NANOSONICS LIMITED — Earnings Release 2016

Aug 16, 2016

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17 August 2016

Company Announcements Office Australian Securities Exchange

Nanosonics 2016 full year financial results

HIGHLIGHTS

• Record full year sales of $42.8 million up 93% on prior year

• Maiden full year profit of $122,000 ($3.4 million in 2[nd] half)

• First full year of positive free cash flow of $1.9 million

• Cash and cash equivalents at year-end of $48.8 million supporting ongoing investment in growth

• North American installed base grows to over 8,700, up 74% in 12 month period with global installed base now over 10,000 units

• Fundamentals for adoption continued to strengthen with positive growth momentum generated

$ million H1 H2	FY16 FY15
Operating revenue 15.6 27.2	42.8 22.2
Gross profit 12.6 19.6	32.2 15.3
% 81% 72%	75% 69%
Other income/expense 0.3 (0.2)	0.1 2.3
Operating expenses (16.4) (16.3)	(32.7) (23.4)
EBIT (3.5) 3.1	(0.4) (5.8)
Interest (net) 0.2 0.3	0.5 0.3
Pre-tax (loss) / profit (3.3) 3.4	0.1 (5.5)
Net (loss) / profit (3.3) 3.4	0.1 (5.5)

Nanosonics (ASX: NAN), a leader in infection control solutions, today released its Appendix 4E Preliminary Final Report and Annual Report for the year ended 30 June 2016.

“The 2016 financial year has been one of significant achievement and success for Nanosonics. Throughout the year the organisation consistently focussed on the execution of the core strategies defined by our strategic growth agenda which has delivered an excellent set of results. The fundamentals for the adoption of our technology continued to grow throughout the year resulting in excellent growth in the installed base in particular in North America where the installed base grew 74% to over 8,700 units” said Michael Kavanagh, Nanosonics’ Chief Executive Officer and President.

Nanosonics Limited

T: +61 2 8063 1600 E: info@nanosonics.com.au F: +61 2 8063 1600 www.nanosonics.com.au

14 Mars Road, Lane Cove NSW 2066 Australia

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“Record sales of $42.8 million were achieved for FY16, up 93% on the prior year. A maiden full year profit of $122,000 with profit of $3.4 million in the second half was also achieved, ahead of market expectations. The 2016 financial year also saw the first full year of positive free cash flow of $1.9 million ending the year with $48.8 million of cash and cash equivalents. These positive outcomes resulted in another year of strong shareholder return with a 31% increase in market value over the last 12 months and 248% in the last 3 years.”

“Excellent progress was made throughout the year across the key priorities of the business under our core growth pillars, namely Customer Experience, Product Innovation, Operational Excellence, People Engagement and Value Creation. Some of the key FY16 highlights include:

Customer Experience

• Installed base in North America grew 74% to over 8,700 units where trophon is now represented in 48 of the top 50 hospitals and adoption has commenced in over 3,000 facilities across the country. The global installed base grew to over 10,000 units.

• Agreements were put in place towards the end of the financial year with all major ultrasound OEMs in North America providing them access to trophon capital equipment for inclusion with their ultrasound sales.

• Fundamentals for adoption continued to strengthen with publication of a number of pivotal papers including evidence demonstrating that the trophon technology is the only proven technology to kill Human Papillomavirus (HPV).

• New guidance was published in Scotland requiring high level disinfection for all semicritical ultrasound examinations with expectations new English guidance will be published in Q1 FY17.

• Expansion into new markets commenced with a new distribution agreement for Ireland and negotiations advanced for a number of Middle East countries.

Product Innovation

• Investment in R&D activities grew by almost 50% during the year to $7.3 million as the organisation focussed on future generations of the trophon platform technology plus research on novel new solutions to meet a number of core opportunities in infection prevention.

• Strengthened strategic partnerships with a number of key associations in both infection prevention plus ultrasound which provide excellent insights into our product development program.

• Expanded the indications for use of trophon beyond the use with ultrasound probes in Australia and Europe.

Operational Excellence

• Highly successful first full year of the Nanosonics direct operations in North America driving growth and adoption in the North American market.

• First anniversary of operations in new global headquarters and manufacturing facility with numerous successful certifications and regulatory approvals achieved.

• Enhanced global capabilities with roll out of ERP system across USA, UK Germany and France.

People Engagement

• Grew the Nanosonics team by 18% to 150 employees bringing excellent qualifications and experience to the organisation.

• Appointment of Dr Steven Farrugia as SVP Design and Development.

• Participation in Women in MBA program from MGSM.

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Value Creation

• Investment in our strategic growth agenda resulted in market capitalisation growth of 31% over last 12 month period and over 248% in last three years.

• Foundations for ongoing growth strengthened throughout the year”.

“Looking forward, our aim is to build on the success of FY16, continue to execute on our strategic growth agenda and influence and leverage the positive and strengthening market fundamentals for the adoption of trophon across current and new markets around the world. Continual investment in our R&D strategy to bring to market a diversified portfolio of infection prevention solutions remains a priority”.

Michael Kavanagh CEO / President

Investor conference call

Investors are invited to join a conference call hosted by Mr Michael Kavanagh, CEO and President of Nanosonics at 11.00am AEST on Wednesday 17 August 2016.

To access the call please use the following details:

Conference ID: 6436 7743

Australian Participant Dial-in Numbers

Toll: +61 2 8038 5221 (can be used if dialing from international location) Toll Free: 1800 123 296

International Participant Dial-in Numbers

Toll-free dial-in numbers for each country are listed below. For countries not listed below, the Australian Toll number provided above may be used.

New Zealand Toll Free	0800 452 782
China	4001 203 085
Canada	1855 5616 766
Hong Kong	800 908 861
India	1800 3010 6141
Japan	0120 477 087
Singapore	800 616 2288
United Kingdom	0808 234 0757
United States	1855 293 1544

An archive of the conference call will be available at www.openbriefing.com/OB/2258.aspx.

For more information please contact:

Michael Kavanagh, CEO / President or McGregor Grant, CFO, on (02) 8063 1600 Kyahn Williamson, Investor Relations, Buchan Consulting on (03) 9866 4722 Ben Walsh, Media Relations, Buchan Consulting on (02) 9237 2801

About Nanosonics

Nanosonics Limited is developing a portfolio of decontamination products designed to reduce the spread of infection. The Company owns intellectual property relating to a unique disinfection and sterilisation technology which can be suited to a variety of markets. Initial market applications are designed for the reprocessing of reusable medical instruments. The Company’s first product is designed to disinfect Ultrasound Transducers. For more information about Nanosonics please visit www.nanosonics.com.au

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Appendix 4E

Preliminary Final Report – Results for Announcement to the Market

Name of entity:

NANOSONICS LIMITED

ABN 11 095 076 896

Year ended: 30 June 2016

Nanosonics Limited (the Company) gives the following information to ASX under listing rule 4.3A and Appendix 4E.

• 1 Reporting period: Year ended 30 June 2016

Previous corresponding period: Year ended 30 June 2015

2 Results for announcement to the market

Results for announcement to the market	Results for announcement to the market	Results for announcement to the market
% change $000’s Revenue from ordinary activities up 73% to 44,027 Profit from ordinary activities after tax attributable to members up nm to 122 Net profit for the period attributable to members up nm to 122
Dividends	Amountper security	Franked amount per security
Interim dividend paid per share 0 0 Final dividend paid per share 0 0 Dividends proposed per share 0 0 Record date for entitlement to dividend proposed n/a n/a
Net Tangible Asset Backing	30 June 2016	30 June 2015
Net tangible asset backing per ordinary security on issue atperiod end:	19.1 cents	15.6 cents

• nm % change not meaningful. In the previous corresponding period, the Company had a consolidated loss after tax of $5,460,000 compared to this period’s $122,000 consolidated profit after tax

The Nanosonics Limited audited Annual Report for the year ended 30 June 2016 accompanies this announcement.

Additional Appendix 4E disclosure requirements can be found in the Directors’ report, the review of operations and the 30 June 2016 financial statements and accompanying notes in the Annual Report.

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Appendix 4E - Preliminary Full Year Report Year ended 30 June 2016

Where applicable, the Annual Report includes information per items 3 to 15 below:

• 3 Consolidated statement of profit or loss and other comprehensive income together with notes to the statement prepared in compliance with AASB 101 Presentation of Financial Statements.

• 4 Consolidated statement of financial position together with notes to the statement.

• 5 Consolidated statement of cash flows together with the notes to the statement, prepared in compliance with AASB 107 Statement of Cash Flows.

• 6 Details of dividends are shown in note 2.5 to the financial statements. No dividends were proposed, declared or paid during the reporting period and the previous corresponding period.

• 7 No dividend or distribution reinvestment plans operated during the reporting period and the previous corresponding period.

• 8 Consolidated statement of changes in equity showing retained earnings / (accumulated losses) and movements during the year.

• 9 Net tangible assets per security with the comparative figure for the previous corresponding period is noted in the table in item 2 above.

• 10 During the period, Nanosonics Canada, Inc. was formed as wholly-owned subsidiary of Nanosonics Limited (2015: Nanosonics Europe Limited and Nanosonics UK Limited were formed as wholly-owned subsidiaries). There were no other entities over which control has been gained or lost during the period or the previous corresponding period.

• 11 The entity had no associates or joint venture entities during the period or the previous corresponding period.

• 12 Nanosonics Limited is an Australian company which applies Australian Accounting Standards and also complies with International Financial Reporting Standards.

• 13 Other significant information is available in the Annual Report for the year ended 30 June 2016 that accompanies this announcement.

• A commentary on the results for the period is available from the Directors’ report on page 17 and the review of operations included in the CEO’s report and the Regional highlights on pages 6 to 11 of the Annual Report. Other relevant information is as follows:

13	Other significant information is available in the Annual Report for the year ended 30 June 2016 accompanies this announcement. A commentary on the results for the period is available from the Directors’ report on page 17 an review of operations included in the CEO’s report and the Regional highlights on pages 6 to 11 o Annual Report. Other relevant information is as follows:
	2016 2015
13.1	Earnings/(loss) per share cents cents
	Basic earnings/(loss) per share 0.04 (2.03)
	Diluted earnings/(loss) per share 0.04 (2.03)
13.2	There were no returns to shareholders during the period or the previous corresponding period.
13.3	Significant features of operating performance are included in the Annual Report.
13.4	The entity has one business segment, being healthcare equipment and operates in three
	geographical regions – North America, Australia and NZ, Europe and other countries. Segment
	information is included in the notes to the financial statements.

• 14 The financial statements included in the Annual Report have been audited and the Auditor’s report appears on pages 86 to 87.

• 15 The financial statements included in the Annual Report are not subject to audit dispute or qualification.

Directors’ resolution

The information set out above and in the Annual Report accompanies this announcement is provided to ASX in accordance with a resolution of the directors dated 17 August 2016.

Signed:

Date: 17 August 2016

Print name: McGregor Grant CFO and Company Secretary

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