COMPUMEDICS LIMITED — Annual Report 2013

Oct 30, 2013

Compumedics
Limited Business
summary
–
October
2013

Agenda

• Mee;ng

opens

• Chairman's
address

• Ordinary
business

• Mee;ng
  closes

_**Strategic

Value
Roadmap**_

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Core
diagnos,c
business Sleep –
Es;mated
global
market
USD150m

Neurology –
Es;mated
global
market
USD450m Brain
Research
(Neuroscan) –
Es;mated
global
market USD15m
–
new
opportuni;es
rapidly
emerging Brain
Blood
Flow
(DWL) –
es;mated
market
USD15m, new
opportuni;es
in
Doppler
Ultrasound
Imaging Medical
Innova,on
plaBorms

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Sleep
treatment –
Es;mated
global
market
US8bn Driver
vigilance
assist –
Es;mated
global
market
US15bn

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eHealth
and
educa,on –
Es;mated
global
market

US12bn

_**What

was
achieved
in
FY2013?**_

• Refinancing of primary working capital with BIBBY Financial Services Australia Pty Ltd - $2.5m facility limit, dependent on invoices presented [February 2013]

• Additional short-term funding provided by existing shareholders of the Company - $300k [June 2013]

• Strategic partnership established with long-term China-based distributor, Beijing Bestmed – equity and loans $550k and new distribution agreement, with expected business in China for sleep and neuro diagnostic products to increase from USD1.0/1.5m to USD2.5m per annum [June 2013]

• Relocation of some manufacturing activities to Asia – component purchasing and some labour intensive activities have or are in the process of being moved to Asia, where lower unit costs will provide margin improvement [On-going]

_**What

was
achieved
in
FY2013?**_

• Continued expansion into the long-term EEG monitoring market – New key sites were won in the US and other parts of the world as the Company continues its expansion into this new market

• Asian business continues to grow – sales orders from Asia were 19% higher than the prior year, reflecting an increased focus by the Company into these emerging markets

• Revisions to main product offerings - including Siesta, Profusion PSG and Profusion EEG software.

_**What

was
achieved
in
FY2013?**_

• Profitability restored at the EBITDA line - $0.3m compared to $(0.1)m in the previous year – benefit of positive impact from sales order shipments being caught up still to come in FY2014. NPAT was $(1.5)m compared to $(2.8)m in the prior year.

• Shipped sales stable at $27.2m compared to $27.9m – benefit of shipment catch up still to come in FY2014

• Cash and debt stable – $1.2m and $2.3m respectively compared to $1.1m and $2.0m in the prior year

• Record level of sales orders - $7.3m - on hand at end of FY2013 to be cleared in FY2014 – the Company expect to clear the large sales orders on hand position during FY2014, whilst also shipping new sales orders received during the year.

_**Revenue

ComposiAon
at
≈$27m**_

**By

geographic
region**

By
product/market

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Tech.
Service,
Supply
Europe,
USA,
Items,
10%
Sleep,
31%
29%
10%
30%
Brain
Neuro,
Aust,
Asia,
Blood
9%
20%
Brain
20%
Flow,
Res,
19%
22%
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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

_**Historical

Revenues**_

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Shipped
and
invoiced
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2010
2011
2012
2013
F2014
Const
Curr
As
Reported
Forecast
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Sales
shipped
and
invoiced
in
2013
were
impacted
by
an
inability
to
ship
due
to
restricted working
capital.

_**Sales

orders
on
hand**_

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8
7
6
5
4
3
2
1
0
2009
2010
2011
2012
2013
Orders
on
hand
1.2
2.4
2.6
6.4
7.3
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With
the
working
capital/funding
issues
resolved
late
in
FY2013
it
is
expected
carry
forward sales
orders
on
hand
will
decline
to
more
normal
levels
of
$1.0m
to
$2.0m.

_**Historical

Earnings**_

NPAT

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----- Start of picture text -----

4
3
2
1
0
2010
2011
2012
2013
F2014
-­‐1
-­‐2
-­‐3
-­‐4
NPAT
NPAT
-­‐
FX
adj
Forecast
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EBITDA

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5
4
3
2
1
0
-­‐1
EBITDA
EBITDA
-­‐
FX
Adj
Forecast
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NPAT
and
EBITDA
in
FY2012
and
FY2013
were
both
adversely
impacted
by
the
inability
to
ship sales
orders
on
hand.
With
the
funding
issue
sorted
profitability
will
be
restored
in
FY2014.

_**Cash,

debt
&
operaAng
cash**_

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----- Start of picture text -----

3
2.5
2
1.5
1
0.5
0
2010
2011
2012
2013
Opera;ng
cash
Cash
Debt
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_**A

TradiAon
of
InnovaAon**_

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----- Start of picture text -----

Comperio
DQ
Summit
IP
2004
SynAmps2
2005
Somté
2003
2001 Siesta
802
Siesta
2000 2005
P
Series
1994
S
Series
1987 Somté
PSG
2006
Neuvo
LTM
SynAmpsRT
2007
2008
CURRY6
2009
Somnilink
SPAP
Grael
HD
2010
2010
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Somté
PSG
2.0 2011

_**Established

Client
Profile**_

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_**Strategic

Value
Roadmap**_

==> picture [74 x 75] intentionally omitted <==

==> picture [75 x 75] intentionally omitted <==

Core
diagnos,c
business Sleep –
Es;mated
global
market
USD150m

Neurology –
Es;mated
global
market
USD450m Brain
Research
(Neuroscan) –
Es;mated
global
market USD15m
–
new
opportuni;es
rapidly
emerging Brain
Blood
Flow
(DWL) –
es;mated
market
USD15m, new
opportuni;es
in
Doppler
Ultrasound
Imaging Medical
Innova,on
plaBorms Sleep
treatment –
Es;mated
global
market
US8bn Driver
vigilance
assist –
Es;mated
global
market
US15bn eHealth
and
educa,on –
Es;mated
global
market

US12bn

_**Growth

strategies
–
Core
business**_

• Con;nue
  ini;al
  success
  and
  expansion
  into
  key neurological
  monitoring
  markets
  with
  par;cular emphasis
  on
  Long-­‐term
  EEG
  monitoring
  (LTEM).

• • Expansion
  of
  the
  business,
  across
  all
  product
  lines,
  in Asia
  with
  par;cular
  emphasis
  on
  China
  as
  we
  look
  to maximise
  our
  commercial
  opportunity
  there
  through our
  unique
  and
  long
  established
  rela;onships.

• • Maintain
  and
  grow
  sleep
  diagnos;c
  market
  posi;on
  by con;nuing
  to
  expand
  direct
  sales
  force
  in
  US
  market across
  the
  product
  range.

• • Con;nuing
  to
  grow
  and
  expand
  our
  European business,
  with
  par;cular
  emphasis
  on
  Germany.

_**Strategic

Growth
ExecuAon_ Compumedics
Clients
in
China**

_**Earnings

improvement
acAviAes**_

• Reloca;on
  of
  some
  manufacturing
  ac;vi;es
  to lower
  cost
  regions
  –
  China
  and
  Taiwan.

• • Con;nue
  to
  drive
  component
  purchasing
  to lower
  cost
  regions
  –
  China
  and
  Taiwan.

• • Streamlining
  of
  logis;cs
  (product
  delivery)
  and service
  and
  support
  as
  the
  business
  grows.

• • Future
  near-­‐term
  product
  development
  to
  be focused
  on
  cost
  elimina;on
  in
  the
  key
  main products
  and
  selec;ve
  incremental
  feature
  gains to
  maintain
  technology
  leadership.

_**Strategic

Value
Roadmap**_

==> picture [74 x 75] intentionally omitted <==

==> picture [75 x 75] intentionally omitted <==

Core
diagnos,c
business Sleep –
Es;mated
global
market
USD150m Neurology –
Es;mated
global
market
USD450m Brain
Research
(Neuroscan) –
Es;mated
global
market USD15m
–
new
opportuni;es
rapidly
emerging Brain
Blood
Flow
(DWL) –
es;mated
market
USD15m, new
opportuni;es
in
Doppler
Ultrasound
Imaging Medical
Innova,on
plaBorms

==> picture [49 x 44] intentionally omitted <==

Sleep
treatment –
Es;mated
global
market
US8bn

==> picture [49 x 45] intentionally omitted <==

Driver
vigilance
assist –
Es;mated
global
market
US15bn

==> picture [49 x 45] intentionally omitted <==

eHealth
and
educa,on –
Es;mated
global
market

US12bn

_**Medical

InnovaAons
–
Sleep Treatment**_

• The
  sleep
  treatment
  technology
  is
  the
  most
  advanced of
  these
  Medical
  Innova;on
  technologies

• • ® ® The
  SomniLink SPAP device
  has
  been
  developed
  in collabora;on
  with
  Medigas
  Italia
  S.r.l.,
  Compumedics Italian
  distributor
  and
  also
  a
  significant
  shareholder

• • ® The
  SPAP device
  has
  been
  manufactured
  and
  sold
  to Medigas

• The
  Company
  is
  currently
  looking
  to
  commercialise
  the SPAP ® device
  into
  other
  markets
  and
  is
  significantly

• advanced
  in
  its
  FDA
  applica;on,
  so
  as
  to
  be
  able
  to
  sell the
  product
  in
  the
  USA

_**Medical

InnovaAons
–
Sleep Treatment**_

• About
  20%
  of
  the
  adult
  popula;on
  globally suffer
  from
  some
  sleep
  issue.

• The
  global
  apnoea
  devices
  market
  is es;mated
  at
  about
  USD8bn
  with
  expecta;ons it
  could
  reach
  close
  to
  $20bn
  by

• • Up
  to
  100m
  people
  globally
  suffer
  from
  sleep apnoea
  however
  80%
  or
  80m
  of
  these
  remain undiagnosed.

_**Medical

InnovaAons
–
Driver Vigilance
Assist**_

• Compumedics
  has
  unique
  sleep
  monitoring technology
  which
  has
  been
  used
  to
  research
  and develop
  proto-­‐type
  systems
  for
  monitoring
  driver drowsiness

• Fa;gue
  is
  one
  of
  the
  top
  three
  reasons
  for
  all road
  fatali;es

• Car
  manufactures
  are
  now
  installing
  inferior monitoring
  systems
  at
  price
  points
  from
  $1,000 to
  $4,500
  per
  unit

• None
  of
  these
  systems
  has
  any
  of
  the
  unique
  and patented
  features
  of
  the
  Compumedics
  system.

_**Medical

InnovaAons
–
Driver Vigilance
Assist**_

• Market
  for
  this
  technology
  is
  very
  large – conserva;vely
  es;mated
  at
  $30m
  for
  the Australian
  market
  and
  up
  to
  USD15bn
  for
  the global
  market,
  based
  on
  annual
  vehicle produc;on
  of
  some
  60m
  vehicles
  a
  year.

• • Compumedics
  owns
  patents in
  Australia,
  the US
  and
  Germany
  in
  rela;on
  to
  its
  unique technology.

_**Medical

InnovaAons
–
eHealth
and on-­‐line
educaAon**_

• On-­‐line
  educa,on
  targeted
  at
  neurology
  and specifically
  the
  Asia
  Pacific
  region –
  There
  is
  a
  growing prevalence
  of
  neurological
  disorders
  in
  the
  Asia
  region with
  a
  growing
  need
  for
  enhanced
  training
  and
  skills
  in the
  region
  to
  cope
  with
  this

• Large
  on-­‐line
  educa,onal
  markets
  -­‐ $5bn
  in
  Australia es;mated
  and
  $255bn
  globally
  across
  all
  disciplines and
  growing
  at
  23%
  pa

• Compumedics
  in
  conjunc,on
  with
  Monash
  University and
  the
  Australian
  Synchrotron
  -­‐ running
  first
  fee paying
  courses
  at
  4[th] Australian
  Cogni;ve Neuroscience
  conference
  in
  November

_**Medical

InnovaAons
–
eHealth
and on-­‐line
educaAon**_

• Tele-­‐home
  and
  tele-­‐hospital
  applica,ons
  for
  exis,ng Compumedics
  technologies
  – driven
  by
  government and
  insurers
  needs
  to
  reduce
  the
  costs
  of
  delivery health
  services
  to
  ageing
  popula;ons

• • Large
  markets
  – US
  market
  for
  exis;ng
  tele-­‐health applica;ons
  es;mated
  at
  11.6bn
  and
  growing
  at
  a compound
  growth
  rate
  of
  almost
  19%
  pa
  to USD27.3bn
  in
  2016

• Compumedics
  has
  significant
  exper,se
  in
  home monitoring
  – through
  its
  20
  year
  associa;on
  with
  the US
  Sleep
  Heart
  Health
  Study
  and
  its
  Nexus
  enterprise sojware
  for
  pa;ent
  scheduling
  and
  data
  management

Strategic
Growth
ExecuAon Capitaliza)on
Pathways

The three principal paths available to Compumedics in order to implement the strategic growth drivers are:

§ “ Do it ourselves ” – recapitalize the group and implement the action plans for the strategic growth drivers ourselves (we are already doing this within the confines of the current personnel and financial constraints of the business)

§ “ Do it with a strategic partner ” – seek out major strategic partners who can bring not only financial resources but also another level of depth to the sales and marketing capability of the group. This could involve an acquisition, merger, joint venture or other combination.

§ “ Let some one else do it ” – divest all or part of the business to a third party who is better able to deliver the strategic growth drivers if the offer price is acceptable to the existing shareholders

_**In

conclusion**_

• Core
  business –
  refocus
  on
  sales
  and
  profit growth
  as
  Asia
  manufacturing
  cost
  reduc;ons and
  clearing
  the
  sales
  order
  back-­‐log
  restore profitability
  to
  the
  Group

• Medical
  Innova,ons –
  Commercialisa;on
  of main
  breakout
  plakorms: – Sleep
  treatment

• Driver
  Vigilance
  Assist

• eHealth/online
  educa;on

Ordinary Business

• § Item 1 Financial Statements and Reports

• Item 2 Election of Director – Mr. D. Lawson

• §

• § Item 3 Adoption of Remuneration Report (nonbinding resolution)

§

• § Item 4 Appointment of Auditor

Meeting closes

Refreshments and additional questions and discussion to continue in the main reception area for those interested.

OneMedForum 2011 - San Francisco Wednesday 12 January 2011