Universal Biosensors : FY2019 Results Presentation

2019 Financial Results

Important Disclaimer

• This presentation is intended to provide a general outline only and is not intended to be a definitive statement on the subject matter. This presentation is not financial advice and has been prepared without taking into account the objectives, financial situation or needs of a particular person.
• Neither the Company, nor its officers or advisors or any other person warrants the accuracy of the analysis herein or guarantees the investment performance of the Company. Investors must make their own independent assessment of the Company and undertake such additional enquiries as they deem necessary or appropriate for their own investment purposes.
• The statements contained in this presentation that are not purely historical are forward-looking statements within the meaning of the United States Exchange Act. Forward-looking statements in this presentation include statements regarding our expectations, beliefs, hopes, intentions or strategies. All forward-looking statements included in this presentation are based upon information available to us as of the date hereof, and we assume no obligation to update any such forward-looking statement as a result of new information, future events or otherwise. Our actual results could differ materially from our current expectations.
• The Company is subject to a number of risks. For a summary of key risks, refer to the Company's most recent Form 10-K filed with the United States Securities and Exchange Commission and the Australian Securities Exchange.
• Under applicable United States securities laws all of the shares of our common stock are "restricted securities" as that term is defined in Rule 144 under the Securities Act of 1933, as amended. Restricted securities may be resold in the public market to United States persons as defined in Regulation S only if registered for resale or if they qualify for an exemption from registration under the Securities Act. We have not agreed to register any of our common stock for resale by security holders.

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Highlights

Balance sheet supporting investment in product development

• Lump sum service fees of A$44.6 million received on 18 February 2019
• Coagulation product negotiation with Siemens settled on 18 September 2019
  Siemens Xprecia Stride™ strip revenue of A$4.9 million up from A$1.7 million in the prior
• corresponding period (pcp)
• FY19 net cash of A$37.2 million up from A$12.1 million in the pcp
• Investing in new product development using existing technology outside of medical devices

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1. Corporate Overview

4

Corporate Summary

Cash backed share price

	Capital Structure
Last price as at 21February 2020	A$0.175
CHESS Depositary Interests on issue	177.6m

CHESS Depositary Interest Holder (21 February 2020)	Holding	Ownership
Viburnum Funds Pty Ltd	36,636,061	20.6%
CVC Ltd	23,820,765	13.4%

Market Capitalisation	A$31.1m Jencay Australia Investment Fund	20,792,320	11.7%

+ Total Debt (as at 31 December 2018)	-
- Cash (as at 31 December 2019)	A$37.2m

KFT Investments Pty Ltd	17,975,043	10.1%
Other holders of CHESS Depositary Interests	78,347,665	54.2%

Enterprise Value	(A$6.1m) Total CHESS Depositary Interests on issue	177,571,854	100.0%
	Board and Senior Management
Mr Craig Coleman	Non-Executive Chairman
Mr David Hoey	Non-Executive Director
Ms Judith Smith	Non-Executive Director
Mr Marshall Heinberg	Non-Executive Director
	Acting Chief Executive

Mr Salesh Balak	Officer/Chief Financial Officer

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Siemens Definitive Agreements

Provides UBI with complete control over all development activities

• Definitive agreements executed on 18 September 2019
  Commitment from Siemens to purchase a certain minimum amount of strips from UBI over the
• subsequent 42 months
  Enables UBI to pursue partnership and distribution opportunities for coagulation products outside of
• its arrangement with Siemens
• Provides UBI with increased management over the pricing of analyzers and strips
  Provides UBI Access to Siemens' proprietary reagent which is required to manufacture the
• coagulation strips
  Sales and marketing personnel have now been engaged to explore commercial opportunities for the
• Xprecia Stride™ system

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2. Products and Services

7

Coagulation Testing - FY19 Summary

Revenue increase represents increase in market share

FY19

Commentary

Comment

• Test strip sales of A$4.9 million, up from A$1.7 million in the pcp
• Production contribution margin of A$2.0 million (41%), up from A$0.1 million (4%) in the pcp
• Manufacturing contribution and margins have increased due to investment in scale up projects which have improved efficiency and yield

Coagulation Testing Revenue

A$6m

A$4.9m

A$5m

A$4.1m

A$4m

A$3m

A$2m	A$1.7m
A$1m
A$0m
FY17	FY18	FY19

Coagulation Testing Margin

A$3m

A$2.0m

A$2m

A$2m

A$1.1m

A$1m

A$1m

A$0.1m

A$0m

FY17

FY18

FY19

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Other Services - FY19 Summary

Lack of LifeScan quarterly service fees evident in FY19 revenue

FY19

Commentary

Comment

• Other Services revenue excluding revenue generated from LifeScan comprises revenue from testing services undertaken by HRL and other services undertake on behalf of our partners
• Other Services revenue excluding revenue generated from LifeScan was A$1.9 million, up from A$1.8 million in the pcp
• During 2018, LifeSan exercised its right to convert its obligation to pay quarterly service fees to UBI. Accordingly UBI will not receive any further quarterly service fees beyond 2018

Other Services Revenue

A$80m		A$67.8m
A$70m
A$60m
A$50m
A$40m
A$30m		A$21.1m
A$20m
A$10m			A$2.0m
A$0m

FY17

FY18

FY19

Other Services Margin

A$80m		A$66.9m
A$70m
A$60m
A$50m
A$40m
A$30m		A$20.2m
A$20m
A$10m			A$1.3m
A$0m

FY17

FY18

FY19

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3. FY19 Results (Year ended 31 December)

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Profit and Loss

Need to replace revenues previously received from LifeScan

A$m, 12 months ended 31 Dec	2019	2018	Change			Commentary
Blood Glucose	0.2	66.1	-99.6%		Coagulation Testing revenue reflects increase in market share
					Cost of Goods Sold includes Siemens coagulation test strip manufacture
Coagulation Testing	5.6	2.2	155.6%		Decrease in research and development primarily a result of reduced project activity
						during Siemens Definitive Agreement negotiation
HRL	1.1	1.2	-8.3%		Selling, General and Administrative expenses decreased due to cost management
						initiatives undertaken during the year
Total Revenue	6.9	69.5	-90.1%		Term loan repaid in 2018 eliminated financing costs
					Previous period included $2.6 million impairment of fixed assets in 'Other' expense
Cost of Goods Sold and Services	3.6	2.5	42.2%			line, which did not feature in 2019
Research and Development	5.5	11.6	-52.2%
Selling, General and Administrative	7.0	7.0	-0.2%
Financing costs	0.0	3.0	-100.0%
R&D cash rebate	-2.8	0.0	nmf
Other	-0.3	3.4	-106.5%
Total Expenses	13.0	27.5	-52.6%
Income Tax Expense	-1.3	4.4	-130.3%
NPAT	-4.8	37.6	-112.9%

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Cash Flow

Receipt of lump sum service fees in February 2019 boosts our cash position

A$m, 12 months ended 31 Dec	2019	2018	Change
Net cash provided by operating activities	33.2	1.8	1744.4%
Net cash used in investing activities	-10.2	-0.4	-2450.0%
Net cash used in financing activities	0.0	-20.9	100.0%
Movement in exchange rates	2.1	2.2	-4.5%
Net movement in cash at period end	25.1	-17.3	245.1%
Cash at period end	37.2	12.1	207.4%

Cash Reconciliation

A$80m

A$70m

A

$18m

A$60m

A$50m

A

$10m

A$4m

A$5m

A

$60m

A$0m

A$2m

A$1m

A$40m

A$30m

A$20m

A

$37m

A$10m

A

$12m

A$0m

Cash 31 Dec 2018

Sales

Expenses

Acquisition of assets from Siemens

Income tax

Siemens Milestone

Capex

Forex

Other

Cash 31 Dec 2019

Commentary

• 2019 operating cash flow includes receipt of US$31.5 million LifeScan lump sum service fee
• The impact of Siemens Definitive Agreement included in 2019 investing cash flows

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Balance Sheet

Healthy cash balance to carry out strategic initiatives

A$m, as at 31 Dec	2019	2018	Change
Cash and cash equivalents	30.2	11.8	156.2%
Trade and other receivables	0.1	50.2	-99.7%
Prepayments	0.1	0.2	-14.3%
Other current assets	6.6	1.9	253.3%
Current Assets	37.0	64.1	-42.1%
Property, plant and equipment	4.8	5.6	-15.6%
Intangibles	15.9	0.0	nmf
Other non current assets	4.9	0.3	1433.7%

Commentary

• Cash position supported by receipt of lump sum service fees in February 2019, previously reflected in other receivables in 2018
• Other current assets comprise primarily of R&D cash rebate receivable , restricted cash and inventory
• Increase in intangibles associated with assets subject to the Siemens Definitive Agreements
• Other non current assets represents restricted cash
• Contingent consideration represents payments to Siemens in the event of achieving a pre-defined milestone

Non Current Assets	25.6	5.9	330.3%	Deferred income tax liability represents adjustment to the cost base of assets acquired
				with Siemens Definitive Agreements
Total Assets	62.6	70.0	-10.5%
Income taxes payable	0.0	4.4	-100.0%
Trade and other payables	1.6	2.4	-31.8%
Contingent consideration	2.1	0.0	nmf
Deferred revenue	2.7	2.3	13.9%
Other current liabilities	3.7	4.1	-9.6%
Total Current Liabilities	10.1	13.2	-23.8%
Deferred revenue	1.4	3.5	-59.0%
Deferred income tax liability	3.1	0.0	nmf
Other non current liabilities	2.6	2.6	-0.3%
Total Non Current Liabilities	7.1	6.1	16.4%
Total Liabilities	17.2	19.3	-10.6%
Net Assets	45.4	50.7	-10.4%
Total Equity	45.4	50.7	-10.4%

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4. Research and Development - Introducing Free Sulfur Dioxide (SO2) Test

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R&D Strategy: Overview of Considerations

A range of variables/parameters were considered when reviewing the R&D strategy

Regulatory

Complexity

Human Animal

Health Health

Food and	Agriculture
and/or
Drink
Enviro.

Alternative

Industries

Leverage

Existing

Work

R&D

Program

Strategy

Technical

Complexity

Project

Timelines

RevenueCosts Return

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R&D Strategy: Why a non-medical device platform?

Overall assessment concludes faster & cheaper development cycle compared to medical devices

• Alternative Industries: Food & Drink industry, no true point of use device commercially available
  Leverage Existing Work: Ability to use previously developed meter design, existing electrochemical
• cell technology, and existing manufacturing process
  Regulatory Complexity: Focus on in-process testing (lower regulatory complexity) and no regulatory
• authority review required prior to launch
  Project Timelines: Lower regulatory complexity has reduced development timelines, no complicated
• clinical trials required
• Project Costs: No large investment required (given no clinical trials), current infrastructure is suitable

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R&D Strategy: Introducing Free Sulfur Dioxide (SO2) Test

UBI is developing an in-process test to monitor the concentration of free SO2 during wine production

	Sulfur dioxide (SO2) is widely used in wine production as a preservative to protect wine from negative
effects of oxygen exposure and microbial contamination during ageing/storage

SO2 allows wine to continue developing safely throughout its entire lifetime

	SO2 occurs naturally as a result of the fermentation process, but requires a supplement to fully
protect the wine

	SO2 levels in wine is regulated, with the wine manufacturer requiring a final SO2 concentration value
from an accredited laboratory to export

UBI is developing an in-process test to monitor the concentration of free SO2 during wine production

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R&D Strategy: Wine Industry Overview

The wine manufacturing market is stable and well established, with similar core processes and in-process testing performed worldwide.

	Large Winery Footprint, comprising >100,000 wineries EU/RoW, 10,043 wineries in United States and
2,954 wineries in Australia and New Zealand1

Three main in-process tests conducted during wine production: 1) Free Sulfur Dioxide to confirm

sulphite present to preserve wine, 2) Malic Acid to confirms wine does not have flat or sour taste, and 3) Residual Sugars to confirm dry wine is not sweet

Global market for the three main in-process tests (above) is estimated at 70 million tests annually2

1. 2019 Statistical Report on World Viticulture, Int'l Org of Vine and Wine, Wines and Vines Annual Survey 2018/19, Australia New Zealand Wine Index Directory, NZ

18 Winegrowers Annual Report 2019

2. Free Sulfur Dioxide ~20 million tests annually, Malic Acid ~10 million tests annually and Residual Sugars ~40 million tests annually - UBI estimate

R&D Strategy: SO2 Testing During Wine Production

Three main in-process tests conducted during wine production

Harvest

Crush

Fermentation

Press

Aging

Finishing

Bottling

Residual	Malic Acid	Free SO2
Sugars Testing	Testing	Testing

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Market Opportunity: Point of Use Testing

Wine testing cannot replace the skills of the wine-maker, but providing real-time data can allow the wine-maker to optimize production and produce wines of a consistently high quality

• High Accuracy (perceived)
• Complex to Run
• 20 minutes test time
• Set Up > ~$1K
• Reagents > ~$7-$15

• High Accuracy
• Complex to Run
• High Throughput
• 15-20minutes test time
• Set Up > ~$ 50K
• Reagents > ~$150

Testing

Performed in

Laboratory

(onsite or external)

• High Accuracy
• Complex to Run
• 20 minutes test time
• Set Up > ~$2K
• Reagents > ~$35-$75

More Frequent Testing

• No specialist operator
• Ease of use
• Cheaper set up
• Cheaper test price
• No dangerous chemicals

UBI

Growth

Opportunity

Continued Use of Preservatives

• Preservative concentrations are regulated
• SO2 industry standard preservative

Point of Use Testing

• Immediate adjustment to the wine manufacturing process if required
• Platform for In-Process Testing (multiple tests)

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Market Opportunity: Market Differentiator

UBI's product meets all parameters1

Cost Efficiency: Current test cost ~A$15/sample at winery or lab (with overnight shipping costs). UBI strip

• cost is substantially lower than this
  Time Efficiency: Current lab test time 24hrs+ (including shipping) and winery test time of ~20 minutes,
• compared to UBI test time ~1 minute
  Usability: Simple to use with no special skills required, no sample preparation and no dangerous chemicals -
• likely to lead to increased number of tests
  Quality: Early data indicates suitable performance for a non-lab test, simple test allows better monitoring
• and quality of wine and low regulatory barriers
• Lab Test: Point of use test accessible to all wineries

1. Subject to the successful completion of R&D

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5. Strategic Considerations

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FY20 Priorities

Comfortable cash position sufficient to drive strategic initiatives

• Increase Xprecia Stride™ revenue by channelling new customers and distributors

• Increase HRL revenues through sales and marketing initiatives

• Undertake research and development work for the wine testing platform

• Cost savings initiatives

• Identify, investigate and evaluate inorganic growth options

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