FINANCIAL RESULTS FOR YEAR ENDING JUNE 30, 2003
Compumedics reported a 62% increase in revenue to a record $32 million for the year ending June 30, 2003. The result reflects strong growth of the Company’s core global diagnostic sleep business, together with the increased sales base resulting from the Neuroscan acquisition.
Melbourne Australia, Tuesday 2nd September 2003; Medical diagnostics company, Compumedics Ltd (ASX:CMP) reported a 62% increase in revenue to a record $32 million for the year ending June 30, 2003. The result reflects strong growth of the Company’s core global diagnostic sleep business, together with the increased sales base resulting from the Neuroscan acquisition.
Earnings before interest, tax, depreciation and amortisation (EBITDA) improved $3.0m to $2.1m, compared to a $0.9m loss for the previous year.
Earnings after tax improved $2.0m to a $0.1m profit compared to a $1.9m loss in the previous period before adjustments for certain expense items and an accounting policy review in relation to revenue recognition. With the rapid development of the business the company has decided to align its accounting treatment of intellectual property expense items and revenue recognition with the evolution of the business. After these reviews the result was an after tax loss of $18.6m. The adjustments relate to a revision of the company’s treatment of revenue, research and development costs and intellectual property acquired. In total, these adjustments have reduced revenues by $0.9m and earnings after tax by $18.7m.
Compumedics has evolved rapidly over the last two years from a single focus sleep diagnostic company to a multi product line business. In line with best practice for companies of this type, consideration of future directions of financial reporting requirements for the business in conjunction with the business’ own evolution and to provide a clearer basis for investors to track the underlying performance of the company, the directors have adjusted the values of certain asset and income items.
A more detailed explanation of these adjustments accompanies this announcement (click here to read).
Compumedics’ Executive Chairman David Burton said, “On a comparable year on year basis, our revenue has increased over 60% and the operating performance of the business has improved by $3.0m at the EBITDA line to a $2.1m profit. This growth in revenue has been achieved despite accounting adjustments, SARS, foreign exchange movements, and other external factors. Our focus continues to be very clearly on sustainable sales growth and strong profitability.”
Compumedics USA Neuroscience business finished its first full year with the group with a 300% increase in sales revenue over the previous period. This positions the company well to significantly expand its share of the USA neurological diagnostic market in similar fashion to its rapid capture of the majority share of the Australian market.
European sleep sales increased 45% following the start of the new relationship with Dräger Medical. This was an outstanding result considering the relatively depressed European economic conditions and the early phase of this new business venture.
The global market for the relatively young field of sleep medicine is growing at over 15% per annum, even in the most developed markets. Compumedics is now well placed in all regions to take advantage of that growth.
“We now have a strong and rapidly growing customer base, excellent partners in Dräger Medical in Europe and Teijin in Japan, and an effective direct sales network in the USA. In particular high growth markets for Compumedics such as Europe, Japan and China seem to be well positioned for sustainable growth” Mr Burton said.
Mr. Burton also noted after 20 years of primary focus on building a strong broad IP base the company is pleased to confirm that it is now moving towards an operation focused model with the appointment of a Chief Operating Officer whose primary focus is to extract the value from this long term investment as a technology company.
The core sleep diagnostic business is at the very start of its growth opportunities as can be demonstrated with our continued rapid capture, yet still relatively small market share in the world’s number 1 and 2 markets being the USA and Germany.
The full year results are summarised below:
|$Am||12 mths to June 30||2002 12 mths to June 30 2003||Accounting adjustments||12 months to June 30 2003 pre-accounting adjustments|
|Profit after Tax||(1.9)||(18.6)||18.7||0.1|
Other highlights for the year included:
- A three-year $10 million European distribution and technology development deal with one of the world’s leading medical instrument companies, Dräger Medical.
- 100% growth in the Japanese market year on year after 10 years of investing in the building of a strong relationship with Teijin.
- FDA clearance to sell Somté in the lucrative US market.
- Canadian approval to market the Somté portable sleep diagnostic device.
- Australian Federal Trade Minister official opening at Compumedics’ Melbourne world class manufacturing facility.
- Patents for novel sleep treatment products potentially taking Compumedics’ expertise into the much larger field of treatment for sleep disorders.
- Exciting developments in the new Medical Innovation areas.
The USA sleep business performed strongly with growth year on year of just over 50%. Significant inroads were made into the USA resulting from the switch to direct Compumedics distribution. The USA strategy and decisions are proving to be correct and the business is now on firm ground for continued USA growth.
The Asia Pacific sleep business performed well, despite SARS, growing by 12% year on year. Neuroscan’s Asia Pacific business was also strong at $3m sales for the year. The Japanese market grew by 100% in the current year. The medical supplies business in Asia Pacific also grew strongly at 35% over the pcp.
Following the appointment of Dräger as its partner/distributor, Compumedics is pleased to note a 45% boost in European sales. Once again the strategy and decision appears to be correct in positioning the business for ongoing strong growth. The new rest of world management strategy and structure, together with the quality Dräger and Compumedics partnership is now delivery results.
The focus will clearly be on driving profits out of future revenue growth as well as the established IP base, to further capitalise on the larger and growing customer base.
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 on delivering earnings and cash from these activities.
The company has re-organised its management to allow greater focus on the growth platforms keeping to operational growth and fiercely focused on performance and profitability. A number of patents have been secured on sleep treatment technology during the course of the year. All of these plus other opportunities will be progressed with greater focus under the new management structure.
Compumedics continues to build a strong pipeline of new products and technologies across their sleep diagnostics and neurology diagnostic markets. At the end of the financial year, Compumedics released Synamp2 for the brain research market. Looking forward the company will release StimII, Nexus and a mid-life update for Siesta during the course of the next financial year.
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.
For further information:
Executive Chairman, CEO
Phone: +61 3 8420 7300
Fax: +61 3 8420 7399
Phone: +61 3 8420 7300
Fax: +61 3 8420 7399