COMPUMEDICS LIMITED — Investor Presentation 2014

Oct 29, 2014

Compumedics
Limited Corporate
Presenta2on
–
September
2014

Agenda

• Mee2ng

opens

• Chairman’s
address

• Ordinary
  business

• Mee2ng
  closes

_**Who

is
Compumedics?**_

• Compumedics is a leading global, innovative developer and manufacturer of medical devices for:

• • Diagnosing sleep disorders

• Monitoring neurological disorders including long-term epilepsy monitoring (LTEM)

• Highly sophisticated brain research

• Ultrasonic monitoring of blood flow through the brain (Trans cranial Doppler [TCD])

• Compumedics is a technological leader in its chosen markets:

• 1 Australia sleep & neuro diagnostics device supplier

• 1Japan sleep diagnostics device supplier

• 1 China sleep diagnostic device supplier to China’s premier facilities & #1 TCD device supplier

• 3 USA sleep diagnostic device supplier and emerging #3 supplier for neurological monitoring devices

• Compumedics has a rich intellectual property portfolio

• Compumedics Medical Innovations division focuses on complimentary earlyphase developments in sleep treatment, driver fatigue and eHealth solutions

• Compumedics was listed on the Australian Stock Exchange, December 21, 2000.

Directors and Executive Team Key

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Management
David
Burton,
Ph.D.
Execu5ve
Chairman,
CEO
Founder,
Tenure
26yrs
NED
Mr.
David
Lawson
Mr.
Alan
Anderson Chief
Financial
Officer
&
Leading
USA
AKorney
Company
Secretary
CMP
Tenure
:
11
yrs
CMP
Tenure
13
yrs
Mr.
Warwick
Freeman Kerry
Hubick,
Ph.D .
Mr.
Christoph
WiGe
Chief
Technology
Officer
Trademark,
Patent
&
General
Managing
Director
Compumedics
Germany
CMP
Tenure
15
yrs
General
Legal
AKorney
GmbH
CMP/DWL
Tenure
24
yrs
CMP
Tenure
7
yrs
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_**A

Tradi3on
of
Innova3on**_

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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
–
Market Opportuni3es**_

15

25

Core
Diagnos5c
Business Global
Markets
-­‐
$m 150

450 Sleep
Diagnos2cs Neurological
Monitoring Brain
Research TCD

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Medical
Innova5ons
Global Markets
-­‐
$m

8,000

10,000

15,000

Sleep
Treatment Driver
Vigilance eHealth

_**What

was
achieved
in
the
twelve months
to
30
June
2014?**_

• NPAT
  of
  $0.9
  million
  compared
  to
  loss
  of
  $(1.4)
  million
  for
  the
  PCP.
  EBITDA was
  a
  $3.0
  million
  profit
  compared
  to
  $0.3
  million
  in
  the
  PCP,
  as
  a
  result
  of ongoing
  efficiency
  gains
  in
  manufacturing,
  and
  the
  favourable
  impact
  of
  the lower
  Australian
  Dollar,
  together
  with
  increased
  sales
  shipped
  and
  invoiced.

• Shipped
  and
  invoiced
  sales
  were
  14%
  higher
  at
  $30.8
  million
  compared
  to $27.2
  million
  for
  the
  PCP.

• Cash
  on
  hand
  was
  stable
  at
  $1.1
  million
  at
  30
  June
  2014,
  compared
  to
  $1.2m at
  30
  June

• Debt
  levels
  were
  reduced
  during
  the
  twelve-­‐month
  period to
  $2.0
  million
  at
  30
  June
  2014
  compared
  to
  $2.3
  million
  at
  30
  June

_**What

was
achieved
in
the
twelve months
to
30
June
2014?**_

• The
  Company
  had
  sales
  orders
  of
  $6.0
  million
  on-­‐hand
  at
  30
  June
  2014, which
  it
  expects
  to
  con2nue
  to
  reduce
  during
  the
  first
  half
  of
  FY2015.

� The
Company
has
substan2vely
completed
reloca2ng
some
produc2on
and purchasing
ac2vi2es
to
Asia
as
part
of
its
transi2on
program
to
restore margins
independent
of
the
rela2ve
value
of
the
Australian
Dollar
over
the foreseeable
future.
The
margin
and
profit
improvement
from
these
and other
ini2a2ves,
only
just
commencing,
will
be
seen
in
the
second
half
of
the financial
year
and
beyond

_**Revenue

Composi3on
at
≈$30.8m**_

**By

geographic
region**

**By

product/market**

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Europe,
USA,
18%
32%
Asia,
32%
Aust,
18%
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Tech.
Supply
Service,
Items,
9%
Sleep,
10%
30%
Brain
Neuro,
Blood
12%
Brain
Flow,
Res,
21%
18%
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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

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Historical
Full
Year
Revenues
Shipped
and
invoiced
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2012
2013
2014
FY2015
Full
Yr
F'Cast
Rev
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_**Historical

Full
Year
Earnings**_

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NPAT
EBITDA
3
5
2
4
1
3
0
2
2012
2013
2014
FY2015
-­‐1
1
-­‐2
0
-­‐3
2012
2013
2014
FC2015
-­‐4
-­‐1
NPAT
F'Cast
NPAT
EBITDA
F'Cast
EBITDA
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_**Cash,

debt
&
opera3ng
cash**_

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2.5
2
1.5
1
0.5
0
2012
2013
2014
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Opera2ng
cash Cash Debt

_**Employee

Composi3on
at
≈130
staff**_

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By
geographic
region
Mid
Asia,
East,
2%
1%
Europe,
USA,
24%
32%
Aust,
41%
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**By

func5on**

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Quality,
Admin
Sales
&
2%
&
Fin,
Mark,
12%
24%
Manuf,
Service,
R&D,
28%
12%
22%
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Compumedics
has
its
Head
Office
in
Melbourne,
Australia
with
addi2onal offices
in
CharloKe
(NC),
USA
and
Singen,
Germany

_**Strategic

Value
Roadmap
–
Core Diagnos3c
Business
Opportuni3es**_

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Core
Diagnos5c
Business
Global
Markets
-­‐
$m

25

15

150

450
Sleep
Diagnos2cs
Neurological
Monitoring
Brain
Research
TCD
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Medical
Innova5ons
Global
Markets
-­‐
$m

8,000

10,000

15,000
Sleep
Treatment
Driver
Vigilance
eHealth
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_**Growth

strategies
–
Core
business**_

• Building
  growth
  momentum
  in
  key
  global
  neurological monitoring
  markets
  with
  emphasis
  on
  LTEM
  through
  the Company’s
  innova2ve
  product
  plamorm
  and
  growing
  brand recogni2on
  in
  these
  new
  markets
  for
  the
  Company.

• Expansion
  across
  all
  product
  lines
  in
  Asia,
  with
  emphasis
  on China,
  through
  our
  unique
  and
  long
  established rela2onships
  there.

• Grow
  sleep
  diagnos2c
  market
  posi2on
  in
  the
  US
  by con2nuing
  to
  expand
  direct
  sales
  force
  there.

• Con2nuing
  to
  grow
  and
  expand
  our
  European
  business,
  with emphasis
  on
  Germany.

_**Growth

Strategies
-­‐
Execu3on
so
far_ Compumedics
Clients
in
China**

_**Earnings

improvement
ac3vi3es**_

• Reloca2on
  of
  selected
  manufacturing
  ac2vi2es
  to
  lower cost
  regions
  in
  China
  and
  Taiwan.

• Con2nue
  to
  drive
  component
  purchasing
  to
  lower
  cost regions
  in
  China
  and
  Taiwan.

• Streamlining
  of
  logis2cs
  (final
  product
  assembly,
  tes2ng and
  shipment)
  as
  the
  business
  grows.

• Near-­‐term
  product
  development
  focused
  on
  “cost-­‐to-­‐ make”
  minimiza2on
  ini2a2ves,
  together
  with
  selec2ve incremental
  feature
  gains
  to
  maintain
  technology leadership.

_**Strategic

Value
Roadmap
–
Medical Innova3ons
Commercial
Opportuni3es**_

15 Core
Diagnos5c
Business Medical
Innova5ons
Global Global
Markets
-­‐
$m 25 Markets
-­‐
$m 150 450 8,000 10,000 Sleep
Diagnos2cs Neurological
Monitoring Brain
Research 15,000 TCD

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Sleep
Treatment Driver
Vigilance eHealth

_**Medical

Innova3ons
–
Sleep Treatment**_

• The
  sleep
  treatment
  technology
  is
  the
  most
  advanced
  of
  these Medical
  Innova2on
  technologies.

• ® ®

• The
  SomniLink SPAP device
  has
  been
  developed
  in
  collabora2on with
  Medigas
  Italia
  S.r.l.,
  Compumedics
  Italian
  distributor
  and
  also a
  significant
  shareholder
  in
  the
  Company.

• ®

• 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
  advancing
  its
  opportuni2es
  into the
  Asia
  Pacific
  region
  ini2ally.

_**Medical

Innova3ons
–
Sleep Treatment**_

• About
  20%
  of
  the
  adult
  popula2on
  globally
  suffer from
  some
  sleep
  disorder.

• The
  global
  Apnoea
  devices
  market
  is
  es2mated
  at about
  USD8bn
  with
  expecta2ons
  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

Innova3ons
–
Driver Vigilance
Assist**_

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

• Fa2gue
  is
  one
  of
  the
  top
  three
  reasons
  for
  all
  road
  fatali2es

• Car
  manufacturers
  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

Innova3ons
–
Driver Vigilance
Assist**_

• Market
  for
  this
  technology
  is
  very
  large – conserva2vely
  es2mated
  at
  $30m
  for
  the Australian
  market
  and
  up
  to
  USD15bn
  for
  the global
  market,
  based
  on
  annual
  vehicle produc2on
  of
  some
  60m
  vehicles
  a
  year.

• Compumedics
  owns
  patents in
  Australia,
  the US
  and
  Germany
  in
  rela2on
  to
  its
  unique technology.

_**Medical

Innova3ons
–
eHealth**_

• eHealth
  home
  and
  hospital
  applica5ons
  for
  exis5ng Compumedics
  technologies
  – driven
  by
  government
  and insurers
  needs
  to
  reduce
  the
  delivery
  costs
  of
  health services
  to
  ageing
  popula2ons.

• Large
  markets
  – US
  market
  for
  exis2ng
  eHealth applica2ons
  es2mated
  at
  11.6bn
  and
  growing
  at
  a compound
  growth
  rate
  of
  almost
  19%
  pa
  to
  USD27.3bn
  in 2016.

• Compumedics
  has
  significant
  exper5se
  in
  home monitoring
  – through
  its
  20
  year
  associa2on
  with
  the
  US Sleep
  Heart
  Health
  Study
  and
  its
  Nexus
  enterprise
  sosware for
  pa2ent
  scheduling
  and
  data
  management.

Strategic
Growth
Execu3on 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

**Compara5ve

valua5ons**

Annualised
Revenes
and
Market
Cap
rela5ve
to
Annualised Revenues

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35.0
20.00
18.00

30.0
16.00

25.0
14.00
12.00

20.0
10.00

15.0
8.00
6.00

10.0
4.00

5.0
2.00

-­‐

0.00
CMP
MVP
UCM
IPD
UBI
GLH
MBE
Revenues
29.0
9.0
0.8
3.2
15.1
5.0
12.2
Mark
Cap
to
Rev
0.52
8.44
18.88
14.72
4.44
4.28
7.19
Revenues
-­‐
$m
Market
Cap
to
Revenues
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Conclusion:
Compumedics
represents
an
excellent
opportunity
for
enhanced realisa2on
moving
forward.

_**In

conclusion**_

• Core
business –
refocus
on
sales
and
profit growth
as
Asia
manufacturing
cost
reduc2ons and
clearing
the
sales
order
back-­‐log
restore profitability
to
the
Group.
Consider ra2onaliza2on
of
the
Group
and
demerger op2ons
to
provide
clearer
focus • Medical
Innova5ons –
Commercialisa2on
of main
breakout
plamorms: – Sleep
treatment – Driver
Vigilance
Assist – eHealth/online
educa2on

Ordinary Business

• Item 1 Financial Statements and Reports

• Item 2 Re-election of Director – Mr. A Anderson

• Item 3 Adoption of Remuneration Report (nonbinding resolution)

�

• Item 4 Adoption of the Medical Innovation LongTerm Performance Plan and the issuing of shares under that plan.

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