Corporate presentation April 2016 David Burton – Chairman, CEO dburton@compumedics.com.au David Lawson – Director, CFO dlawson@compumedics.com.au Sleep Diagnostics & Treatment - Neuro Diagnostics - Brain Research - Ultrasonic Blood Flow Monitoring 1
Who is Compumedics? A leading global, innovative developer and manufacturer of medical devices for: Monitoring neurological Ultrasonic monitoring Diagnosing disorders including Highly sophisticated of blood flow through sleep disorders long-term epilepsy brain research the brain (Transcranial monitoring (LTEM) Doppler [TCD]) A technological leader in its chosen markets: #3 USA sleep #1 China sleep diagnostic device #1 Australian sleep & #1Japan sleep diagnostic device supplier and emerging neuro diagnostics diagnostics device supplier to premier #3 supplier for device supplier supplier facilities & #1 TCD neurological monitoring device supplier devices FY15 revenues $33.4m, FY15 EBITDA $4.1m. FY16 Guidance revenues $36m to $38m, EBITDA $4.5m to $5.5m. 120 employees across four locations, Melbourne, Australia (Head Office), Charlotte, NC, USA, Hamburg and Singen, Germany. Compumedics listed ASX Dec 21, 2000. CMP has market capital of around $60m. All $ = A$ unless otherwise specified 2
Revenue Composition at $33.4m 30 June 2015 By geographic region By product/market Tech. Supply Europe, Service, Items, 16% 8% 9% Brain USA, Blood 34% Sleep, Flow, 28% 21% Asia, 34% Brain Aust, Neuro, Res, 16% 12% 21% Software upgrades 5 to 10% of system sales 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 3
Growth Platform – Core and Step-Out Sales – schematic only FY16F FY17F FY18F FY19F FY20F Core - Base Core - Sleep/Neuro - Mid Market Neuro - MEG Sleep - eHealth • Step-out - NEURO – BRAIN IMAGING – By signing the new MEG* Agreement with KRISS we can transition from a USD30k software sale to a USD4.0m complete system sale. • Step-out - SLEEP - CLOUD GROWTH – USD10m in professional application contracts into China, Korea and Taiwan. New personal device “Somfit” – partnering novel “in - house” eHealth sleep device for the home. Potential to keep rapid mid-term EBITDA growth • Core - SLEEP & NEURO – DIAGNOSTIC GROWTH – By adding mid-market devices we expand and lower the cost base of our product range, enabling us to lock in our premium market dominance, and boost sales in the US and China initially and then Europe, with Germany as a specific focus *MEG = Magnetoencephalography 4
Core Business – Premium Focus Neuro Neuro Sleep Brain Blood Diagnostics – Diagnostics - Diagnostics Flow Diagnostics Clinic Research Global market – 250m 1,300m 20m 15m USD pa Compumedics market share 6% <1% 30% 35% (approximate) Aust – 1 Aust – 1 Aust – 1 Aust – 1 Compumedics USA – 2 USA – 3 USA – 3 USA – 1 market position China – 1 China - 1 China - 1 China – 1 Germany – 1 Capital equip – Capital equip – Capital equip – Capital equip – Business and hardware and hardware and hardware and hardware and product type software software software software Annuity revenues – ~ % of total – 15% 10% 5% 5% supplies & support 5
Core Business – Margin Improved $k 45,000 5,000 EBITDA 40,000 4,000 35,000 3,000 30,000 Revenues 2,000 25,000 20,000 1,000 15,000 - 10,000 -1,000 5,000 - -2,000 2009 2010 2011 2012 2013 2014 2015 AUD/USD Exchange rate 1.0324 1.0271 0.9865 0.9188 0.8811 0.8386 0.7495 2009 2010 2011 2012 2013 2014 2015 6
Core Business – Restored Net Cash Position $m FY09 FY10 FY11 FY12 FY13 FY14 FY15 Cash 0.3 1.8 1.2 1.1 1.3 1.1 2.2 Trade receivables 1.7 9.7 10.2 8.7 8.1 8.6 9.8 Inventories 1.4 5.0 5.7 5.3 5.5 6.1 5.7 Prod. dev’t 8.8 4.2 4.2 4.0 3.5 2.9 2.7 Tax asset 0.3 0.2 0.9 0.0 0.0 0.0 0.0 PP&E 0.9 0.9 0.8 0.8 0.7 0.7 0.8 Other 0.1 0.0 0.0 0.0 0.0 0.2 0.5 Assets 13.4 21.8 23.1 19.9 19.1 19.5 21.7 Trade cred. 0.9 4.6 4.7 5.0 4.7 4.7 4.4 Borrowings 0.0 1.9 2.8 2.1 2.3 2.0 2.0 Def. payment 0.2 1.1 0.9 1.4 1.4 1.4 1.6 Other 0.5 1.9 2.0 2.1 2.2 2.3 2.5 Total Liabilities 1.6 9.6 10.3 10.7 10.7 10.4 10.4 Net Assets 11.8 12.2 12.8 9.2 8.4 9.2 11.3 Debt/Equity -2% 1% 13% 11% 13% 11% -2% 7
Core Business – Adding Mid-Tier Range Average Product Used for Bought by selling price Hospitals, doctors Grael Sleep and neurology USD17,500 and service providers Hospitals, doctors Somte PSG Sleep USD10,000 and service providers Hospitals, doctors Siesta Sleep and neurology USD18,000 and service providers Hospitals, doctors and Neuvo LTM Neurology USD35,000 service providers Universities and Synamps RT Brain Research USD38,000 teaching hospitals Universities, teaching CURRY Brain research and neurology USD20,000 and regular hospitals 8
Next Generation Growth – Core and Step-out Neuro Neuro Sleep Brain Blood Diagnostics – Diagnostics - Diagnostics Flow Diagnostics Clinic Imaging Cloud based sleep Leverage existing Long term epilepsy diagnostic platforms Leverage CURRY TCD technology and Next generation market penetration for both professional software into full MEG patent to Traumatic growth platform into US, Europe and consumer solution with KRISS Brain Injury (TBI) and Asia applications application Professional Research only application Estimated cost USD100m pa Market > USD3bn pa Greater than of TBI’s in the US potential Consumer USD100m pa alone greater than Brain Imaging application USD76bn pa >USD4bn pa > USD50bn pa Capital equipment & Mixture Business Services – Capital equipment – Partnership – new of equipment type fee per service bigger market market and service fees 9
Core Business - Growth Drivers Compumedics/NeuroScan LTEM innovative brain analysis software and high performance amplifiers are unrivalled world class technology We have >20,000 systems installed worldwide. Strong reputation and brand name. Customers like buying from Compumedics. Earnings initiatives to flow through in FY16 – FY20. Lower cost base enables addition of mid-tier. Opportunity to significantly grow the USA business through strengthening of the management team and expansion of the sales force. Expansion into untapped German market Push into the Chinese neurology market Ideally positioned to accelerate organic growth and value realisation 10
USA – CMP is number 3 Supplier USA Clinical Sales Force Expansion More sales representatives = more revenue for both sleep and neurology USD4.5m Past FY2015 USD6.4m to now USD10.0m FY2016 USD15.0m FY2017 11
China - We are the number 1 Premier Supplier Compumedics Clients in China Sleep Neuroscience Neuroscan 2 28 5 Xin Jiang Helongjiang Inner Mongolia 2 Jilin 2 Beijing Liaoning 88 23 Ningxia Qinhuangdao QingHai HeBei 3 10 Dalian 3 Tianjin China Sales – USD’s 2 3 16 12 14 Gansu Shandong Welfang HeNan Rizhao Shaanxi 6 7.8 Jining SiChuan JiangSu 10 HuBei 5 11 Shanghai 18 Suzhou 49 14 13 2 34 6 AnHui Zhejiang Chongqing 3.8 3.4 GuiZhou Nanchang 4 YunNan 2 2 Changsha 26 2 Fujian GuangDong GuangXi 2 27 Xiamen 8 Shenzhen FY12 FY13 FY14 FY15 Hong Kong 12
Step out 1 - Brain Imaging: A$9m sales in FY17 Opportunity Market & Competition Plan Outcome CMP’s CURRY brain The MEG market is currently H2 FY16 – sign LOI CMP plans to sell analysis software is already estimated at about 35 systems a with KRISS for license and install 2 MEG the gold standard for the year at an average selling price of access to MEG systems in FY17 MEG* market USD5.5m each = US$200m/annum hardware platform @ USD3.5m ea MRI** is too slow to capture This is expected to grow about 10% H1 FY17 – sign LOI CMP expects to dynamic brain activity a year, excluding China with at least first two sell at least 5 MEG needed for alzheimer's et al customers to acquire systems in FY18 It is estimated that China could CMP’s MEG device CMP’s agreement with double the existing market size to CMP expects to KRISS provides access to a about 70 units a year H1 FY17 – Finalise double sales in new and superior hardware specifications and FY19 to 10 MEG The dominant existing player is platform manufacture with systems for about Elekta, based out of Sweden, KRISS USD40m Compumedics can access followed by Yokogawa (Japanese a complete MEG sale market) and CTF MEG (a much H2 FY17 – install first (circa USD5m each) as smaller player) CMP MEG system opposed to the USD30k software sale *MEG = Magnetoencephalography **MRI = Magnetic resonance imaging 13
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