COMPUMEDICS LIMITED — Interim / Quarterly Report 2017

Feb 27, 2017

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Sleep Diagnostics & Treatment - Neuro Diagnostics - Brain Research - Ultrasonic Blood Flow Monitoring 1

Who is Compumedics?

A leading global, innovative developer and manufacturer of medical devices for:

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Monitoring neurological Ultrasonic monitoring Diagnosing disorders including Highly sophisticated of blood flow through sleep disorders long-term epilepsy brain research the brain (Transcranial monitoring (LTEM) Doppler [TCD]) A technological leader in its chosen markets: #3 USA sleep #1 China sleep diagnostic device #1 Australian sleep & #1Japan sleep diagnostic device supplier and emerging neuro diagnostics diagnostics device supplier to premier #3 supplier for device supplier supplier facilities & #1 TCD neurological monitoring device supplier devices

A technological leader in its chosen markets:

120 employees across four locations, Melbourne, Australia (Head Office), Charlotte, NC, USA, Hamburg and Singen, Germany.

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Compumedics listed ASX Dec 21, 2000.

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H1 FY2017 – Performance Review

 H1 FY17 Revenue (reported) $16.2m, EBITDA (reported) $1.2m, NPAT (reported) $0.2m

	H1 FY17	H1 FY16	Variance	Comment
Revenue - reported	$16.2m	$17.4m	(7)%*	US sales (11) % on PCP and new leadership now in place. DWL Europe also experienced some delayed sales which have now largely being recouped.
EBITDA - reported	$1.2m	$2.4m	(50)%	Profitability and operating cash remain positive, validating changes made to product composition
NPAT-reported	$0.2m	$1.9m	(88)%	Prior year contained once-off favourable adjustment of $0.5m relating to booking of a deferred tax asset

*** Sales shortfall for H1 FY17 result of $2m in US sales and $1m in DWL, not apparent until late in December**

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H1 FY2017 – Performance Review

• New leadership in place in US. US sales H1 FY2017 11% below pcp. US business remains on track, with strong pipeline. New Grael platform released and now shipping. Expect improved H2

• Germany based DWL experienced sales delays. Has since recouped some of that delayed business and is targeting a strong H2

• Asia business and China in particular strong with 45% lift in sales over pcp, Latin America was up 80% and Australia performed in line with the size of the market.

• Profitability and operating cash remain positive, despite sales shortfall, validating changes made to product composition (new low cost Grael devices) and the selective outsourcing of production, along with other efficiency gains

• Two strategic growth initiatives - MEG and eHealth – continue to progress forward against stated milestones

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Sales Bridge Chart – H1 FY16 versus H1 FY17

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20
18
16
14
12
10
8
6
4
2
0
Sales H1 FY16 USA Aust Asia Latin America DWL Europe Sales H1 FY17
-2
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EBITDA movement – H1 FY16 versus H1 FY17

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3
2.5
2
1.5
1
0.5
0
EBITDA H1 FY16 Sales Margin Expenses Other Revenues FX EBITDA H1 FY17
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H1 FY17 – Milestones achieved

• Full suite of new Grael (low Cost) products released, with shipments having commenced in Dec 2016 to US and other parts of the world.

• Curry 8 – the next generation of our world leading source localisation brain analysis software - released November 2016 (applicable for MEG and also clinical neurology)

• First batch of fully assembled Grael’s received Dec 16 from our third party manufacturer, as manufacturing transition continues.

• MEG: Compumedics/Neuroscan has now been qualified as a top 2 MEG supplier candidate for more than two major USA centers, one of which is scheduled to make their decision within three months. Compumedics/Neuroscan are also in discussion to supply multi-center MEG systems to at least one multinational hospital consortium.

• eHealth: Pushing ahead with the commercialisation of cloud based sleep diagnostics platform – 4 sites in the USA have now signed for Nexus360, one of which is a multi-center site on the eastern seaboard.

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Revenue Composition at $16.2m for H1 FY17 31 December 2016

By geographic region

By product/market

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Tech.
Supply
Europe, Service,
Items,
15% 10%
USA, Brain 10%
29% Blood
Flow,
15% Sleep,
35%
Brain
Asia,
Aust,
Res,
41%
15%
20% Neuro,
10%
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Software upgrades 5 to 10% of system sales

Compumedics sells directly to end-user customers in Australia, USA and Germany and through its network of more than 50 distributors to all other parts of the world

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Operating cash, Cash and Debt – trending positively

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6
5
4
3
2
1
0
H1 FY12 H1 FY13 H1 FY14 H1 FY15 H1 FY16 H1 FY17
-1
Operating Cash Cash on hand Bank Debt
AUD m
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Core Business – Restored Net Cash Position

$m	FY12	FY13	FY14	FY15	FY16	H1 FY17
Cash	1.1	1.3	1.1	2.2	3.1	5.7
Trade receivables	8.7	8.1	8.6	9.8	11.9	10.9
Inventories	5.3	5.5	6.1	5.7	6.5	7.1
Prod. dev’t	4.0	3.5	2.9	2.7	2.4	2.4
Tax asset	0.0	0.0	0.0	0.0	0.5	0.5
PP&E	0.8	0.7	0.7	0.8	0.8	0.8
Other	0.0	0.0	0.2	0.5	0.9	0.0
Assets	19.9	19.1	19.5	21.7	26.1	27.4
Trade cred.	5.0	4.7	4.7	4.4	4.1	3.0
Borrowings	2.1	2.3	2.0	2.0	2.6	1.0
Def. payment	1.4	1.4	1.4	1.6	2.0	1.3
Other	2.1	2.2	2.3	2.5	2.8	3.1
Total Liabilities	10.7	10.7	10.4	10.4	11.5	8.4
Net Assets	9.2	8.4	9.2	11.3	14.6	19.0
Debt/Equity	11%	13%	11%	-2%	-3%	-25%

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Outlook

• Profitability and operating cash remain positive, despite sales shortfall, validating changes made to product composition (new low cost Grael devices) and the selective outsourcing of production, along with other efficiency gains

• New leadership in place in US. US sales H1 FY2017 11% below PCP. US business remains on track, with strong pipeline. New Grael platform released and now shipping. Expect improved H2

• MEG: Compumedics/Neuroscan has now been qualified as a top 2 MEG supplier candidate for more than two major USA centers, one of which is scheduled to make their decision within two to three months. Compumedics/Neuroscan are also in discussion to supply multi-center MEG systems to at least one multinational hospital consortium.

• eHealth: Pushing ahead with the commercialisation of cloud based sleep diagnostics platform – 4 sites in the USA have now signed for Nexus360, one of which is a multi-center site on the eastern seaboard.

• Guidance up-dated: Revenues: $38m - $42m, EBITDA: $4.5m - $7.5m and NPAT: $2.5m - $5.5m

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Growth Platform – Core and Step-Out

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Sales – schematic only
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FY16F FY17F FY18F FY19F FY20F
Core - Base Core - Sleep/Neuro - Mid Market Neuro - MEG Sleep - eHealth
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• Step-out - NEURO – BRAIN IMAGING – By signing the new MEG* Agreement with KRISS we can transition from a USD30k software sale to a USD4.0m complete system sale.

• Step-out - SLEEP - CLOUD GROWTH – USD10m in professional application contracts into China, Korea and Taiwan. New personal device “Somfit” – partnering novel “in-house” eHealth sleep device for the home. Potential to keep rapid mid-term EBITDA growth

• Core - SLEEP & NEURO – DIAGNOSTIC GROWTH – By adding mid-market devices we expand and lower the cost base of our product range, enabling us to lock in our premium market dominance, and boost sales in the US and China initially and then Europe, with Germany as a specific focus

• *MEG = Magnetoencephalography

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Core Business – Premium Focus

	Sleep Diagnostics	Neuro Diagnostics – Clinic	Neuro Diagnostics - Research	Brain Blood Flow Diagnostics
Global market – USD pa	250m	1,300m	20m	15m
Compumedics
market share	6%	<1%	30%	35%
(approximate)
Compumedics market position	Aust – 1 USA – 3 China - 1	Aust – 1 USA – 3 China - 1	Aust – 1 USA – 1 China – 1	Aust – 1 USA – 2 China – 1 Germany – 1
Business and product type	Capital equip – hardware and software	Capital equip – hardware and software	Capital equip – hardware and software	Capital equip – hardware and software
Annuity revenues –
~ % of total –	15%	10%	5%	5%
supplies & support

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Core Business – Adding Mid-Tier Range

Product	Used for	Bought by	Average selling price
Grael	Sleep and neurology	Hospitals, doctors and service providers	USD17,500
Somte PSG	Sleep	Hospitals, doctors and service providers	USD10,000
Siesta	Sleep and neurology	Hospitals, doctors and service providers	USD18,000
Neuvo LTM	Neurology	Hospitals, doctors and service providers	USD35,000
Synamps RT	Brain Research	Universities and teaching hospitals	USD38,000
CURRY	Brain research and neurology	Universities, teaching and regular hospitals	USD20,000

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Next Generation Growth – Core and Step-out

	Sleep Diagnostics	Neuro Diagnostics – Clinic	Neuro Diagnostics - Imaging	Brain Blood Flow Diagnostics
Next generation growth platform	Cloud based sleep diagnostic platforms for both professional and consumer applications	Long term epilepsy market penetration into US, Europe and Asia	Leverage CURRY software into full MEG solution with KRISS	Leverage existing TCD technology and patent to Traumatic Brain Injury (TBI) application
Market	Professional application > USD3bn pa	Greater than	Research only USD100m pa	Estimated cost of TBI’s in the US
potential	Consumer application > USD50bn pa	USD100m pa	Brain Imaging >USD4bn pa	alone greater than USD76bn pa
Business type	Services – fee per service	Capital equipment – bigger market	Capital equipment & Partnership – new market	Mixture of equipment and service fees

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Core Business - Growth Drivers

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Compumedics/NeuroScan LTEM innovative brain analysis software and high performance amplifiers are unrivalled world class technology

We have >20,000 systems installed worldwide. Strong reputation and brand name. Customers like buying from Compumedics.

Earnings initiatives to flow through in FY16 – FY20. Lower cost base enables addition of mid-tier.

Opportunity to significantly grow the USA business through strengthening of the management team and expansion of the sales force.

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Expansion into untapped German market

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Push into the Chinese neurology market

Ideally positioned to accelerate organic growth and value realisation

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USA – CMP is number 3 Supplier USA Clinical Sales Force Expansion More sales representatives = more revenue for both sleep and neurology

Past USD4.5m FY2016 USD6.4m to now

FY2017 USD10.0m FY2018 USD15.0m

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China - We are the number 1 Premier Supplier Compumedics Clients in China

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Sleep
Neuroscience
2
Neuroscan 28
5
Xin Jiang Helongjiang
Inner Mongolia 2 Jilin
Beijing 88 2 Liaoning
23
Ningxia Qinhuangdao
China Sales (Orders taken) – USD’s QingHai 3 HeBei 10 3 Tianjin Dalian
2 3
16
Gansu 14 12
HeNan
Shandong [Welfang ]
8.2 Shaanxi 6 Rizhao
7.6 SiChuan Jining
JiangSu
10 HuBei 5 11 Shanghai
18 2 13 14 Suzhou 49
Chongqing AnHui 34 6 Zhejiang
3.8
3.4 YunNan GuiZhou 4 Nanchang
2 2 2 Changsha 26
Fujian
GuangXi GuangDong
27 2 Xiamen
8
Shenzhen
FY12 FY13 FY14 FY15 FY16
Hong Kong
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Step out 1 - Brain Imaging: Initial sale in FY17

Opportunity	Market & Competition	Plan	Outcome
CMP’s CURRY brain	The MEG market is currently	H2 FY16 – sign LOI	CMP plans to sell
analysis software is already	estimated at about 35 systems a	with KRISS for license	1 MEG systems
the gold standard for the	year at an average selling price of	access to MEG	in FY17 @
MEG* market	USD5.5m each = US$200m/annum	hardware platform –	approx. USD3.5m
MRI** is too slow to capture	This is expected to grow about 10%	DONE✔	ea
dynamic brain activity	a year, excluding China	H1 FY17 – sign LOI	CMP expects to
needed for alzheimer's et al	It is estimated that China could	with at least first two	sell up to 5 MEG
CMP’s agreement with	double the existing market size to	customers to acquire	systems in FY18
KRISS provides access to a	about 70 units a year	CMP’s MEG device –	CMP expects to
new and superior hardware	The dominant existing player is	Progressing	double sales in
platform	Elekta, based out of Sweden,	H2 FY17 – Finalise	FY19 up to 10
Compumedics can access	followed by Yokogawa (Japanese	specifications and	MEG systems for
a complete MEG sale	market) and CTF MEG (a much	manufacture with	about USD40m
(circa USD5m each) as	smaller player)	KRISS
opposed to the USD30k		H1 FY18 – install first
software sale		CMP MEG system
	*MEG = Magnetoencephalography
	**MRI =Magnetic resonance imaging

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Step out 2 – eHealth/cloud: Initial Nexus 360 sales in US booked

eHealthMedics Operational systems have has already been developed for the cloud locked in excess based capture, transfer of $10m of and translation of medical grade forward orders sleep parameters from any webover the next enabled device. The system can three years then store, analyse and interpret (primarily in that data China) for its in a simple and actionable professional manner, reducing the need for services platform. on-site professionals. Initial contracts for Nexus 360 have been executed with customers in the US.

Compumedics are Key partners now approaching being a select group of pursued strategic include web, partners/investors telco, eHealth, to expedite the consumer process and rapidly health/ deploy the platform to electronics market. providers and device manufacturers.

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Directors & Executive Team Key Management

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NED - Mr. Alan Anderson Leading USA Attorney CMP Tenure : 11 yrs

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David Burton, Ph.D. Executive Chairman, CEO Founder, Tenure 26yrs

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Mr. David Lawson Chief Financial Officer & Company Secretary CMP Tenure 13 yrs

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Mr. Warwick Freeman Chief Technology Officer CMP Tenure 15 yrs

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Kerry Hubick, Ph.D. Trademark, Patent & General Legal Attorney CMP Tenure 7 yrs

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Mr. Christoph Witte General Managing Director Compumedics Germany GmbH CMP/DWL - Tenure 24 yrs

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Investor Summary

Core business continues to grow with lower cost base and addition of mid-tier

Compumedics remains committed to continuing to deliver superior returns to shareholders

Spin off/strategic decisions to unlock significant value, provide funds for growth and potentially capital returns to shareholders

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International sales force

expansion , neurology market opportunity and earnings improvement initiatives to continue to drive growth of core business

Brain imaging and e-Health are the next steps Moving 25+years and $100m+

in cumulative R&D to a modern platform to solve a massive and growing problems of neuro imaging in clinic and sleep disorders in the home

FY17 guidance: Sales $41m-$43m, $6.0m-$8.0m EBITDA, NPAT $4.0m-$6.0m

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Disclaimer

This presentation has been prepared by Compumedics Ltd (CMP). While the information in this presentation has been prepared in good faith and with reasonable care, no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statement, estimates, opinions or other information contained in the presentation.

This presentation may contain forward looking statement. These forward-looking statement have been made based upon CMP’s expectations and beliefs concerning future developments and their potential effect on CMP (and it’s controlled entities) and are subject to risks and uncertainty which are, in many instances, beyond CMP’s control. No assurance is given that future developments will be in accordance with CMP’s expectations. Actual results could differ materially from those expected by CMP.

This presentation does not constitute an offer to sell or a solicitation of an offer to purchase any security or financial product or service. Any such offer or solicitation shall be made only pursuant to a Product Disclosure Statement, Information Memorandum, Prospectus or other offer document relating to a financial product or service.

Past performance is not necessarily indicative of future results and no person guarantees the performance of any financial product or service or the amount or timing of any return from it. There can be no assurance that the financial product or service will achieve any targeted return, that asset allocations will be met or that the financial product or service will be able to implement its investment strategy and investment approach or achieve its investment objective.

The information contained in this presentation is not intended to be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs.

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