undervalued as growth continues

compumedics is about to embark on a new growth wave , new markets and products.
funding and liquidity will enable the company to grow faster . share price will get rerated to reflect a valuation closer to its overseas competitors.
expect its share price to get above 30c once its shares become more liquid , compared to its current 16c.



Compumedics Limited Business Update
Melbourne Australia, Monday, 23 June, 2008

Leading Australia-based medical diagnostics devices company, Compumedics Limited

Dear Shareholders

I would like to take this opportunity to provide you with a business update following the update provided on 10 April 2008 .

Compumedics is moving into an exciting period of development as the market for sleep products develops worldwide.

As you know, Compumedics is a top-tier company that manufactures in Australia and sells world-wide sleep-diagnostics devices with a superb reputation and branding
position. It has done this successfully over more than 20 years.

Almost 5,000 beds are equipped with Compumedics sleep-diagnostic systems globally, including the larger
prestigious sleep laboratory centres of clinical and research excellence.

Developments are occurring in markets in which Compumedics’ core sleep-diagnostics business operates and in the sleep-treatment market, which the Company announced in
June 2007 that it was about to enter.

A key development has occurred in the USA where approval has been given for reimbursement for Home Sleep Testing studies. In March 2008, approval was given for
reimbursement to commence for studies undertaken with devices in Classes III and IV.

Compumedics sells sleep-diagnostics devices in these classes. The available market in the USA may be as much as US$500 million per annum and Compumedics should gain
a share of this new market in the new financial year.

Another key development is the impending release of Compumedics’ NEUVO® longterm EEG (electroencephalograph) monitoring system. This product will enter an
established neurology market that generates sales of about of US$1 billion per annum.

Compumedics is moving forward with its entry to the sleep-treatment market and the imminent release of the first order of its new SomniLink® SPAP® device.

The current sleep-treatment market is dominated by a duopoly of big players, each with about US$600 million in sales annually, which comprises about 80% of the market.
Compumedics expects to win a large share of the US$300 million sales of sleeptreatment devices that is generated from the 5,000 beds with Compumedics' diagnostics
equipment.

This will take Compumedics from its current approximately $40 million diagnostics revenue-base, and its most recent six-month record profit of $1.6 million and
positive cash flow, to a much higher level of sales and profitability.

The Company is looking to realise its intrinsic value for its shareholders. As a first step, I will be helping to increase liquidity in the Company’s shares by selling down a portion of my shareholding to extinguish personal debt. In addition, the Company is looking to raise capital and will consider merger and acquisition opportunities in order to exploit the current heightened interest in the sleep-treatment sector.

the additional funding will primarily accelerate Compumedics’ current growth trajectory, by expanding sales and distribution forces in key markets, particularly the USA.

Accordingly, the Company will continue to meet with investment bankers, corporate advisers, and communications
specialists generally to identify the appropriate strategy to maximise shareholder value.

We believe the current strong interest in the medical devices sector indicates that Compumedics is undervalued significantly compared to companies in its sector.

Characteristically, high quality medical-device companies like Compumedics are valued at 30 to 40 times their earnings and recently companies in the sleep sub-sector have
been valued at up to 50 times earnings. Evidence of the interest in the sector was the March 2008 purchase of Respironics, Inc, by Royal Philips Electronics for a price that was a multiple of approximately five times Respironics’ 2007 sales.

The Company is committed to realise the intrinsic value of its current business as well as its significant intellectual property portfolio, brand name, and market presence for its shareholders.

I look forward to updating you on further developments in these initiatives as they
progress.

David Burton
Chairman