Nanosonics Limited (NAN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Steve Sargent, and I am the Non-Executive Chairman of Nanosonics Limited. I would like to extend a warm welcome to our shareholders here at the company's headquarters in Macquarie Park in Sydney and those joining us online as well. It is my privilege to chair this 17th Annual General Meeting. I'd like to start by acknowledging the Traditional Owners of the lands on which we meet today and pay respects to Aboriginal & Torres Strait Islander elders past and present, and acknowledge today's Aboriginal & Torres Strait Islander communities who are the custodians of these lands. With me in the room, I am joined by the Nanosonics Board of Directors, our Company Secretary and representatives from the company's auditor, Ernst & Young. I've been advised by the company secretary that we have a quorum for this meeting, and I therefore declare the meeting open. The number of valid proxies received by 11:00 a.m. on Wednesday, the 1st of November, was 456 proxies, representing over 196 million shares or just under 65% of the company's approximately 303 million shares on issue. In accordance with the Corporations Act, the minutes of this meeting will record for each resolution, the total number of proxies exercisable by all proxies validly appointed, the directions in the proxy forms and the results of the polling. I would like to take this opportunity to introduce the Board, the company's secretary and the auditor for Nanosonics. Moving from your left to right is Michael Kavanagh, our Managing Director and CEO; Tracey Batten, Non-Executive Director; Larry Marshall, Non-Executive Director; Lisa McIntyre, Non-Executive Director and Chair of the Innovation and Technology Committee; Marie McDonald, Non-Executive Director and Chair of the People, Remuneration and Culture Committee; David Fisher, Non-Executive Director; Geoff Wilson, Non-Executive Director and Chair of the Audit and Risk Committee is joining us online today. We also have Matthew Carbines, our General Counsel and Company Secretary, sitting here in the front row. And as required by the Corporation Act, the company's auditor, Ernst & Young, is also here in attendance today represented by Ms. Vida Virgo. Vida oversold an Nanosonics engagement on behalf of Ernst & Young pertaining to the audit for the FY '23 accounts. The Board, Company Secretary and the company's auditor are available to respond to any questions you may have during the course of this meeting. Also present are members of our management team, who Michael will introduce when he gives his address. Today's meeting will commence with my Chairman's address, then Michael will deliver his address. This is followed by the formal business of the meeting. As this AGM is being conducted in person and online, I will now provide some housekeeping instructions on how to ask questions and how each group of shareholders should vote. For those shareholders joining online, shareholders can ask questions, which may be written or verbal. Online attendees can submit questions at any time. to ask questions in writing, select the Q&A icon, type your question in the text box. Once you have finished typing, hit the send button. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or amalgamated if we receive multiple questions on the same topic. There is further information contained in the meeting platform under the Q&A tab for shareholders that wish to ask a question verbally. For those shareholders joining us here in the room today, please raise your blue voting card if you wish to ask a question in the ordinary way, and one of our staff will provide you with a microphone for you to use when asking the question. We will set aside time after each resolution to answer any questions on the resolutions. In accordance with our usual practice, in addition to having an opportunity to ask questions on the resolutions, we will also invite general questions after the formal business is closed. This will avoid these questions getting mixed with any other questions received on the resolutions during the formal business. For those shareholders joining online, while there will be time for voting after I have introduced each resolution, you may submit your votes at any time until I declare the poll closed. There will also be some time to complete your voting after we have addressed any questions that are raised in relation to the resolutions. If you are eligible to vote, once voting opens, press the vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You will receive a vote confirmation notification on the screen. You can change your vote up until the time I declare voting closed. For those shareholders joining in person, after I call for a vote on each resolution, all persons entitled to vote will be given a moment to complete their voting card before I move on to the next resolution. Voting will be conducted on each resolution by poll. For this purpose, I now declare the poll open. Ladies and gentlemen, it's now my pleasure to deliver my Chairman's address. Being here in our offices caused me to reflect on how far we've come. From our beginnings as a young company in Alexandria at IPO in 2007 to where we are today in these fabulous facilities here in Macquarie Park, which is co-located with our manufacturing site and laboratories, which were about 150 meters from here. The 223 -- sorry, 2023 financial year saw the company continue to focus on meeting customer needs and progressing momentum of our strategy and ambition as a leader in infection prevention. The core trophon business continued to expand globally, delivering record sales and profitability, and we made good progress on progressing CORIS through the development and regulatory approval phases. The health care industry is evolving rapidly with many economic and technology trends necessitating the continual evolution and adoption of organizations to continue to care for patients and to deliver value. There are several trends that impact us, which I'd like to outline briefly as they also represent the areas of challenge and opportunity for Nanosonics. First, our customers are experiencing one of the most difficult operating environments for a very long time. Costs are rising at a faster rate than revenue sources and governments have increasing budgetary pressures. Additionally, workforce shortage issues are exacerbating these financial pressures. We are responding to cost pressures faced by our customers by offering alternative purchasing models to help our customers manage their capital spending constraints such as rental or managed equipment services, which require no upfront capital outlay. Secondly, in response to these costs and workforce pressures, our customers are looking to digitize and automate their processes at an ever-accelerating rate. The digital world is permeating all aspects of health care, replacing arcane documentation and records and delivering virtual diagnostics through remote monitoring and harnessing big data to optimize decision-making. For Nanosonics, one of our core competitive differentiators is our ability to automate complex cleaning and decontamination processes and provide automated validation of compliance requirements. Nanosonics is a market leader in automating reprocessing. Our trophon technology is a great example of this, which has automated the reprocessing of ultrasound transducers and has become the standard of care. Additionally, our CORIS technology will automate and establish new efficacy benchmarks in what is recognized as one of the most difficult issues that must be addressed in instrument reprocessing and that is endoscope reprocessing. As more surgical procedures transition to less invasive endoscopy techniques, the automation and increased efficacy of endoscope reprocessing will become increasingly important. Both product offerings offer a far superior health outcome and a highly replicable automated process. This has significant positive impacts on individual patient incomes -- outcomes as well as the wider health economics equation. Thirdly, the recognition that health care acquired infections are an enduring problem and are high on the agenda to address. It remains critically important aspect of health care. COVID-19 has fundamentally changed the priorities and behaviors of governments and health care providers increasing their awareness of infection control. There is a greater antimicrobial stewardship with programs that aim to minimize antibiotic interventions in infection control. Such programs have become an international focus in the fight against the adverse consequences of antimicrobial resistance. Hospitals have embraced targeted HAI intervention bundles that consider a cross-disciplinary approach to infection control. With these evolving trends, medical technology companies are positioning selves as a solution provider to solve key unmet needs of the customer and continually reevaluate their approach to serving customers. As I look at the Nanosonics business, I believe we are well positioned to compete and thrive in this environment, and continue to protect patients and add value to customers and shareholders. Closer to home now. Over the last year, the company has gone through a process of Board renewal. With each new director joining, the business has benefited from the valuable expertise in the industry insight they bring. We are pleased with the appointment of Dr. Tracey Batten, formerly a medical practitioner, Health System Administrator and CEO of numerous health care organizations and Dr. Larry Marshall, formerly the Chief Executive of the CSIRO and a successful entrepreneur. Their appointments will add tremendous value to the Board and company given their extensive executive experience in the health care sector, their international experience and their successful commercialization of science and technology. I'm looking forward to seeing their impact on the team, and I am pleased that they are standing for formal election -- formal election here today for the Board. I'd also like to take the opportunity to formally welcome Jason Burriss to Nanosonics who joined as our new CFO on the 3rd of October. Jason's 25-year career has seen in bring commercial and operational success across international organizations, including GE Healthcare and the Hilti Group, which span the health care, financial services and construction industries in over 4 [indiscernible]. I look forward to working with him again. In terms of the business performance, Nanosonics performed strongly in 2023 and another year that has presented new challenges. Nanosonics continued to execute its strategy in FY '23 to expand into new geographical markets and broaden and deepen its product and service offering. I'll let Michael update shareholders on this area. However, one important strategic outcome, I would like to acknowledge is that FY '23 was the first full year operating under a largely direct sales model as we transitioned away from GE in North America. Importantly, this puts us closer to the customer and is in line with our strategy of moving primarily direct -- to a primarily direct selling model in all major markets around the world. There continues to be significant runway for the trophon business globally. As Michael will outline, we have also continually invested in R&D, which is the growth engine of our business. We look forward to our next transformational product, CORIS, which you can see outside, for which we are working closely with the FDA to ensure the regulators' testing requirements are met for our de novo submission. We recognize the anticipation for this product launch and we share in that excitement. I would like to remind all shareholders that we are targeting a transformational product and getting it right is the most important thing. We believe it has been -- it has the potential to significantly enhance the long-term value of Nanosonics. There is a reason why this has not been done before. There is a reason why this is hard. The incredible Nanosonics team have solved one of the most significant issues in infection prevention. We continue to monitor the market for M&A activity opportunities in all the markets in which we operate, and we remain poised to move on any opportunity provided that makes sense for us. The Board reviews our approach to capital management twice a year, and at this time, has formed the opinion that cash held by the company is best reinvested into the company to support future growth. The best example of this is CORIS commercialization. It has been a significant achievement that Nanosonics has been able to develop a product of this complexity solely through its internally generated cash flows. Considering this, we will maintain our current dividend policy. Of course, I must mention the single most important investment is that in our people who have worked tirelessly to support our customers, execute our strategy and drive shareholder value. Nanosonics has continued to expand its sustainability agenda, as outlined in the FY '23 Sustainability Report. I encourage you to read it if you haven't already. Sustainability is central to our business strategy and our mission. I'm proud to report that in FY '23, we achieved many milestones, including undertaking an exercise to measure our carbon footprint. This has shown us to be a lower meter when compared to comparable manufacturing and medical device companies. Our next steps on this journey will lead us to setting and pursuing appropriate targets so that we do our share for the energy transition that society is navigating. Diversity and inclusion is recognized as a core value of the company and is an important driver of our growth. The Nanosonics workforce now represents over 30 different nationalities with 45% of employees being female. I'm very proud that we have such a diverse workforce. I'm also very pleased to report that the percentage of females on the Board is now 37.5% following the appointment of Dr. Batten and Dr. Marshall. I must say that, most importantly, by innovating and manufacturing medical devices that meet unmet needs in the infection prevention field, we contribute to important public health outcomes in a way that is unique for a health care company. During FY '23, we have protected more than 25 million patients from the risk of cross infection. And indeed, during the duration of this meeting alone, we will have protected nearly 26,600 patients. By using our technology for those procedures, we have also avoided unnecessary wastage of potentially tens of millions of leaders of water. These are all metrics that our shareholders should be proud of. We will continue to invest in and build on our sustainability targets for the FY '24. I would like to thank each employee of the company here in Australia and globally for their outstanding efforts in FY '23. I would also like to thank Michael and the leadership team for steering the business through another successful year. I also want to thank my board colleagues for their commitment and support in guiding the company for all stakeholders, including our health care customers and the communities in which we operate. Also to our shareholders, thank you for your support of the company. As I look forward to the significant change the health care industry is going through over the coming decade, I reflect on our company's mission, which specifically, it says 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. This inspiring vision encapsulates how Nanosonics is changing the future of health care for the benefit of patients, our customers and society. I'll now hand it over to Michael.

Thanks very much, Steve, and a very good morning, everybody, and thank you for -- I see a number of familiar faces in the audience. Thank you very much, Michael. I see you there for joining us this morning and making the trip out our new facility. And of course, a very warm welcome to everybody that is online. Steve did mention that we are -- we do have a number of members of our executive that have joined us today, and I would like to introduce those members. Steve has already introduced Jason, but Jason, if you wouldn't mind just standing up and turn around and say hi, it's my turn to actually try and embarrass some of these people. Jason joined Nanosonics just over 4 weeks ago and becomes highly experienced with over 15 years in GE Healthcare and was the past CFO of GE Healthcare for Australia and New Zealand, but importantly brings a depth of international finance experience as well. We've got Steve Farrugia, the shiest member on our -- but the most important member on our team and Steve, who is our Chief Technology Officer, and all these fantastic innovations and R&D that we have, it's Steve and his fantastic team that are responsible for that. Jodi, we now have nearly -- just under 500 people and Jodi leads our People and Culture Strategy for the business. We've got Rod Lopez, Rod there, who is our Chief Operating Officer. He keeps us going. And Rod has just also taken on the position of Regional President for Asia Pacific as we've made a number of internal changes. Matthew Lipscombe, our Chief Marketing Officer, in particular on upstream marketing and new product identification opportunities and Matthew leads a very capable marketing team as well. Matthew Carbines, who's our General Counsel and our Company Secretary, doing a great job there on the computer, and he will keep us in line hopefully today. And finally, but we've got Sunny Pillai, who joined us just over 12 months ago and has certainly helped evolve our capability and capacity from an IT perspective across the business. Unfortunately, Ken Shaw, our Regional President from North America and Ronan Wright, our Regional President for Europe could not be here. They're in their respective markets. They will be actually joining us here in Sydney in a couple of weeks' time. Steve ended his address looking at the mission. And I'd actually like to start my address highlighting the mission for the organization as well. And this mission statement is very purposely constructive into 3 segments: the first segment is the why or the purpose of the company, why we exist? Which is to improve the safety of patients, clinics, their staff and the environment. The second section is all about the how, and that is by delivering on our -- how we deliver on our purpose, which is by transforming the way infection prevention practices are understood and conducted. And then the what, which is often where people focus, whereas really the important place where people needs to focus is the why, but the what is all about what we produce, our products and services, and that is all about introducing innovative technology that improve new standards of care. And it's always good to reflect on how your organization is actually delivering on the defined purpose or mission or our stated purpose. And when thinking of the why, and it's all about improving the safety. As Steve mentioned, we do have now over 25 million patients being protected annually from the risk of cross-contamination from ultrasound procedures. And the trophon technology that enables this does so in a way that's extremely safe for patients? And the staff and the clinics because now they're dealing with a highly efficient and closed system that's very, very safe to use. But importantly, environmentally as well which is part of our mission, that this product is also very safe in that the byproduct from a decontamination cycle is just oxygen and water. In terms of the how we deliver on our purpose, well, the organization remains is and remains committed to its ongoing investment in education, clinical studies and clinical support tools. And this is to ensure our customers are aware of the risks and requirements for decontamination. And our work in this area over the years has certainly resulted in the emergence of new guidelines requiring high-level disinfection in many countries since the introduction of trophon, and we continue in these efforts as we expand internationally. And from a what perspective, this really relates to our technological innovation program, our R&D efforts. And for Nanosonics, we have developed over the years an expertise, I believe, in identifying key unmet needs, and particularly in instrument reprocessing and that's by understanding the deficiencies in current practice. And many of these deficiencies are really due to the manual nature of current practice. And through our R&D programs, what we then aim to try and do is to bring automation to current practice, which not only improves the efficiency of the decontamination process but delivers a more effective and safe outcome for our customers and their patients as well as the environment. You've seen this with the introduction of CORIS or trophon which is now an automated system, which replaces a manual inefficient and quite frankly, in many cases, ineffective process and it has established itself as a new standard of care in many of the markets where we operate today. And our goal is to do exactly the same with the introduction of CORIS in endoscope reprocessing, which I'll address a little bit later. So I believe when we look at our mission and we reflect on our mission, we're very being -- certainly being very true to our mission. Over the past year, your company has made great progress. We delivered record sales. We delivered ongoing growth in the global installed base. We delivered acceleration in upgrade volume growth. Our free cash flow of almost 20 million for the year enabled ongoing investments in our short, medium and importantly, our long-term growth and the company also delivered improved profit. And in addition to the statutory P&L for the business, which everybody has seen and the details can be found in the annual report, and I'm not proposing I want to go through this at all. We also provide in the investor presentation, which you'll find online, a pro forma P&L for the trophon business on a stand-alone basis. And we did this because we firmly believe in the long-term growth opportunity for the business and are committed to making the necessary investments for the growth. With that being said, it is important and it's very useful for us to understand whether or not the current underlying revenue-generating part of the business, the trophon business is actually performing well. And it is worth noting when you look at this pro forma that the stand-alone unaudited pro forma profit and loss for the trophon core business, it has been the subject all agreed-upon procedures undertaken by our auditors, EY, including the allocation of expenses. So we're very confident in the numbers and how to represent it here. And as the P&L demonstrates the trophon business alone is a very healthy business, growing strongly, delivering operating leverage with our operating expenses as a percentage of revenue reducing, you see from FY '22 to FY '23, and the business, that's the trophon, a loan business delivers very strong EBIT margin returns. So a very healthy business. And so far, in FY '24, well, consistent with the experience, I guess, of all -- most other companies in the health care sector, especially the medical device sector, and as Steve alluded to, with the general economic situation within hospitals, hospital capital budget allocations, they are currently under pressure. And being under pressure, that can manifest itself in a lengthening of the sales cycle. Taking seasonality into account, so just really the first quarter, our experience in this first quarter shows our global new installed base growth is largely in line with our internal forecast. With also the new installed base pipeline continuing to grow. For upgrades, while we are seeing ongoing growth in upgrade unit volumes over prior year and upgrade pipeline is also continuing to grow, the trend for the sales cycle for an upgrade is lengthening a bit where hospitals, they still continue to use their existing trophon. So the consumables revenue is still coming through. But the trend is that, that upgrade cycle is lengthening a little bit. And until the hospital budgets are released. So we are conscious at just the first quarter, really the first 4 months have elapsed, and there are indeed a range of uncertainties that we did note in our business outlook for FY '24 in August, including these hospital budgetary pressures as well as the broader economic and geopolitical conditions. So accordingly, in the same way as last year it really is too early to provide an update to the outlook for the full year. It is, however, our current expectation, just like last year, that we will provide an update in this respect as part of our half year reporting in February. Of course, Nanosonics is not just the trophon business, and hence, we do continue to invest in our product and geographical expansion strategy. During the year, the total number of employees was up about 12%, 13% and grew to 482 employees. From that, we strengthened our capabilities across many dimensions of the organization, including IT, advances in our manufacturing capacity and capability and importantly, growth in our biosciences function, where we now have significant and in some cases, world-leading capabilities across the scientific dimensions of instrument reprocessing. We evolved our sales model and particularly in North America, through the establishment of fully functional direct operation, where we now in North America, have an infrastructure -- a full infrastructure to drive growth and provide support across all stakeholders and market segments. Globally, our direct operations now make up 91% of our total business. In the past, there was about 40%. It's now make up 91% of our total business. In addition to North America, we've also gone direct in Ireland, where our European headquarters has been established. And know my mother and father are not running that business. And I know Michael here, Michael here, applied for one of the jobs, I believe. But we do continue to invest. And that is a really important thing to understand. There is great growth opportunity for this business, long-term growth opportunity. And we do continue to invest in that future growth, not only as I say, for the short and medium term, but importantly, the long term. But the majority -- what's important to understand is the majority of those investments are going towards future revenue generation and growth. Indeed, 72% of our overall investments are directed towards market growth and R&D, which is 28% into continuing to expand and enhance our operational infrastructure and capabilities to support this future growth. During the year, we also continued our efforts in geographical expansion. In Japan, we continue to make progress towards the establishment of national societal guidelines. And in addition to one of the original local studies that we did in Japan that demonstrated 98% of the transvaginal ultrasound probes that were studied were contaminated. We've now almost completed a second study on ultrasound probes used in the emergency departments. And it is also showing significant contamination. And early into new year, you'll see publications coming out on that. So with the emergence of all this evidence and now we do continue to work with the various societies in Japan with the objective of establishing these national-based guidelines. In China, we have said before, the focus at the moment is on regulatory approval and those that regulatory approval process for the trophon2 is underway in China. It's well underway, and we anticipate approval by the end of the financial year and then in the background, we're looking at all the necessary commercialization strategies for China. Of course, we continued our investments in research and development, where again, we really have built significant capability and unique strengths. In particular, I mentioned in Biosciences, but in the area of biofilm, where we would definitely today be recognized as a leader in biofilm science and production. And this, of course, has specific applicability to CORIS which I will come to shortly. It is worth noting from an R&D perspective that our investments in R&D, sort of $29 million that we did last year represented approximately 18% of total revenue. And what I will say is we remain committed to ongoing investments in R&D. And on an absolute basis, those investments will continue to grow. And what we do expect, however, is that our overall R&D as a percentage of revenue moving forward will start to come down and moderate to a percentage closer to what you see in more mature medical device companies that have much greater revenue. I think it probably is worth just mentioning that metric of looking at R&D as a percentage of revenue is really only relevant when you reach a critical mass of revenue when you take into consideration the costs associated with developing advanced medical device technologies. But what you will start seeing, I believe, over the coming years is that R&D as a percentage of revenue beginning to moderate. Of course, FY '23 was just a snapshot in time. And it is useful actually to look at how the organization has evolved over the last 5 years. Indeed, in that short time period, your organization has evolved greatly despite the significant disruptions of COVID. This progress is across many dimensions, including products, geographical presence, channel mix, moving more direct, installed base, the number of patients protected annually, our R&D investments and growth in our patent portfolio, our facility expansion and growth in the number of employees and of course, our capabilities and capacity as a business in general. And it's great to see how our organization has evolved over the last 5 years. And to some degree, it sort of provides a degree of confidence as to what the next 5 years should look like. But what is, of course, important is our continued growth strategy. And just as it has been in the past, our ongoing strategy is very much informed by our mission. And there are 5 overarching strategic pillars that guide our organizational strategic priorities, with each pillar aligned with creating value for each of our stakeholders. The first is to establish new standards of care, addressing unmet needs in infection prevention in particular, at the moment, instrument reprocessing. This very much creates, as we all know, value for society by reducing cross-contamination and health care acquired infections. The second and importantly, is to deliver an exceptional customer experience that our customers value, but importantly, can rely on. Our third is to be an exceptional place to work that attracts, develops and retains the best people, which creates value for our employees, and you've seen how our employee numbers have grown over the last 5 years. Our fourth is to grow profit margins over time by continually evolving our offerings and our operations to deliver greater efficiency, scale and leverage. And the goal here is to continually create value for our shareholders. And finally, our fifth is to do business responsibly. Not only from a governance and compliance perspective, but in a responsible way for the health of our planet, where we have a commitment to play our part in the lowering of global carbon emissions. And each one of these strategic pillars has a set of strategic priorities within the business, and that shapes our efforts across the business on a daily basis. I just want to touch on the first one with the first establishing new standards of care. And our trophon business, as Steve said, still has significant opportunity. We have established and are establishing it as standard of care in many markets, but globally, the market remains underpenetrated with opportunities for growth across all regions. And of course, once the trophon is adopted, there is great value opportunity associated with each installed base through consumables usage and our ecosystem usage, service contract adoption, and then as the devices age capital upgrades. We also remain focused on further and ongoing product innovation in the ultrasound reprocessing domain to ensure that we remain the market leader, but also ongoing geographic expansion and guideline development, in particular in Asia Pacific. But the other new standard of care relates to CORIS, which is our next transformational product that is being designed to address what is recognized as one of the most significant issues in instrument reprocessing today, and that is in endoscope reprocessing. And in addition, of course, then to trophon and CORIS, as Steve mentioned, we are very committed to further product expansion through our organic R&D efforts, so continuing to invest in R&D, but also through potential M&A or licensing or potentially even distribution opportunities, which is firmly on the agenda. So moving on to CORIS. As Steve said, and you'll have seen there is outside a CORIS device that everybody can have a look at. It's real. As covered in the FY '23 results 2 months ago or 3 months ago when we came out with our results, our focus is very much on readying for the de novo regulatory submission to the FDA, which I'm pleased to say is very much on track for submission as we said, in the third quarter. The clinical in-use study is underway. And as noted in August and surprisingly, the FDA required us to conduct what's called a human factor study in the United States, we were of the belief we could do this here in Australia. We did it for trophon in Australia. It was fine. And interestingly, we've had a number of calls from other companies when we came out saying the FDA now required to be done in the United States as they were planning to do some of their work in Australia as well. So other Australian companies, we may have actually done them a bit of a service. But since that time in August, we have now finished and established and commissioned a clinical simulation lab on the East Coast of the U.S. CORIS is up and running, and that human factor study is now underway. This week, the first people going in for that human factors, it is now underway. So we remain very confident in our ability to meet our commitments to a Q3 de novo FDA submission. The other important aspect is that the efficacy data of CORIS is also now being presented at a number of international conferences. So in June at the large national Infection Prevention Conference in the United States and most recently in Europe, where I participated as well at the World Federation of hospital sterilization, which took place in Brussels and also a large conference in -- on decontamination in Ireland. We've very positive feedback. These were scientific presentations on the capabilities and some of the data that CORIS is actually delivering. But importantly, there is a growing awareness of the complex nature of the problem to be solved. And that's such a complex problem will require, does require an advanced automated solution. And such automated solutions should provide assurances to hospitals that all the channels within an endoscope, irrespective of size have been effectively cleaned in particular, the smallest channels, which are beyond the capacity of current manual cleaning. And in doing so, automation should also remove what is today a laborious inefficient and ineffective manual tasks from the current workflow. And CORIS is being designed specifically to deliver this. At these conferences, we did share an animation of CORIS to help customers understand its advanced mechanism of action. And I'd like to share that particular animation, which I'll try and give a bit of a voice over to it as we're looking through the animation. So if we can play that, please. So flexible endoscopes, they have very complex internal architectures with numerous channels, all of which need to be cleaned. And a CORIS device connects directly to each of these channels. The CORIS system includes the consumable you saw we put out there called the CORIS Quantum. And from a mechanism of action perspective, the CORIS consumable is a nontoxic environmentally safe powder formulation, specifically engineered for particle size and hardness. It's water soluble. And what happens in the device is that water-soluble CORIS Quantum is saturated. And then there are small packets of this saturated solution alerting sense at high velocity through each of the channels with each channel controlled by specific algorithms. So you see those small packets of this saturated solution with finally engineered part kills of a very specific hardness going in very much controlled into each channel. And as they're going through each channel in high velocity, each one of these packets starts effectively debriding the bioburden that's on the walls of each of the channels. And effectively at the end, leaving it totally clean and because of the measure of hardness of these particles doing no damage to the walls, it's flushed with water at the end, then purged with air. And something that's unique with the device as well is once it's connected, once an endoscope is connected to the CORIS device, it's a closed system. So none of that affluent is going back into the sink, potentially recontaminating the actual endoscope, which actually happens today. It goes straight out into the drain, but in a very highly environmentally friendly. So a very, very effective system. Now the question, of course, is an animation doesn't determine how effective the technology is, the data determines. And what I'd like to show you -- share with you is some of the data that was recently presented at the conferences where CORIS was presented. And first of all, there is a body of evidence, there is no dispute that biofilm is a problem. And this particular study is very, very interesting because in this study, what the study did was take endoscopes that were in use. They refurbished, they took the channels out of those endoscopes and replace them with new channels. So effectively having brand-new endoscopes in use. Then over a period of 30 days and 60 days, they use those endoscopes as they normally would in practice and then putting it through their cleaning process and the decontamination process as per normal procedures. And what was found was well within 30 days and 60 days, they then take those endoscopes out of use, take those channels out of the endoscopes and studied -- even though all of these endoscopes every time they were used were cleaned and disinfected they studied the degree of contamination that was left in these channels. And what you see over on the left-hand side, the type of -- all these types of channels, there's various types of channels in an endoscope, biopsy channels, water channels, air channels, et cetera. All of them had biofilm in these channels. And what you're seeing over on the right-hand side, they're scanning electron microscopy images of this biofilm. So you see that extracellular matrix but also you'll see the little rods or bacilli, they're microorganisms in that biofilm. So this is happening after 30 days -- 30 to 60 days. So the evidence is very, very clear that this is a problem, particularly in these small channels. Now how does CORIS perform in these small channels. If I could have the next slide, thank you very much. What I'd like you to focus on is the left-hand side of this slide, that's where the topic called protein. And let me explain to you what we did in this study is in our Biosciences lab where we have an expertise now in biofilm, we have probably grown kilometers of biofilm in tubes that are 1 millimeter to 1.4 millimeters in diameter. And I would say we're probably one of a handful if that of laboratories in the world that can do that today. So what we've done is taken these 1.4 millimeter lumens, we've grown biofilm in there. And it's a specific type of biofilm to mimic exactly what's happening in endoscopes. It's grown over 5 days. It actually goes through disinfection cycles because disinfection cycles can actually be a fixative of that extracellular matrix on the walls of these channels. But it keeps -- we keep doing that for 5 days where you end up with what we call buildup biofilm. And we are currently collaborating with the world's leading expert, Michelle Alfa on buildup biofilm. So what you see on the left-hand side, protein. Protein is the accepted marker for cleanliness. And the measure of protein is by micrograms per centimeter squared. So what we have is a positive control. So in that positive control, we've grown the biofilm, and we've measured a degree of protein in that model. And what you find is there's almost 60 micrograms per centimeter square of protein that we found in there. Then you have a negative control where you've grown nothing. And again, you look at that to measure if there's any protein, and there's not. It's below the limit of detection for the actual assays that can be done today with protein. Now the acceptance, how do we say about 60 micrograms per centimeter squared of protein, the except -- currently excepted limit for cleanliness is it needs to get below 6.4 micrograms. And an actual fact, new standards are coming out to make that even less, we're in an alert level at around 3 micrograms. So that's the exception's limit. Now what you see over the black bar is manual cleaning. The MC stands for manual cleaning. So what we did is then go through the process of manual cleaning in strict accordance with the IFUs of the endoscope manufacturers, which for these small channels is all about flushing these very small channels with detergent. As you can see, hardly any difference in the protein reduction. They are still contaminated. The biofilm still remains with manual cleaning today. Second in from the right is CORIS. CORIS brings that protein level or the biofilm down to almost a limit of detection. So there's almost nothing there, effectively nothing there. So we certainly believe we have a transformational technology in terms of its capability to do what it's been designed to do and address what is indeed a very complex problem. There were other markers in here called total organic carbon and colony forming units both of them, again, very much showing the exact same outcome, that CORIS substantially outperforms what anybody can achieve today. If we look at this visually, if we can have the next slide, thank you. Very simply, on the very bottom of this slide, what you can see is, again, these tubes where we've grown biofilm and sustained the biofilm, you'll see it as purple. And before you'll see purple, after manual cleaning, there's still stained purple. That means the biofilm is still there. On the right-hand side, with CORIS before the biofilm has grown, stained, it's purple. After CORIS, it's clear. It's totally gone. So this data, I believe, certainly demonstrates for CORIS is -- has the capability to set a totally new benchmark in cleaning and importantly, improve patient safety. So we believe CORIS represents a significant global opportunity for Nanosonics. There already exists strong fundamentals and standards for reprocessing unlike trophon where we have to establish in some markets requirement for high-level disinfection. All endoscopes today are reprocessed and cleaned. There is an established and growing endoscope market. And the current cost to actually clean an endoscope is significant, and this is where CORIS squarely plays. And as I mentioned earlier, today, our focus is currently on the FDA de novo, and it is a de novo because there is no predicate, which means that the FDA considers this to be a totally new technology. That's why it's a de novo. And -- but importantly, all is on track for the submission of that de novo in the third quarter of this financial year. So I would like to end by acknowledging the commitment, dedication and engagement of all our employees across the globe, who come to work every day dedicated to delivering on our mission, which hopefully I've demonstrated they do. I'm personally very proud to lead an organization of such capable and dedicated team members. But I would also like to thank you, our shareholders, for your ongoing commitment and belief in the long-term opportunity for the organization and how Nanosonics can certainly establish itself as a recognized global leader in infection prevention. Thank you very much. I'll hand back to Steve.

Thanks, Michael, and thanks for taking the time to bring the CORIS technology to life. It really is extraordinarily exciting. It's certainly something we've been very excited about for quite a while, and we're all very proud and excited to share it with each of you. We'll now move on to the formal business of the meeting. The notice of this meeting was circulated to shareholders, and copies are available at the registration desk when you came in and also on the Nanosonics website. And I propose that the notice be taken as read. I'll now outline the procedure for this part of the meeting. Prior to calls for a vote on each resolution, the resolution and proxy votes will be shown on the screens, and I will invite questions or comments that are specific to each resolution at the time they are read. As I mentioned, voting on each resolution will be by poll. For shareholders who are online, you may either cast your vote at the time the resolution is read or complete voting on all resolutions after I have read all the resolutions and we have concluded answering any questions on the resolutions. I will then provide a warning that the poll is about to close. For those shareholders here in the room, I have the following specific instructions. Please vote using your blue voting cards. After I call for a vote on each resolution, all persons entitled to vote will be given a moment to complete their voting card before I move on to the next resolution. On the reverse side of your blue voting card is your voting paper instructions. For proxy holders, you need to mark a box beside the motion to indicate how you wish to cast your open votes for any votes you are entitled to cast. For shareholders, you need to mark a box beside the motion to indicate how you wish to cast your votes. Once we've completed all of the resolutions, please ensure you print your name where indicated and sign the voting paper. A representative of Computershare will then come around and collect your completed voting card. If you require any assistance during this process, please raise your hand and a Computershare representative will come to assist you. As Chairman, I've been given a number of undirected proxies, which I will vote these in favor of each resolution in the poll. The persons entitled to vote on the poll are all shareholders, representatives and attorneys of shareholders, and, for those in the room, proxy holders who hold blue voting cards. For those shareholders joining online, questions may be submitted at any time whilst the resolutions are read using the functionality previously described. Questions will be considered and answered for each resolution when the resolution is being read. However, there will be a pause at the end to ensure all shareholders online and here in the room have been afforded the opportunity to ask any questions on the resolutions. I'd now like to turn to the first item of ordinary business, which is to receive and consider the company's reports for the year ended 30 June 2023. No formal vote is required on this item of business. I would now like to pause for a few moments and invite, are there any questions from shareholders, and I'll take online firstly, on the financial statements, and annual report? Any questions in the room? Thank you. If I can now go to the first resolution. Resolution 1 concerns the reelection of Director, Dr. Lisa McIntyre. Lisa was first appointed to the Board in 2019. And this resolution seeks shareholder approval of her appointment. Lisa's reelection is unanimously supported by the Board. I would now like to invite Lisa to say a few words in respect of her reelection.

Thank you, Steve. And isn't it great that we can hold this Annual General Meeting in our headquarters this time. It's wonderful. So today, I'm seeking your support for reelection as an Independent Nonexecutive Director of our company. As Steve said, I joined the Nanosonics Board in December 2019, and I currently chair the Research and Innovation Committee, which is great fun. And I'm also a member of the Audit and Risk Committee. In addition, I serve on the Board of the Fisher & Paykel Healthcare company, the University of Sydney Senate and Studiosity Proprietary Limited. And prior to this, I've served on a number of health care companies, including 12 years on the Board of the Garvan Institute of Medical Research and 12 years on the Board of HCF. I have more than 30 years of governance and strategy experience, and it's primarily been in health care and medical innovation and insurance. So I worked for 20 years with L.E.K. Consulting, 10 of that in the U.S., and later in Sydney where I led our Asia Pacific health care practice. And I've been really fortunate to serve on the board of a whole variety of organizations in the health care sector. So I've crossed health insurance, cancer care, radiology services, medical research, medical devices, biotechnology commercialization, a whole range. And it's those capabilities that I try and bring to bear at every meeting with Nanosonics. I do have a strong understanding at this point, I hope, of the health care sectors in which we operate, and the extraordinary ways in which innovation can improve clinical care. I'm keenly familiar with innovation, and I know that it requires not just an aha moment because that's what I used to think that it would require. Actually, it requires hard work, sheer hard work, and I'm looking at you, Steve, and all of our R&D teams and indeed, the whole executive team. It takes extraordinary attention to detail, excellent problem-solving skills and great leadership to make sure that we bring clinical products to market that helps solve needs for patients. And when I look at the purpose of our company, I wonder how many of you in the room have had a loved one or maybe yourselves go to hospital or a clinical procedure that's walked away with an unintended infection, because that's the problem we're trying to solve, and we do that every day, and it takes hard work and dedication. I also have experience with globally dispersed multinational health care companies. And the reason I mention that is how we navigate diverse health care systems and clinical preferences, because clinical care is not the same across the markets in which we operate, and how we navigate these differences is one of the keys to our success. And all of my governance across the past 15 years, it's always linked by a common thread. When you deliver the best care for patients and the best processes for the clinicians who treat them, that is how we get optimal returns for our shareholders. I would be honored to continue my work with Nanosonics to deliver excellence in health care innovation and best-in-class infection prevention practices. And with your support, I look forward to continuing to work with my Board colleagues and this excellent management team to create ongoing value for our shareholders, for our customers, for our employees, and for the communities in which we operate. Thank you.

Thank you very much, Lisa. Appreciate that. The resolution and the proxies received for Resolution 1 are shown on the screen. Shareholders are invited to vote on the resolution at any time before the formal business closes. I would now like to pause for a few moments to see if there are any questions. Are there any questions from folks who are online? No? Nothing online. Any in the room? No questions in the room. Thank you for that. We'll now move on to the next resolution. Resolution 2 concerns the election of our Director, Dr. Tracey Batten. Tracey was recently appointed to the Board on the 26th of September 2023. And this resolution seeks shareholder approval of her appointment. Tracey's election is unanimously supported by the Board. And I would like now to invite Tracey to say a few words with respect to her reelection.

Thanks very much, Steve, and good afternoon, everyone. I'm Tracey Batten, and I'm delighted to be standing here today for election to the Nanosonics Board, having been appointed as a Nonexecutive Director by my fellow colleagues on the 26th of September of this year. My career spans more than 30 years of working in the health care industry, predominantly in Australia but also internationally. I initially trained and worked as a medical practitioner, and I progressed relatively early in my career into health care management, supplementing my clinical qualifications with a number of management and governance qualifications, including a Master of Business Administration at Harvard University and also a Fellowship of the Australian Institute of Company Directors. During my senior executive experience, I spent 15 years as a Chief Executive Officer of a number of large hospital groups, and that included St. Vincent's Health Australia based here in Sydney, and also Imperial College Healthcare based in London. These roles gave me really significant strategic, operational and commercial experience and considerable skills working with clinicians to really work out how to deliver high-quality clinical care. And medical research and its translation into clinical practice is absolutely critical in these hospitals to really continuously improve the standards of clinical care. For the past 6 years, I've been working as a nonexecutive director on a number of boards here in Australia and also in New Zealand. Currently, my directorships include serving on the Board of Medibank Private Limited, which is Australia's largest private health insurer. I'm also on the Board of EBOS Group Limited, which is based in New Zealand, but also listed on the ASX, and it's a marketer, wholesaler and distributor of health care products, medical products and pharmaceutical products. I'm also on the Board of the Accident Compensation Commission, which is -- manages New Zealand's Universal no-fault accident insurance scheme, and the National Institute of Water and Atmospheric Research, which conducts New Zealand's preeminent climate freshwater and ocean science research. Previous boards that I've served on have included Avana Healthcare Group and a number of other health care and research organizations. My industry knowledge, my experience gained as a senior executive and my governance skills are really the capabilities that I'll be bringing to the Board of Nanosonics. Nanosonics' mission, we've heard a lot about today: to transform infection prevention practices to improve the safety of clinical care in medical institutions. And this is something that I'm really passionate about, and I believe Nanosonics is really well positioned to set new benchmarks in patient safety standards in these areas. With your support, it would be a real privilege to serve on the Board of Nanosonics and I look forward to helping to drive Nanosonics' mission forward. Thank you very much.

Thank you very, very much, Tracey, and we're certainly delighted to have you. The resolution and the proxies received for Resolution 2 are shown on the screen. Shareholders are invited to vote on the resolution at any time before the formal business closes. And I would now like to pause for a few minutes to see if there are any questions. Are there any questions online? No questions online. And any questions in the room? No questions in the room. Thank you. We'll now move on to the next resolution. The Resolution 3, which concerns the election of a Director, Dr. Larry Marshall. Larry was recently appointed to the Board on the 3rd of October 2023. And this resolution seeks shareholder approval of his appointment. Larry's election is unanimously supported by the Board. I would like to now invite Larry to come up and say a few words with regard to his election.

Thanks so much, Steve. Today, I'm seeking shareholder support for election as an Independent Nonexecutive Director of Nanosonics. I'm a physicist who became an inventor and then a chief executive. But I've always used the power of science and engineering to turn invention into innovation. My first company invented a medical device that cured blindness in diabetics, and we IPO-ed that company on NASDAQ back in '96. Today, that company still manufactures its product in Mountain View, California because the product was so innovative and so valuable that it supports high-tech domestic jobs in the United States. After that, I led a number of other tech companies over the years and had my second IPO in 2006. But I've always found my way somehow back to med tech because the people in med tech are so passionate about what they do and so committed to improving the standard of care for all patients. Innovation and health are my passions as well. In 2015, I came back to Australia after 26 years in the United States to become the Chief Executive of your National Science Agency, the CSIRO, and led a turnaround of that organization, which literally doubled the value that it generates for stakeholders and delivered the first growth of that organization in 30 years. Back in 2016, I created CSIRO's first health business unit, which 4 years later enabled Australia to mass-produce one of the world's first vaccines for COVID-19. Health is such a strength of Australia, and Nanosonics is a fabulous example of the power of health innovation in creating a $1 billion company by turning a remarkable invention through hard work into a real-world innovation. The invention wasn't really expected by the market, but, gee, the market really needed it. And it's demonstrated by how the market rapidly got its head around this product, which then propelled Nanosonics to the amazing position out in front that it enjoys today as the market embraced our innovation. And trust me when I say there is plenty more where that came from in this extraordinary company. Companies like Nanosonics enable us to manufacture right here in Australia, just as my first company did. Creating the jobs and the economic growth that Australia so badly needs. When you talk to the people who make Nanosonics work, they believe passionately in the future of our company and its ability to grow Aussie innovation. And right now, that team are building our next breakthrough innovation, which you heard Michael talk about today. I'm absolutely honored to join that extraordinary team and to help create even greater stakeholder value by executing on the next stage of our strategic growth plan, and respectfully ask for your support today. Thank you.

Thanks very much, Larry. The resolution and the proxies received for Larry's election are shown on the screen here. Shareholders are invited to vote on the resolution at any time before the formal business closes. Can I just check if there are any questions online? No questions online. And are there any questions in the room? I must admit, I am incredibly proud to work with the caliber of people that we have here, not only the folks sitting up in front of you here, but also the folks sitting in the front here, in the front row of the management team, the folks who really do the hard work. But it's -- it really is a remarkable team, a remarkable team. As the next resolution relates to my own election, I'm going to invite Marie McDonald to the lectern, and she will chair the meeting for the next resolution.

Thank you, Steve. Resolution 4 concerns the reelection of a Director, Mr. Steven Sargent. Steve was first appointed to the Board in 2016. He was the Lead Independent Director and Deputy Chairman until his appointment as Chairman of the Board in July 2022. This resolution seeks shareholder approval for his reappointment. Steve's reelection is unanimously supported by the Board. I'd like to invite Steve back to the lectern to say a few words in respect of Resolution 4.

Thanks very much, Marie. Today, I am seeking your support for reelection as an Independent Nonexecutive Director of Nanosonics. I joined the Nanosonics Board in July 2016, and I assumed chairmanship of the company in July 2022. Separately, I also serve on the Board of Ramsay Healthcare and Origin Energy Limited. The capabilities I bring to Nanosonics have been gained from 44 years of multi-industry, multinational operating experience. I've worked 22 years at General Electric, leading businesses across the United States, Europe, Asia and Australia and New Zealand. I have led businesses across several industries including health care, energy and financial services. The skills I bring to Nanosonics are strong operational leadership skills with a deep understanding of how to lead a globally dispersed multinational manufacturing companies with a view to delivering optimum value. I bring strong people leadership skills, specifically how to ensure our people are engaged, aligned and inspired with working at Nanosonics. I bring a deep understanding of international markets and their interplay with Nanosonics complex operations. I have worked in several industries that have undergone significant change and disruption, the experience from which I used today to help Nanosonics and team as we navigate the road ahead. Finally, my work as a public company director has provided me with excellent insight into effective governance practices, which I do put into effect at Nanosonics. The health care industry is experiencing turbulent times, and it will undergo more change over the coming decade than it has seen in recent decades. This is as exciting as it is challenging. I'm encouraged by how Nanosonics is navigating these challenging times, and I am energized and committed to representing you in helping guide Nanosonics forward. Finally, while I am an active director, I do have ample time to dedicate to my Nanosonics commitments. Thank you for the opportunity to address you today and for my reelection. With the support, I would be honored to work with my Board colleagues and with our management team to create ongoing value for our shareholders, for our customers, for our employees and for our communities. Thank you very much.

Thank you, Steve. The resolution and the proxies received in respect of Steve's reelection are shown on the screen. I'd like to invite shareholders to submit any questions on the resolution. And they can do so at any time before the formal business closes. I'll pause for a few moments and see if there are any questions. Not online, Matt? Are there any in the room? No? Well, thank you. I'll surrender the lectern and -- back to the Chairman. So back to you, Steve.

Thanks, Marie. I appreciate that. Thank you very much. I see Tracey and Larry left me in the dust on the floor. Holy cow. So I think I've got to get myself a doctor, don't I? We'll now move on to the next resolution. The Remuneration Report is required to be considered for adoption in accordance with the Corporations Act. The Remuneration Report forms a part of the Directors' Report and appears on the pages 40 to 61 of the 2023 Annual Report. The vote on this resolution is advisory only and nonbinding. The resolution gives members the opportunity to ask questions or make comments concerning the remuneration report during the meeting. The Chairman of the meeting, other directors, other key management personnel, or any other closely related parties are not to be included in the voting on this resolution, where in my capacity as Chairman, I'm holding undirected proxies and the [indiscernible] has authorized the Chair to vote undirected proxies on this resolution. I will be voting in favor of this resolution. The resolution and the proxies received for resolution 5 are shown on the screen. Shareholders are invited to vote on the resolution at any time. But if I can pause and see if there are any questions online. No questions online. Any questions in the room? That's great. We'll now move on to the next resolution, Resolution 6. Resolution 6 concerns the issue of 44,054 service rights to the Chief Executive Officer and President, Michael Kavanagh, under the 2023 short-term incentive. The resolution and the proxies received for resolution 6 are shown on the screen. Shareholders are invited to vote on this resolution at any time before the formal business closes. I would now like to see if there are any questions online. No? None at the back. No. Any questions in the room on -- great. We will now move on to the next resolution, which is Resolution 7. This resolution seeks approval of the adoption of a refreshed employee share plan called the Nanosonics Equity Plan. The company considers it prudent to phase out its existing Omnibus Plan, which was adopted in 2016, and replaced it with a more contemporary Nanosonics Equity Plan. As set out in the notice of meeting, the Nanosonics Equity Plan has been updated to reflect changes in the law, but can otherwise be considered to be a refresh and an update of the Omnibus Plan that's been in place for the last 7 years. The resolution and the proxies received for Resolution 7 are shown on the screen. Shareholders are invited to vote on the resolution at any time before business closes. I'd like to ask if there are any questions online. Nothing online. And any questions in the room? No questions in the room. Thank you. If I can move on to Resolution 8. Resolution 8 concerns the issue of 385,140 performance rights to the Chief Executive Officer, Michael Kavanagh, under the 2023 long-term incentive plan. There are a number of refinements to the LTI framework as explained in our remuneration report and also in the Notice of Meeting. The resolution and the proxies received for Resolution 8 are shown on the screen. Shareholders are invited to vote on the resolution at any time before the formal business closes. I would now like to pause for a few moments, invite any questions from shareholders. There is one. Is it online? Got it.

Great. So this is a question which is when we've -- when Marie and I engaged with our larger shareholders, were explaining and asking quite helping understand why we were thinking this way. The question is, I noticed that there's a change in the LTI framework. If I understand correctly, expenses for R&D related to new products won't be considered in the profit metrics for LTI. How does the Board see the impact of this change and how the Board will monitor this change won't affect unknowingly in a negative way, which I think is a great question. Previously, we had an underlying return on equity metric, which also include -- excluded R&D. And the reason for that is a company of our size, it's really, A, it's fairly difficult to predict what our R&D will be in 3 years' time, because you invest, you sort of have some success, you get improvements, you realize you've got a product and you've got to invest some time heavily, what's happened with CORIS. So it's a difficult number to predict. The other thing we did not want management to do, not that I think they would, is, let's just assume we've had a couple of years of strong profitability. And in year 3, to meet an LTI metric, we did not want them under-investing in R&D to meet an LTI metric, right? So it was input, you had this misalignment. I don't think they would do that. We now work with this team very closely. However, it does create a misalignment between what's right for shareholders, what's right for the company and management activity. We still keep a very close eye on the R&D spend. There is a research and development committee, which, in fact, it's all Board members attend. They're not all Board members are not on it, but it's the most fun committee we've got, I can tell you. And so we look at all activity in both a -- from a technology perspective, but also from a commercial and market perspective as well. And we keep a very close eye on that. You'll also note that the spend on R&D is captured in the STI metric, the short-term metric, which is a PBT number. And so that is incorporated there. So we approve the budget that the management team present us each year. We monitor that on a monthly basis. And so there's strong controls around that. Have I missed anything, Marie? I think we covered it. Great. Thanks. Any other questions online? Thank you for that question. It's a great question. So now I'll pause for a few moments to provide shareholders with further opportunity to ask any questions on any of the 8 resolutions. I don't think there will be any as we finalize their voting. As a reminder, to send a question, simply click in the ask-a-question box, type your question and press send -- the send arrow to follow up on the instruction in the Q&A tab. The order for taking questions will be, first, we'll take questions from the room, then we'll take questions online. And finally, we'll have any verbal questions on the line. Are there any other questions with regard to the resolutions? Not for the resolutions, but we do have some general questions. Great. The poll will be closing shortly. Before it does, I now provide shareholders a few moments to finalize your voting. Please complete your voting now. Representatives from Computershare will collect the blue voting cards. Please ensure you have printed your name where indicated and signed voting on the voting card. Online attendees need to ensure their vote is submitted via the online portal. [Voting]

I'll just pause for a minute, and then -- collecting the blue cards. You would think there'd be a more contemporary process wouldn't you, Sunny? Can you help us there? All right. I think we're good. So the formal business is now completed, and I declare the poll closed. And of course, the results of the poll will be announced to the ASX in due course. I'd now like to invite general questions about the business. And you can send the questions in the format that I've outlined a couple of times now. Are there any other questions? We'll take the ones in the room first.

I've got 2 questions. Could you just tell us the origin of the word CORIS? Why is it called CORIS?

It's a good question. That's a great question. And it was actually one of our engineers that came up with that name. And it's actually -- I thought it was a great name, because what CORIS is, is a species of fish, just like trophon. But you know those fish called Rasbora fish that clean other fish? Well, CORIS is a species of fish that's found on the barrier reef, that is a Rasbora fish, a very colorful fish, beautiful fish. And in fact, in the marketing of it, we'll probably use the color pallet of that fish. By the way, everybody now will remember this, right? But that's the genesis of it. And it was a fantastic outcome. We held a bit of a competition internally. I was going personally with all these scientific names, et cetera. But I thought CORIS was a great name.

Yes, thank you for that. If ever any of you have ever read the bible, there's somewhere in there, I can't remember if it's in the Old Testament I think it is, that the naming of things is important to the outcome of that thing. My second question is, none of you made any mention of what you're looking at the next product you wish to, or program you wish to embark on.

Well, first of all, we're continuing our development program and advancing what we believe could be good advances in the whole area of ultrasound processing. I'd like to get CORIS. It is a significant development. But the other aspects we do, we're continuously looking either when we are out in the markets as to other areas of opportunity. It's not just about let's develop something. It's about understanding where there are unmet needs today and what are the emerging trends in unmet needs. And so we're keeping a very close eye on that. There's in one of our laboratories, technology development laboratory, I personally love to be working down there because it's people playing with a lot of new things and new areas. It's really in the research area. But we've been looking at areas in environmental decontamination. We've been looking at emerging areas in the likes of [indiscernible] technologies, et cetera, and what's happening out in the world in those things. And so at this stage, we're not publicly saying exactly what those things are being worked on. I think the most important thing is that a razor focus on bringing what we believe is the next transformational technology being CORIS to market.

My name is Michael Lanigan. My question is about AuditPro. That was announced, I think, in June 2020. I've always -- I read through as much as I could [indiscernible] but I could not see how this was adding to Nanosonics' capability, because trophon had just been put on, trophon2 with the AcuTrace tracking. So what does AuditPro add to our capability?

Thanks very much for the question, Michael. AuditPro is a really important product, and it was our first foray really into the area of traceability in the cloud. Now the trophon device -- the trophon2 device, one of the key benefits of that is the digital nature of it, and it does have specific traceability. But what AuditPro does is for the customers, it can capture the patient data, not the private data or the MRN or medical record number or another identification the hospital may use. And then through the cloud, link the decontamination cycle to that patient. But it also has the capability then of just having real-time dashboards available. So at any point in time, the hospital has access to real-time dashboards. So we've -- the product itself is -- continues to emerge, and particularly in North America, and there's a number of large institutions that have adopted it. And I think our manager of AuditPro, and Jodi, I believe, is going to New Zealand shortly to do an installation in some hospitals in New Zealand. But one thing that we have learned is that the selling of such a technology is very, very different to the selling of a piece of capital equipment because the stakeholders that you're dealing with -- but there's one extra and really important stakeholder that you're dealing with when you're looking at implementing a cloud -- a digital cloud solution within the hospital system. And that's the IT departments within the hospital systems. And the -- so the input then of -- from a sales perspective of being able to answer all their questions from a data security, cybersecurity, which we have, as we've announced previously, the organization has ISO 27001 accreditation from a cyber, and we continue to build on our cyber protection. So the actual sales process is very different. We certainly continue to sell. We actually have made even a number of further improvements to AuditPro for the customers, which is like an AuditPro Lite. But also, we're now also looking at how we can interface the data that's in AuditPro with other cloud solutions from other third parties that those hospitals have. So rather than just rely on ours and setting up their own, so there's an integration program that's underway as well. So I firmly believe in the importance of data. I firmly believe that the product and the platform that we've developed and the capabilities we've built internally from a cloud perspective are really important as part of our product and service offerings moving forward.

My name is Eileen Kennedy. And I'd like to tell you all that Michael Lanigan and I come from neighboring towns. We both went to the same university. But there was a difference in time between when we attended, as you can see. But I have just 2 questions. One is about the trophon, which I'm so impressed with. Is there -- what's the story on patenting?

So we have close to about 14 families of patents with trophon across many dimensions of the system. And most of those relevant patents go out into 2030. So partly with consumables as well. But importantly as well, we'll continue to innovate in those areas, which then bring new patents to protect our innovation. So at this stage, our patent coverage for the technology is pretty strong.

Sorry, is this patented or it's going to be your...

Oh, no, it is. It is patented. It's very much patented.

Yes. Great. Second question is about, we have friends whose husband goes every couple of days to dialysis. And I'm just wondering about dialysis, how that's an obvious one that maybe the company is interested in at some stage, especially when I see the CORIS.

Again, the -- it's not lost on us when we look at the range of medical devices or technologies or interventions that are out there. And dialysis is an example where you have tubes. Those tubes have lubes. And because there's not a single lumen or tube that does not have problems with biofilms. So the concept or the technology behind CORIS could indeed have broader applicability across other medical devices in the future. I would say our focus, however, at the moment is very much on the endoscopy area because there's a whole range of different endoscopes. So we will end up with specific indications for each one of those endoscopes. And the beauty of this machine is, and you'll see it outside, is, over time, what we'll be able to do is, because most of these endoscopes have RFID chips in that identifies the type of endoscope, that will be scanned on front of the CORIS and the machine will automatically change all the process parameters internally with respect to the cleaning parameters that are required. But first things first, we'll get endoscopy underway, and then we'll see where we go.

Yes, good morning. I'm very impressed with all your R&D. But as a long-term investor. I wonder when you think you might actually be paying a dividend.

It's something we consider consistently. We have, at least twice a year, we do the analysis on the best use of our cash. We have always decided that it's in the company's best interest and shareholders' best interest to continue to invest back into the company. So certainly for the next 12 months, we have decided to keep the dividend policy as is as it currently stands. No dividend is paid. And then we'll continue to review that twice a year. [ Maury ], you had a question?

Michael, thank you for that deep dive. But when it comes to -- when it comes to CORIS, you showed the rather dramatic difference between manual reprocessing and CORIS' capabilities. But I would assume from the limited knowledge I've got that, that was, in fact, good practice on the manual side. So that's not really what happens in the real world. So the benchmarks are even better. Is that probably a reasonable...

That's a very good observation, [ Maury ]. And all the comparative studies that we do, especially when we're comparing to manual cleaning, is adhering strictly to the IFUs of manual cleaning. And many of these processes have over 100 steps. We will adhere strictly to that. So that is the -- what you saw today is the best that can come from manual cleaning. Our observations externally is that there are a lot of shortcuts that are made in terms of people. And I can understand it. It's a manual process with so many complex pieces to remember, and people under time pressures, et cetera. So you can assume that what would really be getting on the manual is -- I mean, one way or another, what you did see even with the best manual cleaning, the outcome was still in these small channels just non acceptable. So it's -- but you're right, it's -- we compare to the absolute best that there is.

It's remarkable, and congratulations to the team.

Thanks very much, [ Maury ].

[ Peter Braden ], shareholder. Where are the machines manufactured? Sorry, I haven't read the annual report yet. I only picked it up this morning.

About 300 meters from here.

What, all of them for worldwide?

Yes. We're a proud Australian manufacturer. And that's led by Rod, our COO. But we manufacture everything here and then ship it internationally.

I do have another question -- I do have another question online. This is, Nanosonics is generating cash and building cash on hand. Does the Board consider the buyback -- a buyback program alongside investing in the new product? Yes, we do. So again, as I mentioned with regard to a dividend, we actually look at sort of a detailed review of our capital management where we look at the cash we're generating, we look at what we're investing in, what we're investing in, new products, growth of trophon, R&D, M&A activity. And we also then consider, does a stock buyback make any sense, and does a dividend make any sense? And so those things are assessed in a very detailed way twice a year. And to date, we have decided the best use of our cash is to continue to invest back into the company. I actually don't know of too many companies who've been able to invest within the cash generation envelope and created what this company has done. Outside the sort of the initial capital raise, we've had no other debt or additional capital raises, and what's been achieved with that is really quite remarkable. And even when you look at sort of the core profitability of the trophon business, what you've got there, you've got a business that generates a lot of cash, that's very profitable, a very high return on capital. It's a great business. And we fully expect costs will look pretty similar once we did the various regulatory approvals and get that launched. There's one more here in the room. Sir?

Good morning. Dennis Kennedy, shareholder. Question. It's been quite a few years since the company started to get to that 25% market penetration, the trophon. What do you anticipate with CORIS? Will it take a similar months of time to get your 25% of what you expect market penetration may be?

What I don't have up in front of me is a crystal ball, but I have a fair degree of internal optimism with respect to what the success of that product will look like. But I do want to say that any medical device takes time for adoption. There's education involved, there's capital budgets to be -- you have to go through in the hospital systems. One of the thing that's a little bit different with CORIS over trophon is the installation process that has to be plumbed in. You've seen that there's water. So there's -- you're working with facilities, et cetera. So we could sell a device but then it goes into operation 6 weeks later after it's being installed by facilities. The difference, however, and an important difference between CORIS and trophon, I believe, relates to the fundamentals of adoption. So -- and what I mean by that is all markets around the world today require endoscopes to be reprocessed, that are all being cleaned and they're all being disinfected. Some markets better than others, but they all require endoscopes to be reprocessed. That is still not the case in all markets for ultrasound. And I mentioned Japan, and it's counterintuitive to everybody when I mentioned that today, in Japan, there is no mandated requirement that an ultrasound transducer, whether it's used transvaginaly, transrectaly, in surgery, et cetera, has to be decontaminated. That doesn't exist. That's the work we're doing. So we would like to think that we are not going to have to go out and establish the fundamentals that are requirements. It's more a little bit like what we did in the United States with trophon, where over there when we launched trophon, that market did require high-level disinfection. It was an old, manual, antiquated, toxic, inefficient and ineffective process. Now we're 25%, 27% market penetrated globally, we're close to 50% with standard of care. So this small Australian company that manufactures 300 meters away, you will find our devices in every luminary hospital in the United States. So -- but we have work to do. It's not just about getting the regulatory approval. We've got work to do like every medical device in terms of its launch, the education, getting the budget cycles, the installation, et cetera. But we feel very confident, certainly very, very confident with the opportunity that's out there.

Thank you very much. They were all -- sorry, Michael, you have one more question. Yes.

One of the things you mentioned was worker shortage in the past. It's hard to match, obviously. I presume the worker shortage is extra anxiety and pressure put on paper, reasonably lowly paid, and having to accept enormous responsibility on top of all that. Now you -- I reconfirmed that the [indiscernible] infection prevention for life. Now that is -- I congratulate you all for this, and that should be something to reduce the anxiety of health care workers worldwide, and keep [indiscernible]. Thank you very much.

You're absolutely right there. It's an important point, Michael. If I'm correct, the IPU requirement for cleaning a colonoscope, for example, is you've got to brush it for up to 30 minutes. Can you imagine standing at a sink for 30 minutes cleaning a 3.5-meter colonoscope? All the various lumens. And then there's the air water channel, which is a mil, 1 mil thick, which just doesn't get cleared, just gets flushed. So those people will now be able to hook up than go away and do something else. So thank you very much, everybody. That certainly concludes the business today. I really do appreciate you all taking the time to come out to our offices here. And I want to thank the team, the Nanosonics team, and our support team for all the hard work in putting this on. It's not easy. But we felt it was much more important to have it here rather than in a hotel in Sydney. So thank you very much. We declare the meeting closed. Thank you.