COMPUMEDICS LIMITED — Investor Presentation 2020

Nov 18, 2020

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Cover sheet to be added – Simone

Corporate Presentation October 2019

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AGM Agenda

Meeting opens Chair’s address Ordinary business Meeting closes

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Ordinary Business

Item 1 Financial Statements and Reports Item 2 Re-election of a Director – Tucson Dunn Item 3 Adoption of Remuneration Report (non-binding resolution)

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Who is Compumedics?

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

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Monitoring neurological Ultrasonic monitoring of Diagnosing disorders including longHighly sophisticated blood flow through the sleep disorders term epilepsy monitoring brain research brain (Transcranial (LTEM) Doppler [TCD]) A technological leader in its chosen markets: #1 China sleep #3 USA sleep diagnostic #1 Australian sleep & #1Japan sleep diagnostic device device supplier and neuro diagnostics device diagnostics device supplier to premier emerging #3 supplier for supplier supplier facilities & #1 TCD neurological monitoring device supplier devices FY20 COVID-19 impacts Revenues down 16% to $35.1m, FY19 underlying EBITDA down 61% to $2.3m.

A technological leader in its chosen markets:

FY21 Guidance not given due to the significant uncertainty caused by the impacts of the COVID-19 pandemic on our markets around the world.

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130 employees across seven locations, Melbourne, Australia (Head Office), Charlotte, NC, USA, Hamburg, Dresden and Singen, Germany, Paris, France and Daejeon, South Korea. Compumedics listed ASX Dec 21, 2000. CMP has market capital of around $90m.

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All $ = A$ unless otherwise specified

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FY2020 – Performance Review (COVID-19 impacted) ▪ Revenue $35.1m, underlying EBITDA $2.3m, underlying NPAT $1.8m

	FY20	FY19	Variance	Comment
Revenue	$35.1m	$41.5m	(16)%	Revenues fell as a result of COVID-19 restrictions globally. Japan grew, China fell most, US not as much as expected and Australia was similar to FY19.
EBITDA – underlying EBITDA – reported	$2.3m $(5.6)m	$5.9m $5.9m	(61)% n/a	Underlying profitability fell as a result of COVID-19 impacted sales. Reported profitability was further impacted by $7.7m write-down of intangible assets.
NPAT – underlying NPAT – reported	$1.8m $(5.8)m	$2.8m $2.8m	(55)% n/a	Underlying NPAT fell as a result of COVID-19 impacted sales. Reported NPAT was impacted by $7.7m write-down of intangible assets.

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FY2020 – Performance Review (COVID-19 impacted)

• Core: Asia business, and China in particular, significantly impacted by COVID-19 lockdowns with orders taken falling 41% over pcp and a 32% decline over pcp on shipped and invoiced sales.

• Core: DWL business 10% fall in revenues and US business 10% fall, FY20 compared to FY19.

• Core: Profitability fell as a result of the overall contraction in revenues due to COVID-19 impacts. The selective and on-going outsourcing of production, along with other efficiency gains continued to contribute to improvements in operational efficiency and earnings.

• MEG growth initiative: The second phase of the first MEG sale to Barrow Neurological Institute in Phoenix, AZ, USA, was scheduled for H2 FY20 but has been delayed by restrictions around COVID-19, currently targeting early 2021 completion. Further MEG opportunities identified with discussions on-going.

• –

• eHealth growth initiative 46 sites, with over 270 beds in US and Australia secured for Nexus 360 (professional application), which generated $1.1m of revenues in FY20. Total signed contracts now have annual subscription fees exceeding $1.5m.

• Somfit (consumer application) product development progresses with COVID-19 multi-modal capability applications currently being pursued alongside existing targeted applications.

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Revenue Bridge Chart – FY19 to FY20

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EBITDA Bridge Chart – FY19 to FY20

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Revenue Composition at $35.1m

30 June 2020

By geographic region

By product/market

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Customer
Care 12%
Europe, Consumables
21% 11%
Sleep -
USA, 36% Clinical
Brain -
Diagnostics
Blood Flow
24%
Monitoring
19%
Sleep -
Nexus360
Asia, 29% 2%
Brain -
Brain - Clinical
Aust, 14% Research
17% Monitoring 15%
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Software upgrades 5 to 10% of system revenues. MEG included in Brain – Research

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

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FY21 Update

• Current trading in line with same time last year – pre COVID19 – new sales orders taken currently $15m and trending to $18m plus for H1 FY21

• Shipments and invoicing for H1 FY21, very dependent on current northern hemisphere lockdowns

• Compumedics currently progressing $1.5m State Government project which includes an order for non-invasive ventilators as part of the State Governments COVID-19 procurement strategy

• • Major US contract ($1.0m) for Compumedics OnSight ambulatory EEG system secured

• MEG business progresses

• Somfit opportunities continue to evolve

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Growth Platform – Core and Step-Out

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Sales – schematic only
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FY19A FY20A FY21F FY22F FY23F
Core - Base Core - Sleep/Neuro (Mid Market) Neuro - MEG Sleep - eHealth (Nexus360 & Somfit)
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• Step-out - NEURO – BRAIN IMAGING – First phase installation at Barrow Neurological Institute in Phoenix, AZ, USA has been undertaken and the second and final phase, which was COVID-19 delayed, is currently planned for early 2021. It confirms that we can transition from a USD30k software sale to a USD3.5m complete system sale. Additional sales opportunities being actively pursued.

• Step-out - SLEEP - CLOUD GROWTH – Nexus 360 cloud-based professional sleep diagnostic solution sold to more than 46 sites in US and Australia and generated revenues of about $1m in FY20. Annual contracted fees now over $1.5m. Somfit development and discussions continue, including as a multi-modal COVID-19 monitor.

• Core - SLEEP & NEURO – DIAGNOSTIC GROWTH – Mid-market devices selling and with a complete range of new ambulatory devices for 2021. Neurology remains a key focus for core business growth in Asia, China, US and other key markets.

*MEG = Magnetoencephalography

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Core Business – Premium Focus

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

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Core Business – COVID-19 impacts but underlying profits

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Core Business – Consistent Net Cash Position

$m	FY14	FY15	FY16	FY17	FY18	FY19	FY20
Cash	1.1	2.2	3.1	4.1	3.9	4.6	6.4
Trade receivables	8.6	9.8	11.9	13.1	18.3	16.0	12.6
Inventories	6.1	5.7	6.5	7.4	7.6	7.8	8.8
Capitalised R&D	2.9	2.7	2.4	2.4	4.0	6.8	2.8
Tax asset	0.0	0.0	0.5	0.8	0.1	0.0	0.8
PP&E	0.7	0.8	0.8	0.7	0.7	1.7	1.5
Other	0.2	0.5	0.9	0.7	0.0	1.8	2.6
Assets	19.5	21.7	26.1	29.2	34.7	38.7	35.5
Trade creditors	4.7	4.4	4.1	4.2	5.1	4.4	3.8
Borrowings	2.0	2.0	2.6	0.7	1.9	1.6	3.0
Deferred Revenues	1.4	1.6	2.0	1.6	1.7	1.4	2.1
Other/Deferred Tax	2.3	2.5	2.8	2.7	2.7	4.0	4.8
Total Liabilities	10.4	10.4	11.5	9.2	11.5	11.4	13.7
Net Assets	9.2	11.3	14.6	20.1	23.2	27.3	21.8
Net (Cash)/Debt to
Equity	11%	(2)%	(3)%	(17)%	(9)%	(11)%	(16)%

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Core Business – Adding Mid-Tier Range

Product	Used for	Bought by	Average selling price
Grael family	Sleep and neurology, high end and price sensitive models	Hospitals, doctors and service providers	USD11,500 to USD17,500
Somte PSG	Sleep	Hospitals, doctors and service providers	USD10,000
Siesta	Sleep and neurology	Hospitals, doctors and service providers	USD18,000
Neuvo LTM	Neurology	Hospitals, doctors and service providers	USD35,000
Synamps RT	Brain Research	Universities and teaching hospitals	USD38,000
CURRY	Brain research and neurology	Universities, teaching and regular hospitals	USD20,000

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Next Generation Growth – Core and Step-out

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

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Core Business - Growth Drivers

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Compumedics/Neuroscan innovative brain analysis software and high-performance amplifiers are unrivalled world class technology. Curry 9 releasing FY21

We have about 23,000 systems installed worldwide. Strong reputation and brand name. Customers like buying from Compumedics.

Earnings initiatives to continue to flow through in FY21 – FY22. New range of ambulatory products for sleep and neurology releasing FY21.

USA business growing with further modifications and enhancements to the team being implemented to support stronger growth across the entire business there.

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Continued expansion into untapped German market and ongoing growth in France.

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Continuing growth in China for sleep diagnostics, with a stronger emphasis on the neuro diagnostic and monitoring market there.

Ideally positioned to accelerate organic growth and value realisation

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

Past USD3.5m FY2020 USD4.0m

FY2021 USD6.0m FY2022 USD9.0m

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

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Sleep
Neuroscience
2
Neuroscan 28
5
Xin Jiang Helongjiang
Inner Mongolia 2 Jilin
Beijing 88 2 Liaoning
23
Ningxia Qinhuangdao
China Sales (invoiced) – USD’s QingHai 3 HeBei 10 3 Tianjin Dalian
2 3
16
Gansu 14 HeNan 12 Welfang
Shandong
9.6 Shaanxi 6 Rizhao
SiChuan Jining
JiangSu
7.6 10 HuBei 5 11 Shanghai
6.1 6.2 6.5 18 2 13 14 Suzhou 49
5.6 Chongqing AnHui 34 6 Zhejiang
YunNan GuiZhou 4 Nanchang
2 2 Changsha 26
Fujian
GuangXi GuangDong
27 2 Xiamen
8
Shenzhen
FY15 FY16 FY17 FY18 FY19 FY20
Hong Kong
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Step out 1 - Brain Imaging: 1[st] sale secured

Opportunity	Market & Competition	Plan	Outcome
CMP’s CURRY brain analysis	The MEG market is currently estimated	H2 FY19 – first phase of	FY19/FY20 CMP
software is already the gold	at about 20 systems a year at an	MEG installation	has sold and
standard for the MEG* market	average selling price of USD4.0m each	undertaken at US based	partially installed 1
MRI** is too slow to capture	= US$80m/annum	Barrow Neurological	MEG systems
dynamic brain activity needed	This is expected to grow about 10% a	Institute (BNI)	H2 FY20 – gained
for alzheimer's et al	year, excluding China	H2 FY21 – second and	FDA for MEG in US
CMP’s agreement with KRISS	It is estimated that China could more	final phase of MEG	for clinical
provides access to a new and	than double the existing market size to	installation undertaken	application
superior hardware platform	about 50 units a year	at BNI (COVID-19 delay)	CMP expects to sell
Compumedics can access a	The dominant existing player is Elekta,	FY21 – Secure second	at 1 and possibly 2
complete MEG sale (circa	based out of Sweden, followed by	and possibly third MEG	MEG systems in
USD3 to 4m each) as	Yokogawa (Japanese market) and CTF	sales	FY21
opposed to the USD30k	MEG (a much smaller player)		CMP expects to
software sale			double sales in FY22
			to 2 to 4 MEG
			systems
*MEG = Magnetoencephalography
**MRI =Magnetic resonance imaging

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Step out 2 - eHealth – Cloud Sleep Diagnostics

Nexus 360 Operational systems have been (professional developed for the cloud-based cloud sleep capture, transfer diagnostics) sold and translation of medical grade into more than 46 sleep parameters from any web- US and Aust. sites enabled device. The system can with over 270 then store, analyse and interpret beds and that data generated in a simple and actionable manner, revenues of abour reducing the need for on-site $1m in FY20. professionals. Contracted

Compumedics is Key partners continuing to seek being pursued appropriate third include web, parties to expedite the telco, eHealth, process and take the consumer Somfit consumer device health/ to targeted market electronics opportunities, including providers as a potential multi and device modal COVID-19 manufacturers. monitoring device.

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revenues now running at $1.5m pa run rate as we exited FY20.

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Directors & Executive Team Key Management

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David Burton, Ph.D. Executive Chairman, CEO Founder, Tenure 32 yrs

Mr. David Lawson Chief Financial Officer & Company Secretary CMP Tenure 20 yrs

Mr Tucson Dunn Non Executive Director CMP Tenure 12 months

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Mr. Warwick Freeman Chief Technology Officer CMP Tenure 26 yrs

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Kerry Hubick, Ph.D. Trademark, Patent & General Legal Attorney CMP Tenure 11 yrs

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Mr. Christoph Witte General Managing Director Compumedics Germany GmbH CMP/DWL - Tenure 29 yrs

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Investor Summary

Core business profitable with on-going growth opportunities in key global markets

Compumedics remains committed to continuing to deliver superior returns to shareholders Spin off/strategic decisions to unlock significant value, provide funds for growth and potentially capital returns to shareholders

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International sales force

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

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

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

FY21 guidance: Guidance not given due to the significant uncertainty caused by the impacts of the COVID-19 pandemic on our markets around the world.

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Disclaimer

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

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

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

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

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

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compumedics.com.au

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