IMPEDIMED LIMITED — Annual Report 2009

Aug 27, 2009

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28[th] August 2009

ASX RELEASE – FISCAL YEAR 2009 - A VERY POSITIVE YEAR FOR MAKING PROGRESS IN THE ACCEPTANCE AND ADOPTION OF L-DEX TECHNOLOGY

ImpediMed Limited today released its Annual Report for the year ended 30[th] June 2009, incorporating final audited results for that year.

Chairman Mel Bridges said “The board are very pleased with the company’s progress through 2009 in advancing the adoption and acceptance of L-Dex medical devices. It was also a pivotal year for establishing a new consumable business model that saw good initial adoption by Breast surgeons in the key US market. We look forward to further growing the interest in and adoption of ImpediMed technology in 2010.”

Following are some of the highlights:

• The company achieved US FDA clearance for the L-Dex U400 device for aiding in the clinical assessment of unilateral lymphoedema of the arm in breast cancer patients.

• Following this FDA clearance, the company implemented a pre-emptive care clinical model to surgeons and oncologists, for the prevention of Lymphoedema in breast cancer patients. To achieve this, the company established a small direct sales force, which to date has built a solid support with key US opinion leaders.

• The US reimbursement strategy to secure payment for clinicians, using a miscellaneous code, was also successful. Some key private insurers, with an average payment between $150 to $300 per test, are providing coverage for the test. Coverage for this code is however only regional and the company will be working to both maintain and expand this coverage going forward. The company has made substantial progress towards the preparation of an application for a Category One Reimbursement code, which is expected to be submitted in November 2009. This code will dramatically simplify the process for a clinician to make a claim for reimbursement.

• The case for health care payers to support the adoption of a pre-emptive care strategy with Breast Cancer patients has been advanced with the release of a study by Shih et al. This study established that the costs of managing a patient with breast cancer related lymphoedema were significantly higher (in the range of $US 14,877 to $US 23,167 over the two year study period), than those for breast cancer patients without lymphoedema.

• In the toughest capital raising environment in recent memory, the company was successful in raising $AU 18.2 Million, including the entitlement offer, that closed in late June 2009 and completed on 2[nd] July 2009.

Mr Bridges said “Management can feel justifiably proud of the commercial progress made towards creating a new market for the company’s L-Dex devices in Breast Cancer. This progress has been instrumental in gaining the support of investors to fund the business in a time when only the most compelling opportunities are attracting capital.”

CEO Greg Brown announced the highlights of the financial results for fiscal 2009.

• Sales revenues related to goods and services were $2,991K up 27.8% against the comparative result of $2,341K.

• Cash at 30[th] June 2009 was $6,633K, and was added to on 2[nd] July 2009 by the net proceeds of the company’s entitlement offer, giving another $6,559K for a pro-forma cash balance of $13,192K.

• The net loss projected in July 2009 to be in the range of ($14.4M to $14.6M) came in at $14.0M

• The net loss of $14,027K compares to a comparative period net loss of $9,754K. Key movements are explained as follows:

  • The impact on the net loss of the US businesses from the movement in exchange rate from an average in FY2008 of 0.896 to the FY2009 average of 0.748 was a variation of ($1,308K).

  • 2009 external research and development project costs were $2,928K (2008 : $1,828K) a variation of ($1,100K). The majority of the R&D spend related to the UB500 project, which in January reached prototype stage.

  • 2009 grant income from the Commercial Ready Grant in support of the UB500 program was $275K (2008: 1,076K) a decrease of ($801K).

  • Salaries and benefits increased in 2009 to $5,578K (2008: $4,135K) a variation of ($1,443K). The average exchange rate effect already accounted above explained ($669K), while movements in actual salaries and benefits generated ($774K) of the variation. The average FTE headcount in 2009 was 34.1 versus 2008’s 23.8, and the increase was predominantly related to the establishment of a direct sales force in the US and support positions in San Diego.

Mr Brown said “ImpediMed, has made significant investments into infrastructure and resources in 2009, to support the commercialisation of L-Dex devices. With an increasing awareness around Lymphoedema, and the benefits of earlier detection, ImpediMed feels it is well positioned to develop a substantial global market for L-Dex devices.

“Looking ahead our next critical milestone is the submission of an application to the American Medical Association for a Category One reimbursement code. If this application is successful and is set a reasonable payment by the Relative Units committee, then this would be a major milestone in helping to accelerate the market adoption of pre-emptive care. A category one code, covered by insurers would significantly assist surgeons, oncologists and therapists to improve care for patients.” said Mr Brown.

Mel Bridges Greg Brown Chairman CEO