Pro Medicus Interim Results

Australia's leading medical IT and e-health provider Pro Medicus Limited [ASX:PME] today reported a reduced after tax profit for the half-year of $1.057 million largely due to the previously announced reversal of $1.2 million of accrued revenue. While the reported result was down, the underlying performance of the business remained strong.

The company's balance sheet has been further strengthened with cash reserves increasing to $10.2 million and the company remains operationally debt free. Directors have declared an interim dividend of 1.25 cents per share fully franked, the same as for the previous corresponding half-year.

The $1.2 million revenue reversal, announced to the market in December 2003, related to the deferred implementation of a major project for Mayne Diagnostic Imaging. Income, relating to the work done was accrued in the 2002/2003 financial year in accordance with standard revenue recognition policies. The project is expected to complete in the future and at that time its total revenue will be booked as income. All costs related to the project to date have been expensed.

Key milestones achieved during the period include:

1. e-health
   • Over 14,500 Australian doctors are now connected to Promedicus' e-health network, promedicus.net.
   • More than 5 million diagnostic results have been securely transacted.
   • The network, predominantly handling radiology results, is now open to all specialists through the introduction of the Specialist Report Sender software.
   • R&D work is well advanced on HIC-Online capability to streamline claiming and clinical information processes between clients and the government over the internet. The company will be eligible for significant financial incentives from the government on completion of this project.
2. Digital radiology
   • The company's first digital imaging customer, Lake Imaging in Ballarat, has found that the productivity improvements gained from the system have exceeded expectations and plan to expand their network further.
   • A $1 million contract to supply the full suite of digital radiology products to a major public sector project was won in December. This project, linking the radiology departments of a number of hospitals across a large geographic region, signifies that PME's technology is applicable to both the public and private sectors.
   • After balance date (January), a second digital imaging contract was won to supply the full range of PME practice management and digital imaging products to Manningham Diagnostic Imaging, a "new generation" practice in Melbourne.
   • Discussions have advanced with major clients regarding the potential widespread adoption of the PME digital imaging integration products.
3. Overseas activity
   • The company's UK customer, MIA Lodestone, one of the largest private radiology groups in the UK, has increased its use of Pro Medicus systems.
   • company's UK customer, MIA Lodestone, one of the largest private radiology groups in the UK, has increased its use of Pro Medicus systems.
   • &D work was initiated to evaluate the suitability of current products for other overseas markets with a view to developing further international versions. This follows the successful development of software for the UK.

Commenting on the results, Pro Medicus managing director, Dr Sam Hupert said, "It's unfortunate that the accounting adjustment masks what was otherwise a solid operating half for Pro Medicus. Our core practice management business performed well, we've seen the rapid growth of our e-health network continue and most importantly, the accelerated take-up of our digital technology. Whilst it has taken a little longer than we had hoped, there is no doubt that interest in our digital radiology systems has started to take off. This technology has shown that it can deliver productivity improvements in the order of 30% or greater, making it very attractive in an industry where radiologists and technical staff wages represent such a huge proportion of total operating costs."

Looking forward, Dr Hupert expects the second half to be a busy one for Pro Medicus. "We already have two new digital projects to implement, both of which will be installed in the second half. This will give us a good head start, as the majority of the revenue for these projects will be realised in that period.

"There is now clear indication in the market that some of the large radiology players are looking to implement a comprehensive digital strategy within the next six to twelve months. Our leading edge technology and its proven ability to deliver substantial productivity gains uniquely position us to address this opportunity".

For more information:

Dr Sam Hupert Managing Director Pro Medicus Limited	Mike Feehan Monsoon Communications Phone: + 61 3 9620 3333
Email: hupert@promedicus.com.au Phone: +61 3 9429 8800 Facsimile: +61 3 9429 9544