NANOSONICS LIMITED — AGM Information 2016

Nov 3, 2016

Nanosonics Limited 2016 Annual General Meeting

4 November 2016

Nanosonics Limited 2016 Annual General Meeting

Chairman's Address Mr Maurie Stang

Research & Development

Nanosonics Limited 2016 Annual General Meeting

Mr. Michael Kavanagh Chief Executive Officer & President

Nanosonic's Senior Leadership Team

McGregor Grant CFO / Company Secretary

Weinberger President Technology Development/ Commercialisation

Dr. Steven Farrugia SVP Design & Development

Gerard Putt Head of Manufacturing & Operations

Vincent Wang Head of Global Services

Kirste Courtney Human Resources Manager

Andrew Murray Head of Global Marketing

Ron Bacskai President and CEO Nanosonics Inc.

Schmähling Country Manager - Germany

Julien Laronze Country Manager -

Corporate Mission

We improve the safety of patients, clinics, their staff and the environment by transforming the way infection prevention practices are understood and conducted, and introducing innovative technologies that deliver improved standards of care.

trophon EPR

trophon is the safe, versatile and simple way to high level disinfect ultrasound probes. Anything else is a compromise.

trophon assures safety for patient, staff and the environment; and is the only system proven to kill high-risk cancer-causing HPV.

trophon streamlines practice workflows to maximise patient throughput and reduce costs. Also compatible with all major ultrasound probe OEMs.

trophon makes ultrasound probe disinfection simple, fast and reliable to maximise compliance with guidelines and standards.

Large market opportunity & attractive revenue model

Global addressable installed base: ~120,000 trophon EPR units

Corporate objectives

Customer Experience

Establish our offerings as new standards of care globally and provide customers a convenient, seamless and consistent experience with both product and brand.

Product Innovation

Create and bring to market a portfolio of innovative and quality products that address unmet customer needs providing higher standards of safety, efficiency and patient care.

Operational Excellence

Develop an agile operation with scalable, compliant and performance focussed processes, designed to deliver a positive experience for our customers.

People Engagement

Build an organisation that attracts and retains the best people and engages and empowers them to take appropriate initiative and be accountable for our core objectives.

Value Creation

Create sustainable shareholder value, delivering high growth and strong returns , while making a significant contribution to social good.

2016 Highlights

Customer Experience

• Installed base growth of 74% in North America to over 8,700 units and 10,000 globally
• Market expansion activities in Europe, Middle East and Japan
• New agreements put in place with all major ultrasound OEMs in USA for provision of trophon capital equipment
• Strengthening fundamentals for adoption

Product Innovation

• Increased R&D investment with solid progress on future generations of trophon platform technology plus research on novel new infection prevention solutions
• Strategic partnerships and collaborations in place with key associations
• Expanded indications in Europe and Australia

Operational Excellence

• Successful first full year of North American direct operations
• Successful certifications and regulatory approvals in new global HQ & manufacturing facility
• Enhanced aligned global capabilities

People Engagement

• Increased workforce by 18% to 160 employees
• Appointment of new SVP of Design and Development Dr Steven Farrugia
• Commenced internships and University programs to attract top new talent

Value Creation

• Market capitalisation growth of 31% in12 months to June 30th and 248% over 3 years
• Foundations in place for ongoing growth

2016 Key Financial Results

• Strong adoption of trophon continued in North America following the establishment of Nanosonics' direct operations in 2015.

• Maiden full year profit of \$122,000 with \$3.4 million in the 2nd half.

Excellent growth momentum under new North American business model

FY15 Q3 – Announced new business model

FY15 Q3 / Q4 – Established North American operations and commenced building pipeline

FY16 Q1 / Q2 – Direct sales momentum in North America and continue building pipeline

FY16 Q3 / Q4 – Sales momentum continues and GEHC resumes purchasing driven by accelerated demand

FY17 Q1 – Strong adoption continues with record quarterly sales achieved.

Growth in Market Capitalisation

3 years to 2 November 2016: Up 264%

1 year to 2 November 2016: Up 101%

Regional Highlights

Regional Highlights

North America

The fundamentals for adoption continued to strengthen

74% installed base growth to over 8,700 units in FY16

Sales grew a record 121% to \$39.0M in North America

• Successful first year of direct sales operations
• trophon has now commenced in 48 of the top 50 hospitals and over 3,000 facilities commenced adoption
• Successful contracts signed with a number of major Integrated Delivery Networks (IDNs)
• Established direct Canadian corporate entity, Nanosonics Canada, Inc.
• Agreements in place enabling other major Ultrasound OEMs to provide trophon capital equipment to customers

Fundamentals for adoption continue to strengthen

Released a Health Advisory emphasising the need to properly maintain, clean, and disinfect or sterilize reusable medical devices¹

Non compliance with infection control standards associated with medical equipment & devices is one of the top 5 findings by The Joint Commission²

The Hospital-Acquired Condition (HAC) Reduction Program³reinforces the guidelines for disinfection and sterilisation in healthcare facilities

1. Electronically accessed: emergency.cdc.gov. Sep 2015.

2. 1. Electronically accessed: thejointcommission.org. May 2014. Issue Two.
3. 1. Electronically accessed: cms.gov. 2 Nov 2015.

trophon breaks new ground in ultrasound probe disinfection

HPV accounts for > 5% cancer worldwide & 99.7% of cervical cancer

"a considerable number of ultrasound probes contaminated with human and HR-HPV DNA, despite LLD disinfection and probe cover"¹

A substantial persistence of microorganisms observed on disinfected probes: HPV DNA found on 13% of samples"²

"HPVs are very stable viruses, able to survive on fomites and surfaces for days" ³

• 1. Casalegno et. Al.: High Risk HPV Contamination of Endocavity Vaginal Ultrasound Probes: An
• Underestimated Route of Nosocomial Infection?, PLOS ONE, Oct 2012, Volume 7, Issue 10 2. M'Zali et al. Persistence of microbial contamination on transvaginal ultrasound probes despite low-level disinfection procedure. PLoS One 2014;9:e93368.
• 1. Ryndock EJ, Meyers C., A risk for non-sexual transmission of human papilloma virus? Expert Rev. Anti Infect. Ther. 12(10), 1165-1170 (2014).

trophon: the only system proven to kill cancer causing HPV

2014 study showed disinfectants commonly used on ultrasound probes not effective against human papillomavirus (HPV)¹

Second study demonstrated that trophon EPR is the first and only system proven to kill high-risk, cancer-causing strains of HPV²

1. Meyers, J., et al., Susceptibility of high-risk human papillomavirus type 16 to clinical disinfectants. J Antimicrob Chemother, 2014

2. Ryndock E, Robison R, Meyers C. Susceptability of HPV16 and 18 to high level disinfectants indicated for semi-critical ultrasound probes. J Med Virol, 2015

Regional Highlights Europe

FY16 focus in Europe centred on market development to strengthen the fundamentals for adoption

• In UK now 25 trusts with trophon.
• Welsh guidelines leads to all 7 health boards adopting of trophon
• New Scottish guidelines published in the last quarter of FY16 and in dialogue with all 14 health boards – First shipments of units in Q1FY17
• New English guidelines due and building pipeline in advance
• Introduced Managed Equipment Service (MES) business model in UK
• Wassenburg appointed as distributor in Ireland
• New reference sites adopt trophon in Germany, Belgium, Italy and Denmark
• European Trophon Publications
• French guidelines under review with topic on agenda of Ministry of Health

Regional Highlights

Australia/NZ

• Sales growth of 11%
• trophon as standard of care with >1,000 units installed and continuing to growing off a high base
• Excellent demonstration of what is possible when fundamentals for adoption strong

ROW

• Progressed Japanese commercialisation strategy. Trophon exhibited at JSUM.
• Representation in a number of Middle East countries progressed with product now registered in Saudi Arabia and nearing completion in UAE

Focussed ramp up in R&D program

• Increased investment in R&D by 50% to \$7.3 million
• Strategic partnerships in place with key associations
• Solid progress made on future generations of the trophon platform technology plus research on novel new solutions to meet a number of core opportunities in infection prevention
• Appointment of Dr. Steven Farrugia as SVP Design and Development

Business Outlook Positioned for ongoing growth

• Fundamentals for adoption continue to strengthen
• North American Business model driving growth
• Growing Installed base
• New supporting guidelines expected in England
• Expansion into new territories being planned
• Active R&D program to diversify portfolio

Thank you

Nanosonics Limited 2016 Annual General Meeting

Formal Business

Resolution 1 Election of a Director – Maurie Stang

Resolution 1 Election of a Director – Maurie Stang

Resolution: That Mr Maurie Stang, who retires as a Director pursuant to the Company's Constitution and, being eligible, offers himself for reelection, be re-elected a Director.

For	:	159,553,698
Against	:	8,487,424
Discretion	:	481,043
Abstained/Excluded	:	69,624

Resolution 2 Election of a Director – Steven Sargent

Resolution 2 Election of a Director – Steven Sargent

Resolution: That Mr Steven Sargent, who was appointed to the Board since the 2015 AGM, retires as a Director pursuant to the Company's Constitution and, being eligible, offers himself for election, be elected as a Director.

Votes for	:	167,987,837
Against	:	27,430
Discretion	:	480,643
Abstained/Excluded	:	95,879

Resolution 3 Election of a Director – Marie McDonald

Resolution 3 Election of a Director – Marie McDonald

Resolution: That Ms Marie McDonald, who will be appointed to the Board since the 2015 AGM, retires as a Director pursuant to the Company's Constitution and, being eligible, will offer herself for election, be elected as a Director.

Votes for	:	167,431,184
Against	:	575,097
Discretion	:	501,054
Abstained/Excluded	:	84,454

Resolution 4 Remuneration report

Resolution: That the Remuneration Report for the financial year ended 30 June 2016 be adopted.

Votes for	:	143,057,463
Against	:	736,105
Discretion	:	507,468
Abstained/Excluded	:	23,422,213

Resolution 5 Issue of Performance Rights and Options to the CEO and President under 2016 LTIS

Resolution: That approval be given for all purposes under the Corporations Act 2001 (Cth) and the ASX Listing Rules:

a) for the issue of 42,138 Performance Rights and 211,306 Options to Mr Michael Kavanagh under the Nanosonics Omnibus Equity Plan (the Omnibus Plan) in respect of the 2016 LTIS; and

b) in consequence of the vesting of those Performance Rights and Options, the issue of fully paid ordinary shares in the Company on the terms set out in the Explanatory Notes accompanying the Notice of Meeting and in accordance with the Rules of the Nanosonics Omnibus Plan (as amended from time-to-time).

Votes for	:	142,653,485
Against	:	886,506
Discretion	:	728,116
Abstained/Excluded	:	23,455,142

Resolution 6 Issue of Performance Rights and Options to the President Technology Development / Commercialisation under 2016 LTIS

Resolution: That approval be given for all purposes under the Corporations Act 2001 (Cth) and the ASX Listing Rules:

a) for the issue of 13,445 Performance Rights and 67,419 Options to Dr Ronald Weinberger under the Nanosonics Omnibus Equity Plan (the Omnibus Plan) in respect of the 2016 LTIS; and

b) in consequence of the vesting of those Performance Rights and Options, the issue of fully paid ordinary shares in the Company on the terms set out in the Explanatory Notes accompanying the Notice of Meeting and in accordance with the Rules of the Nanosonics Omnibus Plan (as amended from time-to-time).

Abstained/Excluded	:	23,468,317
Discretion	:	475,043
Against	:	9,385,789
Votes for	:	134,394,100

Resolution 7 Increase the Non-Executive Directors' Remuneration

Resolution: That for the purposes of Clause 7.3 of the Company's Constitution and ASX Listing Rule 10.17, the maximum aggregate remuneration payable to Non-Executive Directors in any financial year be increased by \$500,000 from \$500,000 to \$1,000,000.

Votes for	:	142,132,246
Against	:	1,601,143
Discretion	:	485,043
Abstained/Excluded	:	23,504,817

Resolution 8 Adoption of the Nanosonics Omnibus Equity Plan

Resolution: That, for the purposes of ASX Listing Rule 7.2, Exception 9, and for all other purposes, approval be given for the Company to adopt the Nanosonics Omnibus Equity Plan (the Omnibus Plan) and for the issue of securities under that Plan on the terms described in the Explanatory Notes accompanying the Notice of Meeting.

Votes for	:	133,927,025
Against	:	783,874
Discretion	:	486,256
Abstained/Excluded	:	32,526,094

Questions