HALF YEAR RESULTS TO DEC31 2003

Compumedics reported record revenues and profits after tax for the six months to December 31, 2003 of $17.3m and $1.1 m respectively. This compares to $16.5m and $0.0m for the previous corresponding period.

Melbourne Australia, Tuesday 17th February, 2004: Compumedics Ltd (ASX:CMP) medical diagnostics company, reported record revenues and profits after tax for the six months to December 31, 2003 of $17.3m and $1.1 m respectively. This compares to $16.5m and $0.0m for the previous corresponding period.
Revenues for first half at $17.3m compared to $16.5m for the previous corresponding period, representing a 5% increase over the prior period. The US Neuroscan and Neuroscience businesses grew strongly along with the Sleep business in Asia.
Net profit after tax was $1.1 for the six months to December 31, 2003 compared to $0.0m for the previous corresponding period. The significant improvement in the profitability of the business reflects the continuing growth of the business along with the benefits of the restructuring of the business that has occurred over the last eighteen months.
Research and development expenses were $3.2m or 19% of revenue for the period compared to $2.9m or 18% of revenue for the previous corresponding period. As noted the business has targeted research and development expenditure at 12% of revenues. Research and development as a percentage of revenue will fall in the second half.

Operating cash for the period was $1.7m, compared to $(0.9)m for the previous corresponding period. Net cash was $1.1m compared to $(2.9)m for the previous corresponding period. Debtor days have improved to 86 days from 96 days at 30 June 2003 and 121 days at the same time last year.

Compumedics’ Executive Chairman David Burton said, “It is pleasing to see positive results out of the hard actions taken over the last eighteen months. The return to profits and the generation of positive operating and net cash are tangible outcomes of those actions. As we move forward we will continue to intensify our focus on profitability, while recognizing the need to sustain strong growth by way of accelerated global market penetration.”

Highlights for the six months were:

• Focus on profitable growth together with the restructuring of the business has resulted in profits and cash for the period.
• Synamps2 released to market June 2003 generates global revenue of $2.5m in first six months of sales to 31 December 2003.
• Margin improvements continue through the release of new premium valued products.
• Focus on margin improvements through improved and leaner production processes.
• Remaining Neuroscan acquisition liabilities refinanced with ANZ Bank, December 2003. In total a $1.2m foreign currency gain on the original acquisition cost in Australian dollars has been realised to date.

Business Performance

Sleep diagnostics

The global sleep business grew by 11% year on year. The rest of the world (ROW) business performed strongly with Japan increasing significantly.

Neuro diagnostics

The global Neuroscience business grew by 30% over the prior period from $1.0m to $1.3m. Exchange rate impact of the movement in the US dollar, Australian dollar underlying growth was 53%. The US Neuroscience business performed well off a low base as we begin to build this business in the US.

Brain Research

The global Brain Research business grew by 4% over the corresponding period last year from $5.4m to $5.7m. The US business performed strongly following the release of Synamp2. ROW sales were not as strong but this is expected to improve in the second half.

Outlook

The focus will continue to be on profitable growth. Product margins and earnings should continue to improve as growth continues. The business has in place the structures for each of its markets and the focus will be to continue to deliver earnings and cash from these activities.

Growth Platforms

As noted in June 2003, medical innovation has been separated from the core business as described above. This will enable the small team of resources led by the Executive Chairman to focus on these opportunities. Separate announcements will be made at the appropriate time regarding these opportunities.

New Products

Compumedics continues to build a strong pipeline of new products and technologies across its sleep diagnostic and neurological markets.
During the six month period Compumedics launched its new Synamp2 to market. In the coming six months Compumedics will release Summit IP, Comperio DQ, a second generation Siesta and a revised version of Curry software for high end applications of the Neuroscan products.

About Compumedics

Compumedics Limited, founded in 1987, is a global leader in the design and manufacture of diagnostic technology for sleep disorders, neurophysiology and cardiology. Compumedics was listed on the Australian Stock Exchange in December 2000. The company has corporate headquarters in Melbourne, Australia and offices in the United States, Asia and Europe. Compumedics holds 70% of the Australian sleep diagnostic market in Australia and is fast becoming a major presence in the US, European and Asian marketplaces for both its sleep diagnostic as well as its neuro-diagnostic products.
In 2002, Compumedics acquired US-based Neuroscan – the world’s leading supplier of instruments for brain research. In the US – the world’s largest medical device market – Neuroscan hold around 90% of the market for brain research products. This acquisition has enabled Compumedics to take advantage of the synergies between Research and Clinical-based Neuro Diagnostic technologies, re-affirming our commitment as a world-class developer of both Sleep and Neuro Diagnostic systems.

For further information:

David Burton
Executive Chairman, CEO
Phone: +61 3 8420 7300
Fax: +61 3 8420 7399

David Lawson
CFO/Company Secretary
Phone: +61 3 8420 7300
Fax: +61 3 8420 7399