COMPUMEDICS LIMITED

(ACN 006 854 897)

ASX final report – 30 June 2019 Lodged with the ASX under Listing Rule 4.3A

Results for Announcement to the Market (Appendix 4E item 2)

Consolidated statement of profit or loss and other comprehensive income (Appendix 4E item 3)

Consolidated statement of financial position (Appendix 4E item 4)

Consolidated statement of changes in equity (Appendix 4E item 6)

Consolidated statement of cash flows (Appendix 4E item 5)

Notes to the consolidated financial statements

(Appendix 4E)

Other Appendix 4E Information (Appendix 4E items 7 to 17)

Compumedics Limited Financial Report Year ended 30 June 2019 Results for Announcement to the Market

			$’000
Revenue from ordinary activities (Appendix 4E item 2.1)	Up 12.2% or $4,503k	to	41,505
Profitsbefore interest, tax, depreciation and amortisation	Up 40% or $1,668k	to	5,884
Profits from ordinary activities after tax attributable to members (Appendix 4E item 2.2)	Up 43% or $1,204k	to	3,988
Profits for the period attributable to members (Appendix 4E item 2.3)	Up 43% or $1,204k	to	3,988

Dividends/distributions (Appendix 4E item 2.4)	Amount per security		Franked amount per security
Final dividend	n/a		n/a
Record date for determining entitlements to the
			n/a

Record date for determining entitlements to the dividend (Appendix 4E item 2.5)

Explanation of Revenue (Appendix 4E item 2.6)

Group revenues at $41.5m for the year ended 30 June 2019 were a record for the Company and 12% higher than the prior corresponding period (pcp). The increase in revenues was partly due to the Company booking a further portion of the MEG sale, with the first phase of the installation now complete. The Company’s China-based sales grew 26% over the pcp, continuing a significant period of growth for the Company in this market, which now represents about 32% of total revenues. Sales were also higher as a result of increasing sales in the DWL business, based in Germany, up 17% on the pcp and in the USA, up 16% on the pcp.

Other areas of the business to grow included Latin America, which was up 275%, over the pcp, albeit off a small base. Importantly the Company made its first shipments to Fukuda Denshi in Japan for it range of neuro-diagnostic products. The Company also booked Nexus 360 revenues of $0.6m in the year ended 30 June 2019, representing 112% growth over the pcp. This revenue although relatively small, represents the Company’s move to sell its core sleep and neuro diagnostic and monitoring software, on a software as a service basis. The Australian diagnostic businesses declined over the pcp, reflecting changes in reimbursement in the market, whilst France and other parts of Europe performed similar to, or below, the pcp.

Compumedics Limited Financial Report Year ended 30 June 2019 Results for Announcement to the Market

The Company booked new and record sales orders for the year ended 30[th] June 2019 of $40.5m, an increase of approximately 7.5% compared to new sales orders taken in the 12 months to 30[th] June 2018 of $40m, excluding MEG. The increase in sales orders taken was largely a result of organic growth within the core business, particularly in China, the DWL business, based in Germany, and the Company’s US based business.

The Company finished the year with sales-orders on-hand of approximately $7.7m compared to a $6.9m at the same time last year.

Explanation of Earnings before interest, tax, depreciation and amortisation (EBITDA) (Appendix 4E item 2.6)

As a result of the higher sales EBITDA increased to $5.9m for the year ended 30[th] June 2019, compared to the prior year EBITDA result of $4.2m. The increased EBITDA reflects increased shipments to China, the US and DWL and a further partial invoicing of the MEG sale, as the first phase of the installation was undertaken. Margins positively contributed to EBITDA, improving to 60%, compared to 57% in the pcp. The improvement in margins reflects continuing and expanding shipments of the new Grael low-cost platform, and the efficiency gains from the project to outsource selected manufacturing, which is now largely complete. Further gains will be had as new ambulatory products are released through FY20.

The EBITDA result also reflects specific increases in on-going investment related to the MEG business and to a suite of next generation products for the core business, which will start to generate incremental revenues and margin over the course of FY20.

The Company will continue to assess other operational efficiency gains, which can be implemented and locked in over the foreseeable future. These additional gains, once implemented, will have a positive impact on margins and EBITDA into FY20.

During the year ended 30 June 2019 the Company did capitalise development costs ($3.0m) largely associated with its new Somfit sleep monitoring platform and the MEG project. The combined intangible asset carrying value at 30 June 2019 was $6.8m. The Company has continued to amortise existing intangible assets, where it is appropriate to do so. During the year ended 30 June 2019 the amortisation charge was $0.2m.

Compumedics Limited Financial Report Year ended 30 June 2019 Results for Announcement to the Market

Explanation of Profit from ordinary activities after tax (Appendix 4E item 2.6)

Profits from ordinary activities after tax for the year ended 30 June 2019 increased to $4.0m from the $2.8m profit recorded for the prior year.

The Company booked financing charges of $0.3m, a slight increase on the $0.2m for the prior year reflecting a small increase in debt associated with the MEG business. Depreciation and amortisation were $0.5m for the year ended 30 June 2019, compared to $0.5m in the prior year.

The Company, having fully utilised its tax losses booked income tax expense of $1.1m, which relates to deferred tax liabilities.

Apart from these charges the above explanation for the EBITDA result for the year ended 30[th] June 2019 reflects the underlying operational impacts on earnings for the full year over the prior year.

Explanation of Dividends (Appendix 4E item 2.6)

No dividends have been declared or paid in the period.

Net Tangible Asset Backing (Appendix 4E item 9)

Net Tangible Asset Backing(Ap	pendix 4E item 9)
	2019	2018
Net tangible asset backing per ordinary share	11.6 cents	10.8 cents

Compumedics Limited Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2019

	2019	2018
	$’000	$’000
Revenue from continuing operations	41,505	37,002
Other income	381	612
Cost of sales	(16,750)	(15,815)
Administration	(6,424)	(5,507)
Sales & Marketing	(8,471)	(7,516)
Research & Development	(5,319)	(5,107)
Finance costs	(261)	(207)
Net foreign exchange gain	412	25
Profit before income tax	5,073	3,487
Income tax expense	(1,085)	(703)
Profit for the full year	3,988	2,784
Profit attributable to members of
Compumedics Limited	3,988	2,784
Net Profit for the year	3,988	2,784
Other comprehensive income /
(loss)
Items that may be subsequently
reclassified to Profit or Loss when
specific conditions are met:
Foreign currency translation	156	325
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	4,144	3,109
Earnings per share for profit
from continuing operations
attributable to the ordinary
equity holders of the company
(cents):
Basic earnings per share	2.3	1.6
Diluted earnings per share	2.3	1.6

The above consolidated statement of profit and loss and comprehensive income should be read in conjunction with the accompanying notes.

Compumedics Limited Consolidated statement of financial position as at 30 June 2019

	as at 30 June 20
	2019 $’000 2018 $’000
ASSETS Current assets Cash and cash equivalents Receivables Inventories Other Total current assets	4,598 3,906 15,980 16,198 7,799 7,561 1,837 2,135
	30,214 29,800
Non-current assets Deferred tax asset Property, plant and equipment Intangible assets Non-current assets	0 144 1,652 666 6,795 4,042
	8,447 4,852
Total assets	38,661 34,652
LIABILITIES Current liabilities Payables Borrowings Provisions Income tax payable Deferred revenue Total current liabilities	4,386 5,087 1,570 1,853 2,850 2,709 68 71 1,376 1,571
	10,250 11,291
Non-current liabilities Borrowings Provisions/Deferred tax liabilities Deferred revenues	23 38 968 24 116 139
Total non-current liabilities	1,107 201
Total liabilities	11,357 11,492
Net assets	27,304 23,160
EQUITY Contributed equity Reserves Retained losses Total equity	35,654 35,654 (258) (414) (8,092) (12,080)
	27,304 23,160

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

Compumedics Limited Consolidated statement of changes in equity for the full year ended 30 June 2019

	for the full year ended 30 June 2019
	Contributed equity $,000 Reserves $,000 Retained Losses $,000 Total $’000
Balance at 1 July 2017	35,654 (739) (14,864) 20,051
Profit for the year Other comprehensive income / (loss) Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: New shares issued	- - 2,784 2,784 - 325 - 325
	- 325 2,784 3,109 - - - -
Balance at 30 June 2018	35,654 (414) (12,080) 23,160

Balance at 1 July 2018	35,654 (414) (12,080) 23,160
Profit for the year Other comprehensive income / (loss) Total comprehensive income for the year Transactions with owners in their capacity as owners: New shares issued	- - 3,988 3,988 - 156 - 156
	- 156 3,988 4,144 - - - -
Balance at 30 June 2019	35,654 (258) (8,092) 27,304

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Compumedics Limited Consolidated statement of cashflows for the year ended 30 June 2019

		2019	2018
		$’000	$’000
Cash flow from operating
activities
Receipts from customers		41,334	33,159
(inclusive of goods and services tax)
Payments to suppliers and		(36,310)	(33,003)
employees (inclusive of goods and
services tax)
Interest and other costs of finance		(261)	(207)
paid
Income tax paid		(26)	(9)
Receipts from grants and other		399	619
income
Net cash inflow from operating	5	5,136	559
activities
Cash flows from investing
activities
Payment for property, plany and		(1,314)	(208)
equipment
Payment for intangible assets		(2,972)	(1,816)
Net cash outflow from investing		(4,286)	(2,024)
activities
Cash Flows from financing
activities
Proceeds from borrowings		881	1,153
Repayment of borrowings		(732)	-
Proceeds from equity		-	-
Net cash inflow/(outflow) from		149	1,153
financing activities
Net increase/(decrease) in cash		999	(312)
and cash equivalents
Cash and cash equivalents at the		3,200	3,398
beginning of the year
Effects of exchange rate changes on		172	114
cash
Cash and cash equivalents at the		4,371	3,200
end of the financialyear
This is represented by:
Cash Assets		4,598	3,906
Invoice facility and overdraft (Interest bearingliabilities)		(227)	(706)
Net Cash		4,371	3,200

The above consolidated statement of cash flows statement should be read in conjunction with the accompanying notes.

Compumedics Limited Notes to the consolidated financial statements for the year ended 30 June 2019

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below.

These policies have been consistently applied to all the periods presented, unless otherwise stated.

Basis of preparation of consolidated financial report

This preliminary consolidated financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

This preliminary consolidated financial report for the year ended 30 June 2019 does not include all the notes of the type normally included in an annual financial report. Accordingly, this report should be read in conjunction with the annual report for the year ended 30 June 2018 and any public announcements made by Compumedics Limited during the year in accordance with the continuous disclosure requirements of the Corporations Act 2001 and Australian Stock Exchange Listing Rules.

Compliance with IFRS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the consolidated financial statements and notes of Compumedics Limited comply with International Financial Reporting Standards (IFRS).

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property.

Critical accounting estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Compumedics Limited Notes to the consolidated financial statements for the year ended 30 June 2019

Note 2. Operating segment

Identification of reportable segments

The Group has identified its operating segments based on the internal reports, which are produced by geographical segment and which are reviewed and used by the chief operating decision maker, being the Chief Executive Officer and Chief Financial Officer, in assessing performance and in determining the allocation of resources.

The operating segments are identified by management based on the country of origin and the senior managers who are responsible for the performance of the business in that geographic territory, the type of product and service provided and whether the product is sold directly to end-user customers or via distributors.

The reportable segments are based on geographic territory as these are the sources of the Group’s major risks and have the most effect on rates of return.

Geographic locations

Americas

The Group’s Americas based business includes, the United States, Canada and Latin America. The Group sells all of its product offerings in this region including sleep diagnostic systems, clinical EEG systems, brain monitoring systems, ultrasonic blood-flow systems, supplies and technical service and support. The USA business also includes the sleep diagnostic services business. Sales in the Americas are predominantly direct sales to end-user customers. The USA office is based in Charlotte, North Carolina.

Australia and Asia Pacific

The Group’s head office is based in Melbourne, Australia and the Australia and Asia Pacific territory includes all countries in the Asia Pacific region with major countries for the territory including Japan and China. The Group sells all of its product offerings in this region including sleep diagnostic systems, clinical EEG systems, brain monitoring systems, ultrasonic blood-flow systems, supplies and technical service and support. The group sells directly to end-user customers in Australia and via a network of distributors into the Asian region.

Europe and the Middle East

The Group’s Europe-based business has its principal office in Singen, Germany with a second office in Hamburg Germany. The European territory includes all countries in the European region, plus all Middle Eastern countries.

Compumedics Limited Notes to the consolidated financial statements for the year ended 30 June 2019

Note 2. Operating segment (continued)

The Group sells all of its product offerings in this region including sleep diagnostic systems, clinical EEG systems, brain monitoring systems, ultrasonic blood-flow systems, supplies and technical service and support. The Group sells its ultrasonic blood-flow systems directly in Germany and all other products are sold via a network of distributors across the territory.

The following table represents revenue and profit information for reportable segments for the years ended 30 June 2019 and 30 June 2018.

Operating Segment

$’000 USA	Australia and Asia Pacific Europe	Group
Sales to external customers 13,773 Intersegment sales 626 Other Intersegment Revenue -	18,634 9,098 3,794 883 - 200	41,505 5,303 200
Total segment revenue 14,399	22,428 10,181	47,008
Inter-segment elimination (626)	(3,794) (1,083)	(5,503)
Total revenue per the Statement of Comprehensive Income 13,773	18,634 9,098	41,505

Segment result 769	5,712 (597)	5,884
Depreciation and amortisation (121) Net Interest (expense) / income (32)	(98) (331) (188) (41)	(550) (261)
Net profit before income tax per the Statement of Comprehensive Income 616	5,426 (969)	5,073
Segment assets Operating assets 7,164 Intersegment eliminations -	56,655 6,468 (31,626) -	70,287 (31,626)
Total assets from continuing operations per the Statement of Financial Position 7,164	25,029 6,468	38,661

Compumedics Limited Notes to the consolidated financial statements for the year ended 30 June 2019

Note 2. Operating segment (continued)

Operating Segment For the year ended 30 June 2018

$’000	USA	Australia and Asia Pacific Europe	Group
Sales to external customers Intersegment sales	12,042 862	14,815 10,145 4,447 678 8 1,306	37,002 5,987 1,314
Other Intersegment Revenue
Total segment revenue	12,904	19,270 12,129	44,303
Inter-segment elimination Total revenue per the Statement of Comprehensive Income	(862)	(4,454) (1,983)	(7,299)
	12,042	14,816 10,146	37,004

Segment result	2,032	1,040 1,104	4,176
Depreciation and amortisation Net Interest (expense) / income			(482) (207) -
Net loss before income tax per the Statement of Comprehensive Income			3,487
	7,415 -	49,000 3,716 (25,479) -	60,131 (25,479)
Segment assets Operating assets Intersegment eliminations
Total assets from continuing operations per the Statement of Financial Position	7,415	23,521 3,716	34,652

Compumedics Limited Notes to the consolidated financial statements for the year ended 30 June 2019

Note 3. Dividends (Appendix 4E, item 7)

No dividend has been declared or paid in the current or prior period.

Dividend/distribution reinvestment plans (Appendix 4E item 8) NOT APPLICABLE

Note 4. Events occurring after reporting date

The company is not aware of any material matters that would impact the financial performance of the company at this time.

Note 5 - Reconciliation of profit after income tax to net cash flow from operating activities

Note 5 - Reconciliation of profit after cash flow from operating activities	income tax to net
	2019 $’000 2018 $’000
Profit/(Loss) for the year Depreciation & amortisation Net exchange differences Change in operating assets and liabilities (Increase)/Decrease in receivables (Increase)/Decrease in inventories (Increase)/Decrease in other current assets (Increase)/Decrease in deferred tax assets Increase/(Decrease) in payables Increase/(Decrease) in deferred revenues Increase/(Decrease) in tax provisions Increase/(Decrease) in other provisions Net cash inflow from operating activities	3,988 2,784 550 482 23 230 471 (3,334) (237) (144) 45 (1,227) 144 629 (701) 921 (218) 133 940 65 131 20
	5,136 559

Compumedics Limited Supplementary Appendix 4E information for the year ended 30 June 2019

Net Tangible Asset Backing (Appendix 4E item 9)

Net Tangible Asset Backing(Ap	pendix 4E item 9)
	2019	2018
Net tangible asset backing per ordinary share	11.6 cents	10.8 cents

Controlled entities acquired or disposed of (Appendix 4E item 10)

No control was gained over any new entities nor control lost over any existing entities of the group.

Associates and Joint Venture entities (Appendix 4E item 11)

The company has no interest in any joint ventures at the date of this report.

Commentary on results (Appendix 4E item 14)

Earnings per share

Earnings per share have decreased with the underlying decline in earnings for the Company, as already discussed.

Returns to shareholders

As per earnings per share commentary.

Significant features of operating performance

Comments already noted.