Universal Biosensors : Appendix 4C - quarterly

Universal Biosensors, Inc. Commentary on 4th Quarter of 2016

Universal Biosensors, Inc. (ASX: UBI) has today released its quarterly cash flow report (ASX Appendix 4C) for the quarter ending 31 December 2016.

Highlights

• Net profit for FY16 of approximately $1 million1

• Quarterly service fees of LifeScan's OneTouch Verio® of $4.25 million (up 44% compared to the same period in the previous financial year and 29% on the previous quarter)

• Total service fees for FY2016 of $17.85 million for FY 2016 (up 39% on prior year)

• Positive cash flows of just over $6 million for the year

• UBI qualifies for R&D tax incentive rebate for FY16

• Acquisition of HRL which undertakes a key process in strip production and the acquisition removes scale up risk

YTD service fees up 39% on prior year

Total quarterly service fees generated from LifeScan's OneTouch Verio® blood glucose test strips for the fourth quarter of FY16 was $4.25 million, up 29% on the previous quarter ($3.29 million) and 44% compared to the same period in the previous financial year ($2.95 million).

UBI generated positive cash flow for the year

Positive cash flow for the year was $6.05 million resulting from the increase in OneTouch Verio® strip sales, receipt of R&D tax incentive of $9.4 million, and prepaid milestones from Siemens of US$3.75 million.

Cash at the end of the period was $20.4 million. A summary of the net cash flows when compared to the prior year is as follows:

Cash flow comparison to prior comparable period	3 months ending 31 Dec,		12 months ending 31 Dec,
	2016 ($ M)	2015 ($ M)	2016 ($ M)	2015 ($ M)
Net cash provided by operating activities	-1.41	-2.04	7.05	-0.53
Net cash used in investing activities	-0.96	-0.19	-1.27	-1.27
Net cash used in financing activities	0.37	-0.26	0.04	-1.38
Net movement in cash at period end	-1.24	-3.00	6.05	-1.98
Cash at period end	20.40	14.35	20.40	14.35

Siemens

Just over 300,000 Xprecia Stride™ PT-INR test strips were sold to Siemens during FY16 with a purchase order of 800,000 received for quarter one of FY17. The sales program for Xprecia Stride™ is expected to expand throughout FY17.

UBI qualifies for R&D tax incentive for FY161

With aggregate turnover2 below $20 million for FY16, UBI is eligible for the R&D Tax Incentive for FY2016. It anticipates receiving a cash refund of $7.1 million in 2017 for its 2016 R&D spend3.

HRL acquisition removes scale up risk

UBI announced the acquisition of the Hemostasis Reference Laboratory business (HRL) from LifeLabs, Inc. in December to prepare for future increased production requirements of Siemens' Xprecia Stride™ test strips. Strips produced by UBI are required to be calibrated so that all PT-INR products agree with an international standard. The acquisition of HRL gives UBI more control, certainty and reduces risks in meeting expanded product demand. The amount of CAD$50,000 paid to LifeLabs, Inc. for the acquisition was funded by existing cash reserves.

For further information, please contact:

Rebecca Wilson or Amanda Loh Salesh Balak

Investor and Media Relations Chief Financial Officer

[phone] (03) 9213 9000

Andy Denver Executive Chairman [phone]

Note

1. Based on unaudited results.

2. Generally means an entity's total income that it derives on an accruals basis in the ordinary course of carrying on a business, subject to certain exclusions.

3. This is based on existing Australian Federal Government legislation.

Appendix 4C

+Rule 4.7B

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity
UNIVERSAL BIOSENSORS, INC.
ABN	Quarter ended ("current quarter")
67 950 836 446	31 December 2016

Consolidated statement of cash flows		Current quarter $A'000	Year to date (12 months) $A'000
1.	Cash flows from operating activities	5,186	22,433
1.1	Receipts from customers
1.2	Payments for	(1,214)	(6,696)
(a) research and development
(b) product manufacturing and operating costs		(861)	(1,048)
(c) advertising and marketing		-	-
(d) leased assets		(227)	(903)
(e) staff costs		(3,048)	(11,442)
(f) administration and corporate costs		(709)	(2,524)
1.3	Dividends received (see note 3)	33	179
1.4	Interest received
1.5	Interest and other costs of finance paid	(610)	(2,352)
1.6	Income taxes paid	40	9,402
1.7	Government grants and tax incentives
1.8	Other (provide details if material)
1.9	Net cash from / (used in) operating activities	(1,410)	7,049

1. Cash flows from investing activities

2. Payments to acquire:

3. property, plant and equipment

   (902) (1,213)

4. businesses (see item 10) (59) (59)

5. investments

6. Consolidated statement of cash flows	Current quarter $A'000	Year to date (12 months) $A'000

7. intellectual property

8. other non-current assets

1. Proceeds from disposal of:

2. property, plant and equipment

3. businesses (see item 10)

4. investments

5. intellectual property

6. other non-current assets

7. Cash flows from loans to other entities

8. Dividends received (see note 3)

9. Other (provide details if material)

10. 2.6 Net cash from / (used in) investing activities

(961)

(1,272)

Cash flows from financing activities Proceeds from issues of shares Proceeds from issue of convertible notes Proceeds from exercise of share options Transaction costs related to issues of shares, convertible notes or options Proceeds from borrowings Repayment of borrowings Transaction costs related to loans and borrowings Dividends paid Other (provide details if material) 3.10 Net cash from / (used in) financing activities	369 0	369 (324)
	369	45

4.	Net increase / (decrease) in cash and cash equivalents for the period
4.1	Cash and cash equivalents at beginning of quarter/year to date	21,640	14,350
4.2	Net cash from / (used in) operating activities (item 1.9 above)	(1,410)	7,049
4.3	Net cash from / (used in) investing activities (item 2.6 above)	(961)	(1,272)
4.4	Net cash from / (used in) financing activities (item 3.10 above)	369	45