COMPUMEDICS LIMITED — Earnings Release 2014

Aug 26, 2014

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ASX / MEDIA RELEASE Melbourne Australia 27 August, 2014

Compumedics Limited Business Update: Appendix 4E Release

Current Performance Highlights:

• NPAT returns to profitability at $0.9m compared to a loss of $(1.5m) for the year ended 30 June 2013. EBITDA substantially higher at $3.0m compared to $0.3m for the year ending 30 June 2013.

• Revenues shipped and invoiced increased 13.6% to $30.8m, compared to $27.2m for the previous year.

• The US, Asia (including China), Middle East and the DWL business all posted growth in shipped and invoiced sales, with growth of 19%, 8%, 4% and 26% respectively. Australia and Europe were consistent with prior years.

• $6.0m sales orders on-hand, despite improved shipping performance, highlights continuing solid new sales order flow into the Company. The sales orders on hand will be further reduced during first half of FY2015.

• Cash on hand and debt levels were stable during the period, with cash and debt at $1.1m and $2.0m respectively, compared to $1.2m and $2.3m in FY2013.

• Company currently reviewing on-going financing needs to better meet business requirements and to look to reduce financing costs.

Business Outlook:

• The Company’s previously articulated expansion strategy focused on a greater footprint in sleep diagnostics, expansion into the neuro-monitoring and LongTerm EEG Monitoring (LTEM) market and entry into the sleep-treatment market, remains on track, and will be accelerated with the strengthening of the Company’s financial position now that profitability has been restored.

Compumedics Limited (ASX:CMP)

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Leading Australia-based medical device company, Compumedics Limited (ASX: CMP), is pleased to announce restoration of full year profitability for the year ending 30 June 2014, following the profitable first half year results. Comparable shipped and invoiced sales were $30.8m compared to $27.2m in the previous year. Importantly, the Company returned to profitability at $0.9m compared to a loss of $(1.5m) in FY2013 and increased profitability at EBITDA, generating a $3.0m profit compared to $0.3m in the previous year. The Company took new orders in the year of $28.2m, resulting in $6.0m of sales orders on hand at 30 June 2014.

The Company should continue to reduce its carry forward sales orders given the improved financial performance of the business and also its continuing activities to seek and secure financial facilities that will continue to meet the needs of the Company at a cost competitive rate.

The following table highlights the key financial performance measures on this basis.

	FY2013	FY2012	Variance
Revenues – as reported	$30.8m	$27.2m	14%
EBITDA – as reported	$3.0m	$0.3m	Up $2.7m
NPAT – as reported	$0.9m	$(1.5m)	Up $2.4m

Highlights and Achievements for Compumedics for the year ended 30 June, 2014

• EBITDA was a $3.0m compared to $0.3m in the prior year, as a result of on-going efficiency gains in manufacturing, and improved shipping in the year ended 30 June 2014.

• Shipped and invoiced sales were 14% higher at $30.8m compared to $27.2m for the previous year.

• Cash on hand and debt levels were also stable during the period at $1.1m and $2.0m respectively compared to $1.2m and $2.3m in FY2013.

• The Company had sales orders of $6.0m on-hand at 30 June 2014, reflecting a solid flow of new sales orders into the Company, as the Company continues to lift its shipping rate.

- Core diagnostic medical device business separated from medical innovation

business

Compumedics is pleased to report to the market, both aggregated and disaggregated financial performance, which is attributable to its core diagnostic medical-device business and its investment in technologies and products being developed in its medical innovation business. The Company believes the disaggregated information provides the investment community with a clearer and more transparent picture of these two distinct activities currently being undertaken within the Company.

The Company’s core diagnostic medical-device business encompasses the technology and products currently sold globally for the diagnosis and/or monitoring of sleep disorders and

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neurological disorders, and for the monitoring of blood flow through the brain. It also includes products and technology used in advanced brain function research.

The Company’s medical innovation business primarily includes technologies and products for the treatment of sleep disorders and less developed technologies for driver fatigue monitoring and depth of anaesthesia monitoring.

	**Earnings **	**Earnings **	adjusted for unrealised	adjusted for unrealised	FX losses	FX losses
AUDm	Medical diagnostic devices		Medical Innovation		As Reported
	FY2014	FY2013	FY2014	FY2013	FY2014	FY2013
Revenues	30.7	27.2	0.1	0.0	30.8	27.2
R&D expense	4.2	4.3	1.0	0.8	5.2	5.1
EBITDA	3.2	1.1	(0.2)	(0.8)	3.0	0.3
EBITDA to revenue	12.4%	1.8%	-	-	10.0%	0.0%
Depreciation and amortisation	(0.5)	(0.4)	(0.9)	(0.8)	(1.4)	(1.2)
EBIT	2.7	0.7	(1.1)	(1.6)	1.6	(0.9)
Finance charges	(0.6)	(0.4)		-	(0.6)	(0.4)
Tax (exp)/credit	(0.1)	(0.2)		-	(0.1)	(0.2)
Net profit after tax(NPAT)	2.0	0.1	(1.1)	(1.6)	0.9	(1.5)
NPAT to revenue	6.5%	0%	n/a	n/a	3.0%	(5.4)%
Operating cash	1.5	1.2	(0.8)	(1.0)	0.7	0.2

Highlights and Achievements for the “diagnostic” medical-device businesses for the year ended 30 June 2014:

• EBITDA increased to $3.2m compared to $1.1m in the prior year, as a result of ongoing efficiency gains in manufacturing, as the Company started to clear shipments.

• Shipped and invoiced sales grew 14% to $30.7m compared to $27.2m for the previous year.

• Cash on hand and debt levels were also stable during the period at $1.1m and $2.0m respectively, compared to $1.2m and $2.3m in the previous year.

• Compumedics had significant sales orders of $6.0m on-hand at 30 June 2014, down from $7.2m at December 2013, but still high reflecting the on-going strength of sales into the Company.

Highlights and Achievements for the medical innovation business for the year ended 30 June 2014:

• The Company has continued to progress the production of its sleep-treatment product and anticipated moving to delivering against three distribution agreements currently in place.

• The Company continues to progress a number of other technology opportunities currently residing within the Medical Innovation Division and will make further announcements when it is appropriate to do so.

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Key Growth Opportunities

Compumedics believes current key growth opportunities derive from the following primary initiatives:

1. Continuing the current two to three-fold expansion of Compumedics’ core sleep and neuro medical diagnostic device sales in the key US and European markets.

2. Continuing its expansion into the global Long-Term EEG Monitoring (LTEM) market with its innovative LTEM device, Neuvo®. The Company will also focus on the routine EEG market over the next financial year as part of this additional focus.

During the second half of the 2014 financial year, Compumedics has continued a major renewal and expansion of its US-based direct sales team. This has involved employing a Business Development and Marketing Manager, continuing to expand the existing sales team to ensure Compumedics has a footprint over all major markets within the US. The Company has also selectively expanded its resources in Europe to achieve targeted outcomes in FY2014, particularly as it relates to France. These changes together with recent successful contract announcements in France will enable Compumedics to further regenerate revenue growth over the course of FY2015.

The Company will also selectively look to commercialise several technologies within its intellectual property portfolio as it continues to build its profitability and growth.

Financial Outlook

Compumedics expects the identified key growth opportunities to deliver an increase in revenues and earnings in the current financial year. However, at this time the Company will not issue specific financial guidance.

Compumedics expects growth beyond the current financial year to result from a combination of:

• Organic growth from the core businesses and the key growth opportunities identified

• The expansion of the business into sleep-treatment markets, and

• Opportunistic mergers, acquisitions, or alliances that are identified as being complementary to the Company’s existing product range and incremental to the financial performance of the Company.

Strategically, Compumedics continues to review all business development options available to fully unlock the commercial potential within the range of technologies and products that the Company currently has or is developing.

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For Further information:

Dr David Burton Executive Chairman, CEO Phone: + 61 3 8420 7300 Fax: +61 3 8420 7399

Mr David Lawson Executive Director and Chief Financial Officer Phone: + 61 3 8420 7300 Fax: +61 3 8420 7399

Investor Relations & Media Enquires:

Mr Rod North Executive Director Bourse Communications Pty Ltd Phone: +61 3 9510 8309 Mobile: +61 (0) 408 670 706

About Compumedics Limited

Compumedics Limited (ASX: CMP) is an internationally recognised medical device company involved in the development, manufacture and commercialisation of diagnostics technology for the sleep, brain and ultrasonic blood-flow monitoring applications. The Company owns US based Neuroscan and Germany basedDWL Elektronishe GmbH. In conjunction with these two subsidiaries, Compumedics has a broad global reach, including Americas; Australia and Asia Pacific; and Europe and the Middle East.

Executive Chairman, Dr David Burton, founded Compumedics in 1987. In the same year the Company successfully designed and installed the first Australian, fully computerised Sleep Clinic at Epworth Hospital in Melbourne. Following this early success, Compumedics focused on the development of products that sold into the growing international sleep clinic and home monitoring markets. Compumedics listed on the Australian Securities Exchange in 2000. Over the years, Compumedics has received numerous awards and accolades including Australia’s exporter of the year and has been recognised as a Top 100 Innovator by the both German and Australian Governments.

Compumedics Limited (ASX:CMP)

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