COMPUMEDICS LIMITED - Annual Report 2013

20 1 3

==> picture [46 x 31] intentionally omitted <==

==> picture [503 x 165] intentionally omitted <==

==> picture [60 x 520] intentionally omitted <==

==> picture [38 x 481] intentionally omitted <==

==> picture [74 x 456] intentionally omitted <==

==> picture [73 x 421] intentionally omitted <==

==> picture [358 x 336] intentionally omitted <==

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

Annual Report
> Sleep Diagnostics & Treatment
> Neuro Diagnostics
> Brain Research
> Ultrasonic Blood Flow Monitoring
----- End of picture text -----

==> picture [358 x 87] intentionally omitted <==

==> picture [457 x 457] intentionally omitted <==

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

FINANCIAL SUMMARY
ALL FIGURES IN A$M UNLESS OTHERWISE STATED
Revenue for continuing operations
Earnings before interest, income tax, depreciation and amortisation (EBITDA)
Earnings before interest and income tax (EBIT)
Net operating profit after tax (NPAT)
Research and development costs as a percentage of operating revenue
Total assets
Shareholders funds
Net tangible assets per share (cents)
Weighted average number of shares (million)
Earnings per share (basic) (cents)
Earnings per share based on earnings before interest, tax, depreciation and amortisation (cents)
UNDERSTANDING THE NUMBERS
----- End of picture text -----

==> picture [141 x 842] intentionally omitted <==

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

2013 2012
27.2 27.9
0.3 (0.1)
(0.9) (1.3)
(1.5) (2.8)
16.1 16.6
19.1 19.9
8.4 9.2
0.3 0.4
167 162
(0.9) (1.75)
(0.9) (1.75)
----- End of picture text -----

� �

EXECUTIVE CHAIRMAN AND CEO’S REVIEW

==> picture [369 x 373] intentionally omitted <==

��

==> picture [596 x 71] intentionally omitted <==

A focused strategy in action ��

NASA contracts won for International Space Station and Space Shuttle flight preparation NASA chose Compumedics’ P-Series Portable Sleep Monitoring System for the 1998 Neuro-mission Space Shuttle flight preparations. Compumedics entered into

Compumedics established NASA chose Compumedics’ Dr. David Burton P-Series Portable Sleep Monitoring System for the founded Compumedics �� 1998 Neuro-mission Space �� to design and manufacture medical electronics. Prior �� Shuttle flight preparations. Compumedics entered into �� Compumedics recognised Compumedics was named Australian Exporter to Compumedics, �� co-operation with the US$5 of the Year. analysis and diagnosis billion dollar Japanese depended, in large part, upon manual recording methods, Computer-Aided Sleep Scoring system released conglomerate, Teijin for the development of the Japanese sleep market. Compumedics was awarded the Commonwealth Bank Small to Medium Innovative Manufacturer Award. which were very Dr. M.W. Johns and Compumedics developed time consuming and Dr. David Burton its Paperless EEG system in Compumedics was awarded costly to implement. released an abstract: conjunction with worldthe 1998 Governor of Victoria The sleep monitoring An improved Method P-Series and renowned EEG researchers Award for Victorian Exporter market in the USA. system developed for EEG Analysis & S-Series released and technicians including Key awards and wins of the Year. by Compumedics Computer-Aided Compumedics announced Dr Sam Berkovic and Mr Compumedics was awarded Compumedics was awarded comprises powerful Sleep Scoring. This the release of the P-Series Milosh Vosnansky of the Austin the European CE mark the 1998 Governor of computer-based system is the basis Portable Sleep Monitoring Hospital Neurology Department for Quality and Good Victoria Export Award for hardware and for Compumedics’ System with features – leading epilepsy centre in the Manufacturing Processes. Small to Medium Innovative sophisticated software current sleep including intelligent CPAP Southern Hemisphere. Manufacturer. programs which staging software control. Compumedics won eliminate thousands of that is now Compumedics was awarded a the contract to supply Compumedics was awarded pages of paper readings and countless hours of recognised throughout Compumedics released its S-Series optical erasable patent for its on-line analysis. Compumedics was awarded medical hardware for the International Space Station’s the 1998 AusIndustry Innovation Award. work by technicians, the world. disk storage sleep systems. AS3901/ISO9001 Total Quality Human Research Facility Compumedics was awarded freeing them for more Management certification (HRF) under contract the 1998 Telstra productive work. by NATA. to NASA. Innovation Award. �� 1988 1989 1990 1992 1993 1994 1996 1998 1999 2000 1987 1991 1995 1997 2001

Compumedics’ ASX listing Compumedics listed on the Australian Stock Exchange. E-series EEG/ PSG system receives FDA clearance to market in the USA.

2001

P-Series products wins Compumedics awarded CMP receives award and FDA approval Compumedics was named more recognition Compumedics’ P-Series Small Business of the Compumedics won the wins a Highly Commended Year at the Telstra and 2001 Australian Export Award at the Australian Australian Government Award for Small to Medium Engineering Excellence Small Business Awards. Manufacturers. Awards. Compumedics was awarded the 1997 Premier’s Award for Technological Innovation in the Telstra & Victorian Government Small Business Awards.

Epworth installs first Royal Prince Alfred NZ’s first Sleep Chosen for world’s P-Series products wins Compumedics awarded CMP receives Sleep Disorders Unit Hospital installation Laboratory installed largest sleep study award and FDA approval Compumedics was named more recognition Compumedics’ first sleep Compumedics sleep Compumedics installed Compumedics won the Compumedics’ P-Series Small Business of the Compumedics won the system was installed equipment was chosen New Zealand’s first fully competitive US Governmentwins a Highly Commended Year at the Telstra and 2001 Australian Export at the Epworth Hospital by the internationally computerised sleep funded contract to supply the Award at the Australian Australian Government Award for Small to Medium Sleep Disorders Unit recognised Sleep laboratory at equipment for the world’s Engineering Excellence Small Business Awards. Manufacturers. (Melbourne, Victoria). TIME magazine and the television series ‘Beyond 2000’ both featured the Epworth sleep center. Disorder Centre at the Royal Prince Alfred Hospital, Sydney. This centre, under the direction of Prof. CE Sullivan (University of Sydney) was responsible for the breakthrough Sales revenue�Green Lane Hospital.Sales split�� largest sleep study (6000 patients). The five year Sleep Heart Health Study (SHHS) was won against a field of 22 competitors, including multinationals. Compumedics supplied 40 P-Series Sleep Monitoring Systems along with 9 replay and 6 analysis Awards. Compumedics was awarded the 1997 Premier’s Award for Technological Innovation in the Telstra & Victorian Government Small Business Awards. Compumedics wonAusIndustry Innovation Award at the Telstra and Australian Government Small Business Awards. Compumedics wonAnsett Australia Business Owner Award at the the the Compumedics won the 2001 Governor of Victoria Export Award for Small to Medium Manufacturer. Compumedics won the AVCAL (Australian Venture Capital Association Limited) award for Best Early Stage Investment for 2000/2001. discovery in the systems. The equipment FDA approval Telstra and Victorian treatment of sleep selection committee was for P-Series Government Small FDA clearance for Siesta apnoea with nasal made up of sleep experts P-Series receives FDA Business Awards. Siesta Systems receives CPAP in 1981. from 11 leading University clearance to market Compumedics was FDA clearance to market Domestic $1.5m Hospitals across the USA. in the USA. awarded the 1999 in the USA. Export $0.2m Compumedics was granted Sales revenue Business Asia Best IEC 601-1 patient safety certification for its S-Series �� Australian Small Medium Business and P-Series products. Activity in Asia Award.

==> picture [60 x 35] intentionally omitted <==

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

��
��
��
��
��
----- End of picture text -----

Sales split Domestic $1.6m Export $3.7m Other $0.1m

��  �� ��  ��

==> picture [596 x 43] intentionally omitted <==

��

==> picture [44 x 55] intentionally omitted <==

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

25 YEARS
OF DIAGNOSTICS
EXCELLENCE
----- End of picture text -----

Medigas Italia Srl invests in Compumedics commercialisation of new generation sleep-efficient Sleep Products Somnilink SPAP device. received regulatory clearance in Taiwan Medigas Italia Srl (member of SIAD group Sales revenue of Companies, SIAD owned Regional Split 34% by Praxair Inc.) takes strategic stake in Compumedics.

==> picture [208 x 649] intentionally omitted <==

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

25 YEARS
OF DIAGNOSTICS
EXCELLENCE
Compumedics celebrates
�� [�] its 25 Year Silver Jubilee
Anniversary.
Somnilink SPAP receives CE
and TGA clearance. Neuvo LTM, world’s
first 512 channel
Grael receives FDA clearance. wall system is released
Compumedics wins major to market - the Ultimate
Mannhiem University Medical Long-term Monitoring
Centre contract in Germany. System.
Compumedics
Achieves a World’s
First In Brain
Monitoring -
The Yale New Haven
Medical Center has
produced brain EEG scans using the new
scans using the new
�� Compumedics [[®]]
�� NEUVO [[®]] .
Compumedics recognised This breakthrough
as one of Australia’s top 100 represents a major
Health Innovators through its enhancement in
world leading devices for sleep diagnostic capabilities
diagnostics. for evaluating patients
The updated requiring surgical
Somté PSG correction for epilepsy.
is released. Grael-HD EEG -
High-Definition EEG
is released to market.
��
��
��
��
��
� � ��
2011
2010 2012 2013
Beijing Bestmed,
Compumedics’ China-
shareholder - this injection
of funds contributes to
Compumedics further
CURRY SCAN SCAN 7 Neuroimaging
Suite is released -
Compumedics Neuroscan new business - further
releases it’s combined
strengthening the future
acquisition and signal
growth prospects in the
processing software.
Neurology market.
Compumedics introduces
direct selling in France.
Compumedics inaugural
attendance at the China
Medical Equipment Fair,
Shenzhen.
Milestone EEG
contract win
to equip
the new &
internationally
acclaimed
Royal Children’s
Hospital Melbourne
with Compumedics
Neuvo LTM.
��
��
��
� ��
----- End of picture text -----

Grael receives FDA clearance. US Office relocated to Compumedics wins major Charlotte, NC. Mannhiem University Medical Centre contract in Germany.

Compumedics acquires German based DWL Electronishe Systeme GmbH FDA approval for Summit IP Summit IP Summit IP receives FDA clearance to market in clearance to market in the USA

$200m of revenue achieved since listing. Domestic Compumedics DWL awarded Export membership to Germany’s top 100 innovative companies.

Compumedics Achieves a World’s First In Brain Monitoring - The Yale New Haven Medical Center has produced brain EEG scans using the new � Compumedics[[®]] NEUVO[[®]] . �

==> picture [294 x 373] intentionally omitted <==

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

GmbH
Domestic Compumedics DWL awarded
FDA approval for Summit IP Export membership to Germany’s top
Summit IP receives FDA clearance to market in Key distributor 100 innovative companies. Neuvo LTM is released -
the USA agreement signed the new standard in LTM
with Medigas Italia, a and epilepsy monitoring.
�� FDA approval for SynAmps2 division of Praxair, Inc., for the distribution Xegis EMG/EP/IOM
�� released -
�� SynAmps2 receives FDA clearance to market in the USA of the complete Compumedics product line. leading the way in Neurophysiology EMG/EP/IOM.
Somté receives Sales revenue Neuroscan MaglinkRT CURRY 6 released -
European clearance Somté receives CE mark �� released with CE mark approval. Latest the world’s most powerfulMulti-modal Neuroimaging
generation technology software.
for European Market
Compumedics’ Sales split for recording EEG and ERP in the MRI.
completes first
acquisition
– Neuroscan.
Sales revenue
� Domestic $4.3m
��
Export $29.5m ��
Other $0.2m
��
2002 2003 2004 2006 2007 2008 2009
2005
FDA clearance for Somté DWL division established Compumedics awarded
Somté cardio-respiratory for blood-flow Doppler the 2006 Frost & Sullivan
System receives FDA technology. Technology Leadership
clearance to market in Award.
the USA. Sales revenue Compumedics and
Compumedics awarded � chairman inducted
the Frost and Sullivan �� into the Victorian
Award for Market Manufacturing Hall
Expansion Strategy of Fame.
Sales revenue Somté PSG is released -
�� the simplest and most convenient way to meet convenient way to meet
requirements for recording
full PSG, in both attended
and unattended settings.
----- End of picture text -----

Beijing Bestmed, Compumedics’ Chinabased distributor invests $0.5, becoming a top 10 shareholder - this injection of funds contributes to Compumedics further growth in the China region.

FDA clearance for Somté DWL division established Compumedics awarded Grael is released - Somté cardio-respiratory for blood-flow Doppler the 2006 Frost & Sullivan Compumedics released the System receives FDA technology. Technology Leadership world’s first High Definition clearance to market in Award. and premier PSG/EEG, Grael the USA. Sales revenue Compumedics and Grael wins Powerhouse Compumedics awarded � chairman inducted Museum Award & finalist the Frost and Sullivan �� into the Victorian at the Australian International Award for Market Manufacturing Hall Design Award. Expansion Strategy of Fame.

CURRY SCAN SCAN 7 Neuroimaging Secured significant US Suite is released - LTEM site representing a combined US $1m of Compumedics Neuroscan new business - further releases it’s combined strengthening the future acquisition and signal growth prospects in the processing software. Neurology market.

Sales revenue Somté PSG is released - �� �� the simplest and most convenient way to meet convenient way to meet requirements for recording full PSG, in both attended and unattended settings. Profusion PSG3 is released - the next generation world class sleep �� diagnostics software. �� Somté PSG & Profusion Profusion EEG4 is released - �� PSG3 receive CE mark The next generation world �� �� class clinical and LTM �� �� software package.

Compumedics introduces direct selling in Germany.

University Medical Centre in Freiburg chooses Neuvo LTM EEG ahead of all major competitors.

�� Somnilink SPAP debuts

�� in Australia. Compumedics DWL wins Innovation Grant. Record profits

� ��

==> picture [395 x 77] intentionally omitted <==

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

Chairman’s address
----- End of picture text -----

==> picture [202 x 128] intentionally omitted <==

Dear Compumedics investors,

On behalf of the Board, management and Compumedics team I present to you the results contained within the 2013 Annual Report.

A number of key milestones and initiatives were successfully achieved during the year including the finalization of a refinancing program, ongoing strengthening of our global sales force, continued structural reforms as we transition our operations to counter the persistent impact of the high Australian dollar, and a number of Medical Innovation commercialization and partnering initiatives, as outlined in the following sections.

FINANCE

I am pleased to announce that the Company finalised its major refinancing milestones in early June 2013 after several delays. Importantly, the Company also almost halved its trading loss for the year ended 30 June 2013 to $1.5m from $2.8m in the prior year. This was despite shipping only $27.2m of the $34.5m of sales orders it potentially could have shipped. The limited shipments for the year were the direct result of only getting the financing milestones completed in June 2013.

As a consequence, the Company was holding record sales-orders on-hand of approximately $7.3m and expects to ship the majority of these sales orders in the first half of FY2014. With shipments of new sales orders expected to be taken in the first half of FY2014 profitability should be restored in FY2014.

The Company achievements during the course of the 2013 financial year were:

EBITDA was a $0.3m profit compared to a loss of $(0.1)m in the prior year, as a result of on-going efficiency gains in manufacturing, despite the constrained working capital environment for most of the year;
Shipped and invoiced sales were stable at $27.2m compared to $27.9m for the previous year;
Cash on hand and debt levels were also stable during the period at $1.2m and $2.3m respectively compared to $1.1m and $2.0m in FY2012;
The Company had record sales orders of $7.3m on-hand at 30 June 2013;
Sales orders taken in Asia were 19% higher than the prior year, with continuing strong growth out of China driving most of this overall sales-order growth.

OPERATIONS

Despite the impact of the persistently high Australian dollar and on-going challenging market conditions, Compumedics maintained its research and development (R&D) investment at 16%, or more than twice the industry standard. Consequently, the Company has retained its technological leadership, with a strong pipeline of new and exciting upcoming product releases and upgrades.

In order to enable the Company to operate profitably with a persistently high Australian dollar, the Company has invested in a number of structural reforms designed to restore and then ensure continued growth in profits. These structural reforms include retooling and relocation of select manufacturing functions to more competitive manufacturing regions, such as Taiwan and other parts of Asia. The Company has also commenced designing a range of more competitive neurology and sleep products, incorporating premium performance but enabling the Company to access a larger portion of the global market through reduced cost of manufacture.

While these structural transforms have demanded significant investment in the short term, in terms of personnel, engineering and components, they will result in substantial savings and elevated shareholder returns in the medium terms through improved margins.

STRENGTHENED SALES AND MARKETING

As previously noted, Compumedics has entered the long term electroencephalography monitoring (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 $200m in the US and approximately US $400m globally. Compumedics is well-positioned to capture a 5% share of this global market over the next few years. Compumedics has achieved approximately US $4m in annual incremental revenues from this market over the last two years and will look to expand this through to the initial target of a 5% global market share.

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 neuro-diagnostics market to leverage its expertise in highend 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 world-wide and as such 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 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.

The Company will continue its development of the sleep-treatment market with its partner in Italy over the next twelve months and concurrently ramp up its commercialisation opportunities here in Australia and Asia.

BREAKOUT MEDICAL INNOVATIONS

Compumedics Medical Innovation (CMI) division has continued to develop a number of breakout technology platforms. Each of these CMI platforms incorporates a folio of patents, complements Compumedics’ core business, presents unique and significant product differentiation, and has been independently validated, as outlined in the subsequent sections.

SPAP[®] and Biomask Sleep Treatment: Sleep disorders, particularly obstructive sleep apnoea or cessation of breathing, are a major health issue world-wide. About 20% of the adult population have sleepdisordered breathing. Co-morbidities of SDB are linked to some of the most significant health problems including stroke, hypertension, congestive heart failure, diabetes and obesity. Moreover, it has been found that even amongst CPAP treated patients, up to 12% of this treated group still suffer residual excessive sleepiness (RES). Hence, the need for improved SDB systems has never been greater. The worldwide apnoea devices market in 2011 was valued at US $7.96 billion, with expectations that it will reach US $19.72 billion by the year 2017 (marketsandmarkets 2011). While over 100 million people may suffer from sleep apnoea 80% of these people remain undiagnosed (marketsandmarkets 2011). Non-invasive Ventilator (NIV) market continues to surge as demands for home care ventilators hit an all-time high, driven by a rising and aging population and growing rates of chronic obstructive pulmonary disease

(COPD). In terms of technological trends, intelligent PAP devices such as adaptive servo ventilation (ASV), Synchronized Intermittent Mandatory Ventilation (SIMV) and Proportional Assist Ventilation (PAV), Neural Control of Ventilatory Assist (NAVA), are becoming more popular, and patterns of care are tending to shift towards the home versus the traditional clinic setting (marketstrat 2010).

The Opportunity: The current range of SPAP[®] systems will soon be transitioning towards commercialisation phases as initial trials, evaluations and validation studies continue to demonstrate successful outcomes. In a recent double-blinded, randomised cross-over trial comparing and contrasting SPAP[®] with Resmed’s most advanced systems, “The SPAP was found to be non-inferior to the S8 on all measures. Both as treated and intention to treat showed that apnoea hypopnoea index (AHI) and � wake after sleep onset (WASO) were significantly reduced and sleep- � efficiency (SE) significantly increased on the SPAP as compared to the S8.”

The Compumedics SPAP[®] technology is the culmination of an extensive R&D program underpinned by 25 years of Compumedics experience in developing world renowned sleep, arousal, respiratory, artifact and neurological analysis software. The SPAP[®] system is supported by a folio of worldwide patents.

Driver Vigilance Assist: Compumedics expertise in sleep monitoring technology has been used to research and develop prototype systems for monitoring driver drowsiness. Research projects in collaboration with Australian universities has shown that combining measurements of eye movements, body movements and EEG parameters of a driver provide the best estimate of driver drowsiness.

The Opportunity: Car manufacturers are offering driver vigilance systems on their new high-end models for prices ranging from $1000 to $4600, representing an Australian market of at least $30 million per annum (PA) based on a small range of new passenger vehicles. The global market applicable to a small range of vehicles is more than US $15 billion PA. None of the existing systems include the features covered by Compumedics’ patents. Current systems may be relatively cumbersome, requiring glasses or other assists to monitor driver drowsiness, compared to the simple Compumedics system which, subject to end user sophistication and price requirements, can be configured to use various combinations of sensors in the steering wheel and seat, and video cameras combined with vehicle data outputs. Compumedics systems are suitable for retro-fitting into passenger vehicles, truck fleets, busses, or any other type of vehicle, once the required parameters are determined. Compumedics owns patents in the USA, Australia, and Germany, which cover the features of its driver drowsiness system. The CMI Driver Vigilance Assist is being offered to vehicle manufacturers as well as after-market or vehicle parts manufacturers.

Online Educational Services: The online education market is growing globally at a rate of 23% per annum, and in Australia at a rate of 19% per annum. This translates to an expected US $255 billion global market in 2017 and by 2013 in Australia alone an AU $5 billion market employing 19,000 Australians. The World Health Organisation report highlighted the rapidly expanding neurology disorders market (US $12 billion PA), and particularly noted the growing prevalence of neurology disorders in the Asia Pacific region and the need for enhanced training and skills to manage this major public healthcare problem.

In terms of neurology markets, Compumedics/Neuroscan provide world leading clinical and research products, along with an extensive array of educational programs. Compumedics has exported about AU $500 million of products from its Abbotsford factory. Its CURRY[®] brain source reconstruction software is known to be the best for neuroscience research laboratories. Many of the research organisations in US and European centres of excellence that will undertake the European brain simulation and US BRAIN project use Neuroscan.

The Opportunity: A consortium, comprising of Compumedics Limited as the industry partner and a number of Victorian research institutions that have exceptional expertise and capabilities is being formed to exploit the burgeoning market opportunities in neuroscience and online education, with a focus on Asia/Pacific delivery. The consortium will comprise of Compumedics Limited with its intellectual property in the CURRY[®] program. Academic partners include the heads of the Centre for Biomedical Imaging at Monash University and Neurosciences Division at St Vincent’s Hospital with their expertise in the development and delivery of online education and, in particular, neuroscience education.

In one example of these online educational initiatives, Compumedics is presenting in cooperation with the Monash University’s Monash Biomedical Imaging, the 4th Australasian Cognitive Neuroscience Conference 2013 and the Australian Synchrotron (the largest stand-alone piece of infrastructure in the southern hemisphere) educational courses and Asia Pacific webinars on Methods in Neuroscience later this year, in November and December, 2013.

Mobile Health Services Platforms: The global telehome and telehospital market was valued at US $11.6 billion in 2011, with an expected rise to US $27.3 billion in 2016, representing a compound annual growth rate of (CAGR) over a 5 year period of 18.6 percent (BCC Research). The global focus to reduce healthcare costs by deploying telemedicine and yield significant savings is expected to continue (Monegain,B; 2012 healthcareitnews). The potential for mobile health services provider market is obviously much larger due to the broader population relevance. In 1995 Compumedics was awarded, against the field of the world’s 22 leading sleep companies, the contract to design and supply the mobile home monitoring software and hardware platforms for the US NIH Government funded US Sleep Heart Health Study (SHHS). The SHHS is the world’s first and largest of its kind sleep study, with over 8,000 participants scheduled by 2008. Today these SHHS outcomes have been deployed as part of a standardised polysomnography database.

The Opportunity: Compumedics’ mobile home monitoring experience, technology and products combined with their enterprise software solutions (Nexus), ideally position the Company to work with commercialisation partners in order to service the emergent mobile and telehealth market sectors.

Commercialization partners, licensing and other arrangements are being actively sought in order to unlock the value and exploit the commercial value of these SPAP[®] , Driver Vigilance Assist, Online Educational Services and Mobile Health Services projects.

ACKNOWLEDGEMENTS

On behalf of the Board, management, employees and myself personally, we extend our gratitude and best wishes to Prof Graham Mitchell, who retires from the Compumedics board at this year’s AGM.

We proudly welcome Bestmed, our long-time Chinese clinical sleep and neurology distributor, as a major Compumedics shareholder, following their recent investment into the Company.

I wish to extend special thanks to all our employees, contractors, suppliers and other business partners for their dedicated support and loyalty.

SUMMARY

Despite the challenges, the Company has stayed the course and continued to execute upon its strategy, to produce the best of class high quality, innovative, medical products and expand our business through a focus on sales and marketing and a strong R&D investment. Additionally, key initiatives, such as our structural reforms and medical innovations, are now gaining traction, as we continue to focus on strengthening our Company and building shareholder values.

This is a great Company and we remain confident the operational initiatives currently being undertaken will restore profitability in the short-term, allowing our very positive prospects for the medium and long-term to be realised. In particular, the demand for innovative healthcare solutions is underpinned by an ever-increasing aged population, coupled with the growing incidence and awareness of neurology and sleep disorders.

I thank you all for your continued support and look forward to sharing with you a number of special milestones and business updates as Compumedics forges ahead.

Yours sincerely,

==> picture [73 x 29] intentionally omitted <==

Dr. David Burton, Ph.D. Executive Chairman and Chief Executive Officer Compumedics Limited

OUR OBJECTIVES FOR THE NEXT YEAR

� �

The Company has delivered a significantly smaller loss than the prior year on similar levels of sales, can you please explain this?

It is pleasing to note the Company reduced its after tax loss to $1.5m for the year ended 30th June 2013 from $2.8m in the prior year. This was largely a result of a once-off write down in the tax assets of the Company in FY2012, which was not repeated in the current financial year.

That being said the Company also improved margins by about 2% reflecting some early positive gains from some of the initiatives the Company has implemented over the current financial year, particularly as it relates to offshore sourcing of components. The Company expects these gains to continue in the current FY2014 financial year as more offshore purchasing is implemented and some selected manufacturing activities are relocated to Asia.

The Company will gain further from the current depreciation of the dollar if it holds at current levels.

The Company anticipates being able to further improve efficiencies across its operations as it begins to reduce the backlog of sales-orders it has been carrying for the best part of 12 months now.

You have mentioned the backlog of sales orders and have recently referred in notices to the Australian Stock Exchange of the completion of some refinancing milestones. Can you please explain the impact of the achievement of these milestones?

Whilst it was quite frustrating the achievement of the refinancing milestones took as long as they did to achieve it is very pleasing to have completed these during June of this year.

Unfortunately given the lead times with purchasing and manufacture the injection of cash into the business had no real impact on the results for the year ended 30 June 2013.

That being said, the real impact will be in the first half of the current 2014 financial year as production allows for a significant uplift in shipped and invoiced sales orders, which should restore the business to profitability during the 2014 financial year. The Company was carrying $7.3m of sales-orders at 30th June 2013, which should ship in the first half of FY2014 together with new sales orders received in the current six-month window.

Is the Company satisfied it has done enough to ensure it can maintain and enhance the growth, so as to propel the business towards sustained earnings and earnings growth?

Running any business is never easy particularly when you are determined to maintain the Company as an Australia-based manufacturer of elaborately transformed manufactured goods. With that being said, on the basis the Company can clear the sale-orders on hand from a running rate of $6m to $7m, back to about $1.5m then the business, on the basis sales-orders continue to grow, will not only return to profitability but should, in fact, grow profits over time.

The Company has a significant competitive advantage over its main rivals in the neuro-diagnostic market at the present time based on the development work done over many years that has lead to the current product offering. The Company fully intends to maximise the commercial opportunity this presents. Whether the Company can fully exploit this opportunity alone or is better positioned to do so with a strategic partner or indeed in the ownership of another party remains to be seen. At this point in time the Company continues to access all these options, whilst it concurrently simply gets on with making the opportunity a reality and having that flow through consistently in the numbers the Company presents to the market.

==> picture [146 x 424] intentionally omitted <==

==> picture [596 x 71] intentionally omitted <==

The Business of Compumedics

==> picture [338 x 318] intentionally omitted <==

��

Description of the market:

The global Sleep Diagnostics industry is comprised of diagnostic and therapeutic technologies and medicines. Compumedics’ core business lies in the design and manufacture of technologies for the diagnosis of sleep disorders – a market estimated to be worth AUD$250 million worldwide and growing.

Where we compete:

Asia 14% Europe 15% USA 56% Australia/NZ 15% (Total Sales)

Competitive Advantages:

1 Innovative strength
2 Active involvement in sleep science globally

Current Market Share:

6[%]

Key drivers:

To logically continue to expand our US and European sales and support infrastructure and to evolve the business to provide complete sleep medical solutions.

3 Market placement and momentum

��

Description of the market:

Global Brain Research is the study of the brain’s functionality, using Quantitative EEG (QEEG) methods to supplement traditional EEG findings. With the advent of high speed digital information processing and statistical analysis, QEEGs extract and quantify brain electrical activity to address aspects of EEGs that cannot be appreciated visually.

Where we compete:

Asia 27% Europe 23% USA 40% Australia/NZ 11% (Total Sales)

Competitive Advantages:

1 Superior patented technology 2 Uncompromised system design 3 Unmatched innovation

Current Market Share:

28[%]

Key drivers:

The key driver for growth in brain research will be to maintain Neuroscan’s preeminent technological lead and to back this by expanding the sales and support infrastructure to harness this expanding market opportunity.

� ��

==> picture [596 x 43] intentionally omitted <==

��

Description of the market:

Global Neurodiagnostics is the study of electrical activity in the brain, spinal cord, nerves and muscles for the diagnosis and monitoring of neurological based diseases. Tests may be performed in hospital outpatient departments, neurophysiology labs, operating theatres, intensive care units and private practice.

Where we compete:

Asia 1% Europe 70% USA 13% Australia/NZ 16% (Total Sales)

Competitive Advantages:

1 Complete range from clinical to research technologies
2 Uncompromised system design
3 Highest industry quality standards

Current Market Share: less than 1%

Key drivers:

The key drivers for achieving growth in this market are to have technologically superior products that differentiate Compumedics from the existing competition. With the current products being complemented by a completely new long-term monitoring device in 2010, this will be achieved.

��

Description of the market:

The Neuromedical Supplies market comprises sleep consumables, brain research consumables and neurodiagnostic consumables. Typically, items sold in these markets comprise electrodes, sensors, head caps, gels, respiratory bands and the like. Items replacement cycles range from disposable to replacing once every six months.

Where we compete:

Asia 11% Europe 10% USA 51% Australia/NZ 28 % (Total Sales)

Competitive Advantages:

1 Existing installed base
2 Proprietary products
3 Growing distribution network

1%

Current Market Share:

Key drivers:

The key drivers to growth in this market are marketing initiatives to increase our brand awareness followed by on time delivery and product quality and consistency.

��

Description of the market:

The Doppler Sonography technique utilises sound frequencies to measure the blood flow conditions in vessels and evaluate haemodynamics by using highquality diagnostic and monitoring systems.

DWL Doppler systems are used in a wide range of specialist branches of medicine including neurology, neurosurgery, cardio- and vascular surgery, anesthesia, intensive treatment, internal medicine, angiology and radiology.

The products are purchased by private practices and clinics, hospitals (both public and private), and by major universities, national research institutes and corporate research laboratories around the world.

Where we compete:

Asia 36% Europe 52% USA 10% Australia/NZ 2% (Total Sales)

Competitive Advantages:

1 Full Digital Doppler Technology
2 Bilateral Doppler
3 Multi-Range Doppler Technology
4 Physiological Tests
5 Emboli Differentiation & Multi-Frequency probes
6 Highest Doppler sensitivity
7 Best signal to noise ratio
8 Reference gates
9 High and low temperature endurance systems 10 Space endurance systems

Current Market Share: less than

35%

Key drivers:

Digital Doppler Technology
New application areas for the use of TCD
Expanding market opportunities by new Health Care Regulations for the use of TCD
Expanding Sales and Support Infrastructure

==> picture [596 x 71] intentionally omitted <==

Clients of Compumedics

��

==> picture [192 x 40] intentionally omitted <==

==> picture [192 x 204] intentionally omitted <==

Products provided

Key Clients

Grael[®] – the world’s first High Definition PSG/EEG
Austin Repatriation & General Hospital (Aust)
Siesta[®] PSG – the ultimate in wireless Sleep recording systems
Monash Medical Centre (Aust)
Royal Prince Alfred Hospital (Aust)
Somté[®] PSG – unique holter style full PSG system
Sir Charles Gairdner Hospital (Aust)
Somté[®] – unique holter style cardio-respiratory system
Royal Children’s Hospital (Aust)
Minnesota Regional Sleep Disorder Center (USA)
Profusion PSG™ – the next generation world class sleep diagnostics software
University of Michigan Medical Center (USA)
Yale Medical Center (USA)
Profusion Nexus™– laboratory management system
Carolina Healthcare System (USA)
E-Series™ EEG/PSG – network ready laboratory and portable Sleep system
Carolina Sleep Services (USA)
Safiro[®] PSG – ideal for ambulatory applications in sleep

==> picture [141 x 127] intentionally omitted <==

==> picture [113 x 104] intentionally omitted <==

==> picture [89 x 96] intentionally omitted <==

Compumedics Greal[®] -HD Compumedics Siesta[®] Compumedics Somté[® ] PSG

��

Products Provided

– EZ-Dop[® ]

Compact design. High performance.
Multi-Dop[®] Pro
Flexible. Portable. And always at the ready.

==> picture [205 x 240] intentionally omitted <==

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

��
��
��
----- End of picture text -----

Doppler-Box[TM] X
A new Generation.
Multi-Dop[®] T digital
Compact. And extremely versatile.
Multi-Dop[®] X digital
A state-of-the-art all-in system.
Multi-Dop[®] X digital with Color Doppler Imaging Module
Two Methods - One Solution.

Do ppler-Box[TM] X

DWL[®] Atlas of Doppler Sonography Doppler sonography with its ability to measure flow velocity in blood vessels provides a perfect understanding of the hemodynamic situation under normal and pathological conditions. The great number of applications resulting from this ability touch upon a wide spectrum of medical and technical knowledge.

With the DWL[®] Atlas of Doppler Sonography it has been created a reference work presenting a wealth of information about Doppler sonography in pictures, videos, and not least, research papers.

==> picture [183 x 113] intentionally omitted <==

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

EZ-D op [®]
----- End of picture text -----

��

==> picture [596 x 43] intentionally omitted <==

��

��
��
��
��
��
��

Products Provided

Key Clients

Neuvo[®] LTM – the new standard in
Flinders Medical Centre (Aust)
LTM & epilepsy monitoring
Austin Repatriation & General Hospital (Aust)
Grael[®] EEG – high-definition clinical EEG system
St. Vincent’s Hospital (Aust)
E-Series™EEG – network-ready laboratory and portable EEG solution
Royal Children’s Hospital (Aust)
University of Melbourne (Aust)
Safiro[®] EEG – a perfect solution for ambulatory applications
University of Sydney (Aust)
Swinburne Centre for Applied Neuroscience (Aust)
Siesta[®] EEG – the ultimate in wireless capabilities in EEG
Yale New Haven Medical Center (USA)
University of South Alabama (USA)
SynAmpsRT™ – world’s most powerful and advanced amplifier
Georgia Health Sciences University Medical Center (USA)
CURRY[® ] SCAN 7 Neuroimaging Suite - for signal acquiring, processing and source and image analysis
University of Chicago (USA)
Stanford University School of Medicine (USA)
Oxford University (UK)
MagLinkRT™ system for EEG recording in the fMRI environment
Tokyo University (Japan)

==> picture [80 x 224] intentionally omitted <==

Peking University (China)
Stim™ audio visual stimuli presentation software

==> picture [126 x 126] intentionally omitted <==

==> picture [35 x 142] intentionally omitted <==

Compumedics Compumedics CURRY[®] SCAN 7 Neuvo[®] Neuroimaging Suite 512 Channel

Compumedics Grael[®] -HD EEG

�� [�] ��

��

==> picture [35 x 172] intentionally omitted <==

Products provided

Our comprehensive range of products produced for this market are:

Airflow Sensor
Chest Sensor
Electrodes
EMG Needles
Leads
Snoring Monitor

Key Clients

Winmar Diagnostics (USA)
Maine Medical Center (USA)
Providence Medical Center (USA)
Landauer Medical (USA)

==> picture [35 x 172] intentionally omitted <==

==> picture [596 x 71] intentionally omitted <==

Sleep Diagnostics & Treatment

==> picture [59 x 41] intentionally omitted <==

==> picture [49 x 32] intentionally omitted <==

Compumedics was founded with the establishment of computerised sleep diagnostics and today sleep deprivation is recognised as one of the most serious modern day health epidemics. Sleep disorders such as apnoea have been implicated as a leading causation of two of today’s principal causes of death being cardiac arrest and stroke.

��

��

What is a Sleep Disorder?

��

How are Sleep Disorders Diagnosed?

��[�] ��

��

==> picture [596 x 43] intentionally omitted <==

==> picture [146 x 217] intentionally omitted <==

��[��] ��

==> picture [177 x 160] intentionally omitted <==

��[�] ��

How Common are Sleep Disorders?

��

� �� ��[�] ��[�] ��

��

Links to Other Diseases

��

==> picture [56 x 32] intentionally omitted <==

==> picture [18 x 7] intentionally omitted <==

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

AUDm
----- End of picture text -----

==> picture [596 x 71] intentionally omitted <==

Neuro Diagnostics (including Brain Research)

==> picture [40 x 28] intentionally omitted <==

==> picture [12 x 35] intentionally omitted <==

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

TM
TM
----- End of picture text -----

Compumedics through the acquisition of the Neuroscan business in 2002 expanded its business to brain research and neurological diagnostics. Both markets are highly complementary to Compumedics sleep business. Compumedics has focused on leveraging Neuroscan’s high end brain research technology to a more clinical application and the outcome of this is the recently released Neuvo[®] long term monitoring device.

��

==> picture [382 x 466] intentionally omitted <==

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

��
��
��
��
��
��
----- End of picture text -----

��

What is clinical Neurodiagnostics?

��

==> picture [596 x 43] intentionally omitted <==

��

What is brain research?

��

==> picture [187 x 209] intentionally omitted <==

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

s?
��
��
��
��
��
��
��
----- End of picture text -----

==> picture [57 x 181] intentionally omitted <==

Why is this important to Compumedic s?

�� �� �� �� �� �� �� �� �� �� �� �� �� �� ��

��  �� ��  ��

==> picture [114 x 114] intentionally omitted <==

==> picture [97 x 34] intentionally omitted <==

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

��
��
��
��
----- End of picture text -----

��

�� �� �� �� �� ��

==> picture [53 x 15] intentionally omitted <==

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

9.2
8.6
----- End of picture text -----

==> picture [58 x 45] intentionally omitted <==

==> picture [18 x 6] intentionally omitted <==

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

AUDm
----- End of picture text -----

==> picture [596 x 71] intentionally omitted <==

==> picture [5 x 345] intentionally omitted <==

Ultrasonic Blood Flow Monitoring

==> picture [58 x 40] intentionally omitted <==

==> picture [3 x 2] intentionally omitted <==

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

TM
----- End of picture text -----

To grow the business by innovations and developments in technology and products and by capitalising on opportunities in application fields for practicable routine Doppler Sonography, Neuro-monitoring and Neuro-protection and into stroke treatment opportunities.

==> picture [366 x 488] intentionally omitted <==

==> picture [52 x 8] intentionally omitted <==

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

��
----- End of picture text -----

What is Doppler Sonography?

��

Transcranial �� extracranial �� peripheral �� microvascular �� continuous wave �� pulsed wave ��

��

==> picture [596 x 43] intentionally omitted <==

==> picture [167 x 159] intentionally omitted <==

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

��
��
��
��
----- End of picture text -----

��[��] � �� �� �� ��

��  ��

==> picture [152 x 125] intentionally omitted <==

Man y different applications

Different kinds of Doppler Sonography

��

Transcranial Doppler Sonography

��

Extracranial Doppler Sonography

��

��
��

�� ��

��

Peripheral Doppler Sonography

��

��

��
��
��

==> picture [98 x 54] intentionally omitted <==

��

��
��
��

Microvascular Doppler Sonography

��

��

��

��

��
��
��

��

��
��
��
��

==> picture [596 x 71] intentionally omitted <==

NeuroMedical Supplies

==> picture [44 x 30] intentionally omitted <==

Expand this business segment into a leading provider of a comprehensive range of consumable items to serve not only our installed customer base but the entire sleep and neurodiagnostics industry.

��

�� �� �� �� ��

==> picture [105 x 280] intentionally omitted <==

What is NeuroMedical Supplies?

��

==> picture [596 x 43] intentionally omitted <==

==> picture [264 x 100] intentionally omitted <==

==> picture [106 x 25] intentionally omitted <==

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

��
��
��
----- End of picture text -----

==> picture [93 x 75] intentionally omitted <==

��

==> picture [77 x 92] intentionally omitted <==

��

��[��] �� [�] ��

��

==> picture [196 x 137] intentionally omitted <==

==> picture [150 x 135] intentionally omitted <==

==> picture [157 x 133] intentionally omitted <==

Dr. David Burton, Ph.D. Executive Chairman, CEO

Mr Alan Anderson Non-Executive Director

Professor Graham Mitchell AO Non-Executive Director

Mr Anderson, 57, is a leading American attorney in the areas of commercial litigation, intellectual property and computer law. He has represented Compumedics for all legal matters in the USA since late 1998.

Professor Mitchell, 72, is recognised as one of Australia’s leading biological scientists. His expertise extends over a wide range of science and technology fields. He has a detailed knowledge of the academia - industry interface, has authored more than 350 publications, and received numerous awards for scientific achievement. In 1993, Professor Mitchell was appointed an Officer of the Order of Australia for services to science. Professor Mitchell is a principal of Foursight Associates Pty Ltd., and NonExecutive Director of Antisense Therapeutics Limited, Avipap Pty Ltd., Adelaide Research and Innovation Pty Ltd., and AVS Pty Ltd. He acts as a principal adviser on innovation to the Victorian, Tasmanian, Northern Territory and Commonwealth Governments. He is joint Chief Scientist for the Victorian Government Department of Primary Industries and Department of Sustainability and Environment.

��

Mr Anderson completed his Bachelor of Arts with Honours (Political Science) at Coe College. He also holds a Master of Business Administration with Distinction, a Doctor in Law with Honours from Cornell University, and a Certificate in International Business and Commercial Law from the McGeorge School of Law (University of the Pacific).

��

==> picture [176 x 141] intentionally omitted <==

==> picture [174 x 140] intentionally omitted <==

==> picture [193 x 141] intentionally omitted <==

==> picture [545 x 33] intentionally omitted <==

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

Dr. David Burton, Ph.D. David Lawson Warwick Freeman ��
Executive Chairman, CEO Chief Financial Officer Chief Technology Officer ��
& Company Secretary
----- End of picture text -----

==> picture [166 x 142] intentionally omitted <==

==> picture [190 x 145] intentionally omitted <==

==> picture [304 x 32] intentionally omitted <==

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

Kerry Hubick Christoph Witte
Trademark, Patent General Managing Director
& General Legal Attorney DWL Compumedics Germany GmbH
----- End of picture text -----

20 1 3

==> picture [425 x 27] intentionally omitted <==

==> picture [596 x 159] intentionally omitted <==

==> picture [36 x 421] intentionally omitted <==

==> picture [396 x 336] intentionally omitted <==

==> picture [396 x 87] intentionally omitted <==

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

��
AG045-01
www.compumedics.com
----- End of picture text -----

��

AI assistant

COMPUMEDICS LIMITED — Annual Report 2013

64672_rns_2013-09-29_c6c8357a-f5a9-401b-88a4-274503bcafff.pdf

EXECUTIVE CHAIRMAN AND CEO’S REVIEW

�������������������������������������������� ������������������������������������������

2001

Dear Compumedics investors,

FINANCE

OPERATIONS

STRENGTHENED SALES AND MARKETING

BREAKOUT MEDICAL INNOVATIONS

ACKNOWLEDGEMENTS

SUMMARY

The Business of Compumedics

������������� ��� �������������� �

Description of the market:

Where we compete:

Competitive Advantages:

Key drivers:

������������� ���������������

Description of the market:

Where we compete:

Competitive Advantages:

Key drivers:

������� ����������������� ������

Description of the market:

Where we compete:

Competitive Advantages:

Key drivers:

������� ������������� �� ����������� ��

Description of the market:

Where we compete:

1%

Current Market Share:

Key drivers:

��������������� �����������������

Description of the market:

Where we compete:

Competitive Advantages:

35%

Key drivers:

Clients of Compumedics

Products provided

Key Clients

Products Provided

����������������� ��������������������������

����������

Products Provided

Key Clients

��������������� ����[�] ��

�������������� ��������������������

Products provided

Key Clients

Sleep Diagnostics & Treatment

What is a Sleep Disorder?

How are Sleep Disorders Diagnosed?

How Common are Sleep Disorders?

Links to Other Diseases

Neuro Diagnostics (including Brain Research)

What is clinical Neurodiagnostics?

What is brain research?

Why is this important to Compumedic s?

Ultrasonic Blood Flow Monitoring

What is Doppler Sonography?

Man y different applications

Different kinds of Doppler Sonography

Transcranial Doppler Sonography

Extracranial Doppler Sonography

Peripheral Doppler Sonography

Microvascular Doppler Sonography

NeuroMedical Supplies

What is NeuroMedical Supplies?

���� �� ����

����� �����

�������������������

Dr. David Burton, Ph.D. Executive Chairman, CEO

Mr Alan Anderson Non-Executive Director

Professor Graham Mitchell AO Non-Executive Director

������������������

More from COMPUMEDICS LIMITED

COMPUMEDICS LIMITED Annual Report 2013

��

��

��

��

��

��

��

��

�� [�] ��

��

��

��

��

��