COMPUMEDICS LIMITED — Interim / Quarterly Report 2015

Feb 24, 2015

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ASX
/
MEDIA
RELEASE 25
February
2015

Compumedics
Limited Business
Update:
Appendix
4D
Release

**Half

Yearly
Report Revenues
and
Profitability
Continue
their
Grow
Trajectory**

**Current

Performance
Highlights:**

• NPAT
  more
  than
  doubled
  to
  $0.9
  million
  and
  EBITDA
  up
  46%
  to
  $1.9
  million
  for
  the
  half-­‐ year
  ending
  31
  December
  2013,
  compared
  to
  $0.4
  million
  and
  $1.3
  million
  in
  the
  previous corresponding
  period
  (PCP).

• **Revenues
  shipped
  and
  invoiced
  were
  up
  8%
  to
  $15.6
  million,
  compared
  to
  $14.5
  million for
  the
  PCP.

The
Company
achieved
overall
sales-­‐order
growth
of
6%
over
the
PCP. Importantly
sales-­‐order
growth
of
13%
was
achieved
in
Asia
(including
China),
10%
in
DWL (Compumedics
Germany
based
transcranial
Doppler
[TCD]
business),
6%
in
the
USA
and 4%
in
Australia,
Europe
was
steady
with
sales
orders
over
the
PCP.**

• The
  Company
  is
  currently
  considering
  several
  options
  for
  realising
  its
  eHealth
  sleep diagnostic
  platform
  and
  its
  DWL
  business.

**Business

Outlook:**

• Strong
  growth
  outlook
  in
  neurology
  and
  sleep
  business
  : - **$34
  million
  sales;
  Growth

  10%;
  EBITDA
  $4–5
  million**

• Strong
  Neurology
  monitoring
  growth
  platform
  –
  small
  market
  share
  in
  a
  large
  market - Asian
  EEG
  -­‐
  largest
  segment
  of
  about
  $900
  million
  brain
  monitoring
  device
  market - Asian
  EEG
  -­‐
  2013
  $81.8
  million
  PA
  to
  $133.0
  million
  by
  2018,
  CAGR:
  10.40%

• Strong
  sleep
  diagnostic
  growth
  into
  home
  sleep
  testing
  –
  expanding
  and
  larger
  HST market
  augmenting
  traditional
  PSG
  (polysomnography)
  testing - Apnoea
  Diagnostic
  and
  Therapeutic
  Devices
  market
  is
  to
  grow
  at
  a
  CAGR
  of
  16.4% - Sleep
  Disorder
  Clinics
  in
  the
  US:
  Revenues
  $7bn;
  CAGR:
  9.8%
  PA

• Break-­‐out
  medical
  innovation
  opportunities
  (i.e.
  eHealth)

• 5-­‐year
  growth
  outlook:
  wearable
  technology
  $50-­‐
  70
  billion
  ;
  mHealth
  $22
  billion; telemedicine
  $35
  billion

• Capitalisation
  review
  is
  now
  underway

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Leading Australia-­‐based medical device company, Compumedics Limited (ASX: CMP) ( “Compumedics” and “Company” ) , is
pleased
to
announce
profitability
and
revenue
growth
for
the half
year
ending
31
December
2014.

Comparable
shipped
and
invoiced
sales
were
$15.6
million
compared
to
$14.5
million
in
the previous
corresponding
half
year.
Importantly,
Net
Profit
After
Tax
(NPAT)
grew
to
$0.9
million compared
to
a
$0.4
million
for
the
previous
corresponding
half
year.
As
a
result,
the
Company
grew EBITDA,
to
$1.9
million,
an
increase
of
$0.6
million
on
the
PCP
$1.3
million
result.

The
Company
took
$13.8
million
of
new
orders
in
the
half
year,
resulting
in
$3.9
million
worth
of sales
orders
on-­‐hand
at
31
December
2014,
a
significant
improvement
from
the
$6.0m
of
sales-­‐ orders
on
hand
at
30[th] June
2014.

Table
1
highlights
the
key
financial
performance
measures
on
this
basis.

Table
1

Table 1
	H1 FY2014	H1 FY2013	Variance
Revenues – as reported	$15.6m	$14.5m	8%
EBITDA – as reported	$1.9m	$1.3m	46%
NPAT – as reported	$0.9m	$0.4m	125%

**Highlights

And
Achievements
For
Compumedics
For
The
Half-­‐Year
Ended
31
December,
2014:**

• NPAT
  of
  $0.9
  million
  compared
  to
  $0.4
  million
  for
  the
  PCP.
  EBITDA
  was
  $1.9
  million compared
  to
  $1.3
  million
  in
  the
  PCP,
  as
  a
  result
  of
  ongoing
  efficiency
  gains
  in manufacturing,
  and
  the
  favourable
  impact
  of
  the
  lower
  Australian
  Dollar
  and
  increased shipments.

• Shipped
  and
  invoiced
  sales
  were
  8%
  higher
  at
  $15.6
  million
  compared
  to
  $14.5
  million
  for the
  PCP.

• Cash
  on
  hand
  increased
  to
  $1.6
  million
  at
  31
  December
  2014,
  compared
  to
  $1.1m
  at
  30
  June 2014.
  Debt
  levels
  were
  slightly
  higher
  due
  to
  the
  new
  EFIC
  facility
  at
  $2.5
  million
  at
  31 December
  2014
  compared
  to
  $2.0
  million
  at
  30
  June

• The
  Company
  had
  sales
  orders
  of
  $3.9
  million
  on-­‐hand
  at
  31
  December
  2014,
  which
  was
  an improvement
  on
  the
  $6.0m
  sales
  orders
  on
  hand
  at
  30[th] June

• The
  Company
  largely
  completed
  the
  transition
  of
  its
  EEG
  cap
  production
  to
  lower-­‐cost
  Asia and
  is
  now
  working
  on
  transitioning
  production
  of
  its
  main
  sleep
  devices
  to
  Asia.
  These activities
  are
  scheduled
  for
  completion
  by
  the
  end
  of
  calendar

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Table
2
shows
the
results
for
the
six
months
to
31
December.

Table
2

AUDm	Medical diagnostic devices	Medical diagnostic devices	Medical Innovation	Medical Innovation	As Reported	As Reported
	2014	2013	2014	2013	2014	2013
Revenues	15.6	14.5	0.0	0.0	15.6	14.5
R&D expense	2.4	2.1	0.7	0.4	3.1	2.5
EBITDA	2.6	1.7	(0.7)	(0.4)	1.9	1.3
EBITDA to revenue	17%	12%	-	-	12%	9%
Depreciation and amortisation	(0.3)	(0.3)	(0.4)	(0.3)	(0.7)	(0.6)
EBIT	2.3	1.4	(1.1)	(0.7)	1.2	0.7
Finance charges	(0.3)	(0.3)	-	-	(0.3)	(0.3)
Tax(exp)/credit	(0.0)	(0.0)	-	-	(0.0)	(0.0)
Net profit after tax (NPAT)	2.0	1.1	(1.1)	(0.7)	0.9	0.4
NPAT to revenue	13.0%	8%	-	-	6%	3%
Operatingcash	1.1	1.0	(0.7)	(0.4)	0.4	0.6

**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
streams
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
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.

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**Key

Growth
Opportunities**

The
Company
remains
committed
to
its
strategic
growth
plans,
whilst
at
the
same
time
improving productivity
and
efficiency
throughout
the
business
in
order
to
continue
to
generate
consistent
and growing
profits.

As
previously
noted,
Compumedics
has
entered
the
LTEM
market,
a
new
and
incremental
market, with
the
launch
of
its
innovative
LTEM
product,
Neuvo®.
This
takes
Compumedics
into
a
pre-­‐ existing,
but
new
market
for
the
Company,
which
has
estimated
current
annual
sales
of
about US$200
million
in
the
US
and
approximately
US$400
million
globally.

Epilepsy
diagnosis
and
monitoring
is
a
key
target
for
the
Neuvo®
product.

The
US-­‐based
Epilepsy Foundation
estimates
that
more
than
3
million
people
in
the
US
are
affected
by
epilepsy
with 200,000
new
cases
each
year.
Compumedics
has
made
significant
investments
in
product development,
targeting
the
neurodiagnostics
market
to
leverage
its
expertise
in
high-­‐end
amplifier design
and
physiologic
signal
processing.
The
combination
of
the
Neuvo®
LTEM
system
and
the CURRY®
neuroimaging
analysis
software
suite,
some
of
which
is
covered
by
patents,
makes
it
easier for
epileptologists
and
neurosurgeons
to
identify
which
specific
regions
in
the
brain
are
most
likely to
be
the
cause
of
severe
seizure
activity
in
an
afflicted
patient.
As
such
the
LTEM
market
provides another
solid
opportunity
for
growth
for
the
Company
over
the
foreseeable
future.

In
the
Company’s
core
sleep
diagnostic
business,
Compumedics
has
the
most
sophisticated
and advanced
range
of
portable
sleep-­‐monitoring
systems
of
any
of
the
companies
competing
in
these markets.
The
Company
continues
to
be
recognised
as
a
leading
sleep
diagnostic
company
globally and
as
such
the
global
sleep
diagnostic
markets
continue
to
offer
opportunities
for
growth, particularly
in
Asia
Pacific
and
specifically
China.

In
addition,
China
represents
a
unique
emerging
market
opportunity
for
Compumedics’
complete range
of
diagnostic
and
monitoring
systems,
particularly
given
the
country’s
close
proximity
and strong
trade
relations
with
Australia,
coupled
with
Compumedics’
time-­‐earned
reputation
and establishment
of
premier
reference
centres
throughout
China.
As
China
rapidly
builds
and
expands its
basic
health
infrastructure,
mainly
due
to
a
continuously
growing
middle
class,
the
focus
will inevitably
turn
to
new
areas
of
health
management,
including
sleep
and
neural
disorders
and
brain blood-­‐flow
ultrasonography.
This
will
provide
a
measurable
upside
for
companies
as
well
positioned and
established
as
Compumedics
in
this
space.
Compumedics
is
participating
already
in
this
upside as
revealed
in
recent
business
wins
in
China
for
its
ultrasonography
(DWL)
products.

**Strategic

options**

Compumedics
currently
has
a
number
of
unique
technology
applications
focused
on
the
emerging eHealth
market
for
both
professional
and
consumer
sleep
analysis
and
monitoring.
The
Company
is currently
engaged
in
discussions
with
third
parties
as
to
how
best
to
scale
up
and
commercialise these
technologies,
based
on
the
incremental
revenue
aspect
and
the
strength
of
the
contracts
won in
China
during
the
second
half
of
last
calendar
year.
More
announcements
will
be
made
in
relation to
this
as
the
Company
pursues
and
concludes
its
milestones
around
funding,
distribution
and
sale of
this
technology
and
service
package.

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**Financial

Outlook**

Compumedics
expects
the
identified
key
growth
opportunities
to
continue
to
deliver
an
increase
in revenues
and
earnings
in
the
current
financial
year.

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
  eHealth
  markets
  as
  new
  products
  and
  technologies
  are rolled
  out

• 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,
  as
  the
  business
  continues
  to
  demonstrate
  growth
  and
  profitability

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.

**About

Compumedics
Limited**

Compumedics
Limited
(ASX:
CMP)
is
a
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
international 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
both
German
and
Australian
Governments.

**For

further
information
please
contact:**

Dr
David
Burton ,
Executive
Chairman,
CEO Compumedics
Limited T:
+
61
3
8420
7300,
F:
+61
3
8420
7399 For investor relations and media enquiri

Mr
David
Lawson ,
Executive
Director,
CFO Compumedics
Limited T:
+
61
3
8420
7300,
F:
+61
3
8420
7399

Rod
North ,
Managing
Director, Bourse
Communications
Pty
Ltd T:
+61
3
9510
8309,
M:
0408
670
706 E: rod@boursecommunications.com.au