee costs allocated to
different development projects, and
testing a sample of employee rates and
captured hours
the amounts
capitalised and tracing to employee
timesheets;
for
• Reviewing external contractor costs
allocated to the different development
projects, and sampling and testing
supporting
contractor
information
the
expenditure;
substantiate
costs
to
to
•
•
Evaluating management’s process regarding
capitalisation of development costs, and
reviewing development projects against the
recognition criteria as detailed in AASB 138
Intangible assets; and
Assessing the adequacy of the disclosures in
the financial statements.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
dorsaVi Ltd and controlled entities
ABN 15 129 742 409
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd
Key Audit Matter
Provision for Impairment on Intangible assets
Refer to Note 12 - Intangible Assets - $NIL
The
is
Intangibles assets
considered a key audit matter due to the
following:
•
impairment of
assumptions within
There is significant management judgement
required in assessing these balances for
in particular, selecting
impairment and
appropriate
the
Discounted Cash Flow (DCF) impairment
assessment model, including identification
of the appropriate Cash Generating Unit
(CGU), revenue growth assumptions, and
discount rate.
During the year the Group has undertaken an
impairment assessment of the carrying value of
its intangible assets based on value in use
(DCF) calculations. The outcome has resulted in
a provision for impairment of $4,018,354.
We focused on impairment assessment of
intangible assets as a key audit matter due to
the quantum of this assets carrying value and
the number and
judgement and
estimation events required.
type of
How our audit addressed the key audit matter
Our procedures included amongst others:
• Obtaining an understanding of and evaluating
the accounting processes and internal controls
relating to impairment assessments;
Assessment of management’s determination
of the Group’s CGU based on our
understanding of the nature of the Group’s
business;
•
•
• Comparing the DCF forecasts to Board
approved forecasts, and analysis of
assumptions within those forecasts;
Assessing the reliability of the Group’s DCF
forecasts and business plans, including
detailed analysis of key inputs and drivers
including revenue growth, contract attrition
rates and expenditure;
• Comparing DCF forecasts to recent financial
•
•
•
•
performance;
Assessing the discount rate used in the
Group’s DCF;
Performing sensitivity analysis on the DCF
model;
Assessing the value of the Group’s intangible
value utilising other valuation methodologies;
Assessing the adequacy of the disclosures in
the financial statements.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
dorsaVi Ltd and controlled entities
ABN 15 129 742 409
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd
Key Audit Matter
Convertible Note Liability
Refer to Note 15 – Convertible note host debt - $749,862
Refer to Note 15 – Derivative liability- $709,725
How our audit addressed the key audit matter
Our procedures included amongst others:
• Obtaining an understanding of and evaluating
the accounting processes and internal controls
relating to convertible notes;
• Reviewing the terms of the Convertible notes;
•
Assessing the appropriate treatment of the
Convertible notes in accordance with AASB 9:
Financial Instruments;
• Reviewing the external valuation obtained by
•
•
•
the Group;
Evaluating the credentials of the external
valuer;
Assessing the appropriateness of the valuation
methodology and inputs utilised by the external
valuer;
Assessing the adequacy of the disclosures in
the financial statements.
The measurement of the Convertible notes
issued during the year is considered a key audit
matter due to the following:
•
The terms of the Convertible notes were
assessed as being a financial liability with a
host debt contract held at amortised cost,
and an embedded derivative liability, held at
fair value through the profit and loss.
Accordingly, the host debt and derivative
liability components of the Convertible notes
require valuation upon initial recognition,
and the derivative liability is required to be
revalued at each reporting date. The initial
valuation of the respective components, and
the subsequent valuation of the derivative
liability contains complexity.
The initial recognition of the host debt was
$687,255 and the initial fair value of the
derivative liability was $431,574. The fair value
adjustment of the derivative liability at balance
date was an increase to $709,725, with the
$278,151 change of fair value being recognised
as an expense in the profit and loss.
We focused on the initial recognition of the host
debt and derivative liability, and subsequent fair
value adjustment of the derivative liability at
balance date as a key audit matter due to the
complexity of the valuations required.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2020, 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.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
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 Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the 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.
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.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
dorsaVi Ltd and controlled entities
ABN 15 129 742 409
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF dorsaVi Ltd
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, actions to eliminated threats
or safeguards applied.
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 26 of the directors’ report for the
year ended 30 June 2020. In our opinion, the Remuneration Report of dorsaVi Ltd, for the year ended
30 June 2020 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.
S SCHONBERG PITCHER PARTNERS
Partner Melbourne
26 August 2020
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Shareholder Information
Corporate Governance:
The Group’s Corporate Governance Statement can be obtained at https://www.dorsavi.com/au/en/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 13 August 2020.
The Group’s share capital was as follows:
Type of Security:
Ordinary Shares
Options
Performance Rights
Substantial Holders:
Names of Holders
Starfish Technology Fund II, LP, Starfish Ventures, Michael Panaccio and
Cristiana Panaccio and Micana Family Trust
Unmarketable Parcels:
Number of
Securities
231,427,524
13,518,754
430,000
Number of
Holders
1,273
7
1
Number of
Shares Held
% of Total
Shares
101,819,921
44%
Based on the closing market price on 13 August 2020, there were 663 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 13,518,754 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 430,000 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.
dorsaVi Annual Report 2020
68
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.
Distribution Schedule:
Number of Shares
1 – 1,000
1,001 - 5,000
5,001 - 10,000
10,001 – 100,000
100,001 and above
Total
dorsaVi Ltd’s Top 20 Shareholders:
Set out below is a schedule of the 20 largest holders of each class of securities quoted.
Rank Name
1
2
2
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
STARFISH TECHNOLOGY FUND II LP
STARFISH TECHNOLOGY FUND II NOMINEES A PTY LTD
STARFISH TECHNOLOGY FUND II NOMINEES B PTY LTD
AR BSM PTY LTD
BANNABY INVESTMENTS PTY LIMITED
DRNEWNHAM SUPER PTY LTD
TANARNY SUPER FUND PTY LTD
MS GABRIELLE BANAY
ANDREW RONCHI
MRS AMITY BROOKE JOHNSON
DAMIAN CONNELLAN
MR SHANE TIMOTHY BALL
MR SHENG SUN
MR BRIAN TULLY + MRS MARGARET TULLY
MASTO PTY LTD
MR STUART ANDREW LEWIN
TRUJON INVESTMENT HOLDINGS PTY LTD
VALENCE HOLDINGS PTY LTD THE PW & CM STINTON
MR WAI KIT LEE
DANIEL RONCHI
Total shares held by top 20 shareholders
Total shares held by all other shareholders
Number of Holders
41
187
196
627
222
1,273
No of
Shares
Held
60,597,345
18,464,557
18,464,557
7,021,814
4,428,497
4,231,516
3,703,704
3,233,482
2,374,309
2,000,000
1,971,071
1,850,000
1,730,000
1,656,125
1,625,129
1,579,000
1,517,333
% of
Total
Shares
26.18
7.98
7.98
3.03
1.91
1.83
1.60
1.40
1.03
0.86
0.85
0.80
0.75
0.72
0.70
0.68
0.66
1,486,991
0.64
1,278,920
1,244,668
140,459,018
90,968,506
0.55
0.54
60.69
39.31
dorsaVi Annual Report 2020
69
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
Corporate Directory:
Board of Directors and Company Secretary:
Mr Gregory Tweedly
Mr Ashraf Attia
Ms Caroline Elliott
Dr Michael Panaccio
Dr Andrew Ronchi
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer
and Executive Director
Company Secretary
Mr Brendan Case
Executive Team:
Dr Andrew Ronchi
Mr Damian Connellan
Mr David Erikson
Mr Matthew May
Chief Executive Officer
Chief Financial Officer
Chief Technical Officer
General Manager
Registered Office in Australia:
C/- Pitcher Partners, Level 13,
664 Collins Street, Docklands, VIC 3008
Tel: +61 3 8610 5000
Principal Administrative Office:
85 Denmark Street,
Kew, VIC 3101
Tel: 1800 367 728
Share Registry:
Computershare Investor Services Pty Limited
GPO Box 2975, Melbourne, VIC 3001
Tel: + 61 3 9415 4062
Auditor:
Pitcher Partners
Level 13, 664 Collins Street,
Docklands, VIC 3008
Tel: +61 3 8610 5000
Annual General Meeting Date and Venue:
The Annual General Meeting will be held Friday, 27
November 2020 at 9:00 am. Due to the COVID 19
pandemic the venue, and, or, means by which the
meeting will be conducted has yet to be determined.
This will be advised to shareholders and the ASX at a
later date but not later than 27 October 2020.
dorsaVi Annual Report 2020
70
dorsaVi Ltd and controlled entities
ABN: 15 129 742 409
dorsaVi Annual Report 2020
71