CogState : Business Update and Appendix 4C

ASX ANNOUNCEMENT 23 JANUARY 2017 COGSTaTE

BUSINESS UPDATE AND DECEMBER QUARTER CASHFLOW

RECORD SALES PERFORMANCE AND INCREASED CASH BALANCE

Cogstate (ASX.CGS) has today released a business update and its Appendix 4C - Quarterly Cash Flow statement for the second quarter ended 31 December 2016.

SUMMARY OF RESULTS

• Record sales contracts executed of US$23m during 1H17, up 35% on 1H16

• Record contracted revenue backlog of US$32m (A$44m) at 31 Dec 2016 to be recognised in 2H17 and beyond, up 26% since 30 June 2016

• Recognised revenue of A$18 .5m during 1H17, up 43% on 1H16

• Record operating cash inflow of A$6.7m for 2017, taking cash reserves to A$11.2m

• Positive 1H17 EBIT guidance in the range of A$1.3m - A$1.5m

  Note: Cogstate's sales contracts are denominated in US$, but its functional currency is AUD$. Figures in this release are quoted in both US$ and AUD$ where appropriate.

  RECORD HALF FOR NEW SALES AND CONTRACTED REVENUE PIPELINE

  • Cogstate executed US$5.7m of new sales contracts in 2017.

  • Totalvalue of contracts signed during 1H17 reached US$23.0m (A$30.3m), a 35% increase on 1H16 and a new record for a half year.

  • Cogstate management is very pleased with the underlying growth trajectory; given the long sales cycle of clinical trials, management expects some lumpiness in quarterly sales figures.

    SALES CONTRACTS EXECUTED

    $28.5

    $39.2

    .. .

    $30.3

    $23.0

    FY16 FY17 FY16 FY17

    • US$m • • A$m •

  • At 31 December 2016, Cogstate had A$62.5m1·2 of contracted Clinical Trials revenue to be recognised in FY17 and later years. Of that contracted amount, A$30 .9m is expected to be recognised in FY17, inclusive of the A$18.5m recognised in 1H17.

  • As indicated by the strong book-to-bill result for the half, during 1H17 Cogstate grew the amount of contracted revenue that will be recognised in the future, from A$33.9m (US$25.2M) at 30 June 2016 to A$43 .9M (US$31.7M) at 31 December 2016, an increase of 29%.

    CONTRACTED REVENUE TO BE RECOGNISED IN THE FUTURE

    '

    29.°-/o/'.-

    $43.9

    $31.7

    $33.9

    ,,,'

    $25.2

    30-JUN-1631-DEC-16

    • US$m •

RECORD HALF FOR RECOGNISED REVENUE

1. JUN-16 31-DEC-16

   • A$m •

   • Revenue of A$7.5m achieved for 2017, resulting in record underlying revenue of A$18.5m (excluding pass-through cost recoveries) for 1H17 (up 43% on 1H16).

     RECOGNISED REVENUE

     $27.3

     $19.8

     $18.5

     50% ,,,,

     ,'

     ---..,.,,'

     $14.0

     FY16 FY17

     • US$m •

     FY16 FY17

     • A$m •

   • New contract signings in 2017 of A$7.8m 1 exceeded the A$7 .3m of Clinical Trials revenue booked in the same period representing a quarterly Book-to-Bill ratio of 1.07x. New contract signings have exceeded revenue in nine of the past ten quarters since 1015 (Book to Bill ratio >1x), indicating continued growth in the future revenue pipeline.

1. Cogstate received not1ficat1on that one study had been put on hold andis expected to re1rntiate in 2018. This contracted revenue (US$2.4m) has been excluded from the analysis above and will be included when the studyis rein1t1ated

1. Contracts are denominated in US$. Spot rate at 31 December 2016 has been used to calculate the A$ equivalent. The rate used at 31

   December 2016 was O 7236 and the rate used at 30 June 2016 was 0.743

   RECORD OPERATING CASH FLOW AND STRENGTHENED BALANCE SHEET

   • Net Operating Cash Inflow was A$6.7m in 2017, reflective of the large receipts from customers during the quarter. Trade receivables at 31 December 2016 were A$6.1 m, down from A$10 .9m at 30 September 2016.

   • Cash balance of A$11.2m at the end of the quarter was 120% higher than at the end of December 2015.

     POSITIVE EBIT ACHIEVED

   • Cogstate expects to report EBIT in the range of A$1 .3m -A$1.5m for 1H17.

   • In achieving positive EBIT, all software development costs have been expensed in line with company policy. Intangible Assets remain unchanged from 30 June 2016.

     OTHER DEVELOPMENTS

   • Cogstate remains focused on growth in Clinical Trial opportunities, as well as preparing for launch in the Healthcare market.

   • Cogstate welcomed George Hunnewell as Chief Operating Officer and Frank Cheng as President of Healthcare during the quarter. The new senior executives will be attending institutional investor roadshows in late January/early February 2017 alongside Brad O'Connor, CEO.

   • Cogstate notes that its functional currency will change to US dollars from 1 July 2017 onwards, bringing reporting into line with the fundamentals of Cogstate's business (approximately 98%+ of Cogstate's revenues and 80%+ of costs are in US dollars).

     FUTURE ASX ANNOUNCEMENTS

   • Cogstate plans to release its Appendix 40 and Half Year Report for the period to 31 December 2016 on Thursday 23 February 2017.

Quarterly Report - 31 December 2016 Summary Financial Table

Quarter Just Completed

Previous Quarter

Previous Correspondi ng

Quarter

31-Dec-16 30-Sep-16 31-Dec- 15

A$ million A$ mi llion A$ million

Revenue	7.27	11.00	6.45
Clinical Trials revenue
Other Revenue (incl. Precision Recruitment)	0.19	0.09	0.44
Sub-total	7.46	11.09	6.89
Pass-through Cost Recoveries	1.61	0.51	1.51
Total Revenue	9.07	11.60	8.40
Receivables
Opening balance	10.85	5.26	6.14
Closing balance	6.09	10.85	6.62
Net lncrease/(Decrease) in Receivables	(4.76)	5.59	0.48
Payables
Opening balance	(3.62)	(4.75)	(2.80)
Closing balance	(4.06)	(3.62)	(4.54)
Net lncrease/(Decrease) in Payables	0.44	(1.13)	1.74
Cash Flow
Cash receipts from customers	15.29	6.90	7.36
Cash payments to employees	(5.72)	(7.46)	(4.38)
Cash payments to suppliers	(2.90)	(1.95)	(2.00)
Cash receipts, non-trading	0.01	0.00	0.03
Net Operating Cash ln/(Out) Flows	6.68	(2.51)	1.01
Net Investing Cash ln/(Out) Flows	(0.44)	(0.17)	(0.80)
Net Financing Cash ln/(Out) Flows	0.33	0.00	0.51
Foreign exchange movement	(0.06)	(0.10)	0.25
Net lncrease/(Oecrease) in cash held	6.51	(2.78)	0.97

For further information contact: Brad O'Connor

Cogstate Chief Execut ive Officer

[phone] or 0411 888 347

boconnor@cogstate . com

Kyahn Williamson Buchan Consulting 0401 018 828

kwilliamson@buchanwe . com . au