Cochlear Limited · ASX:COH
Cochlear — H1 2004 Earnings Presentation
34 slides from Cochlear's earnings presentation, Feb 17, 2004
Slide 1: The world leader.
Slide 2: Results for the half year ended 31 December 2003
Slide 3: Presentation Agenda 17th February 2004
Slide 4: Introduction
Slide 5: First Impressions
First Impressions ¢ Fundamentals of the business are intact * Unmet clinical need * Great technology / products * Strong market position * Good people ¢« Need renewed focus on execution ¢ Good opportunities for expanding access pO tags, into these markets eon “A eo % wo Hear now. And always“ &
Slide 6: Long Term Trends
Long Term Trends ¢ Implant rate less than incidence of severe deafness ¢ Neonatal screening ¢ Technology developments ¢ Ageing population * Growing critical mass of recipients ct , hit bos a _ ra Hear now. And always % &
Slide 7: Financial Results - H104
Financial Results - H104
Slide 8: Financial Results Profile 1H04
Financial Results Profile 1H04 * Sales in line with expectations * FX PAT impact (A$1m) ¢ Margin improvement ¢ Strict expense control ¢ Additional $2.6m investment in R&D, ahead of new system launch in F’05 * Capital management - Review complete - Payout ratio maintained ¢ New accounting disclosures
Slide 9: Accounting Disclosures — 1H04
Accounting Disclosures — 1H04 « FX hedge gains - Profit on hedges in Total Revenue (previously COGS) - Separate line item - Complies Accounting Standards AASB 1012 ¢ Intangible - Relates to Phonak contribution to Cochlear Acoustics ¢ Deferred revenue - 24 processor sales pS HOOLON EE pay, . a maa a
Slide 10: Financial Performance
Financial Performance 1H 04 A$’m Units 4,482 Total Revenue* 139.2 Operating Profit before tax 36.3 PAT 26.9 Half year’s dividend 35c Franking 100% * Restated 1HO3 with accounting standards 1H 03 % A$’m Change 4,415 12% 150.5 L7% 36.0 - 27.0 - 33¢ T6% 100% so a spit “Sp, ; wo Hear now. And always % f
Slide 11: Financial Performance 1H04
Financial Performance 1H04 Revenue by region 78.4 @ 1H04 : W 1H04 at 1H03 rates 1H03 80 47.5 Americas Europe Asia Pacific y ————w o e, a Hear now. And always f
Slide 12: Americas — Overview 1H04
Americas — Overview 1H04 * Comparatives difficult: last year’s growth 50% Market leader — 60-65% market share — an increase from the start of F’03 Market share loss minimal from 2H03 to 1H04 FX impact on reported A$ sales Clinic capacity / profitability | et “Albin, on hy " i? es Re Im b urseme nt f
Slide 13: Europe — Overview 1H04
Europe — Overview 1H04 ¢ High market share maintained — 60-65% ¢ Good growth in major markets of UK and Germany ¢ Middle East / Central Eastern Europe slower growth ¢ Reimbursement breakthroughs uneven be a ty, a Ny i e e, year now. And always“
Slide 14: Asia Pacific — Overview 1H04
Asia Pacific — Overview 1H04 ¢ Cochlear clear market leader in Asia — 80% market share ¢ First two months impacted by SARS ¢ Strong unit growth of 21% ¢ Strong North East Asia / China sales ¢ Good growth in Australian sales pecans a hit bos a _ e e, year now. And always“
Slide 15: PAT Reconciliation 1H04 — 1H03
PAT Reconciliation 1H04 — 1H03 * Market & F'04 Profit arKe! Admin R&D $26.9 43 (3.0) PAT Increase/ (Decrease) Tax Minorities A$m (1.2) 02 27.1 y ! in F'03 Profit $27.0 ow tO Y a now, And always ‘
Slide 16: Financial Performance — FX 1H04
Financial Performance — FX 1H04 ¢ Portfolio of currencies - USD, EURO, JPY, HKD * Policy maintained to hedge out 3 years on rolling basis ¢ 100% first six months down to 20% 36 months out 1H04 - Impact A$m Sales revenue translation impact (21) FX contracts 15 Foreign expenses — translation 5 impact
Slide 17: Foreign Exchange 1H04
Foreign Exchange 1H04 Rates applied 1H04 and 1H03 1H04 | 1HO03 Average rates (used for translating P&L) USD 69 56 GBP 42 37 JPY 79 68 Contract rates (used to bring FX to Australia) USD 59 52 EURO 55 57 GBP 36 36 JPY 54 58 if oe Dig ra Hear now. And always &
Slide 18: Foreign Exchange Going Forward
Foreign Exchange Going Forward Contract Rates USD |EURO| JPY 6 months to June 04 55 56 58 12 months to June ’05 59 56 53 12 months to June ’06 62 53 54 Total mark to market FX gain at 31 December A$47m vA a Cs oe i, i “ty Hear now. And always
Slide 19: Financial Position 1H04
Financial Position 1H04 Current assets Cash (net) Receivables Inventory Current liabilities Provisions Dec 31 2003 A$m 38.8 53.9 49.0 15.3 wee oe ee os st ", a , o e, wv Hear now. And always
Slide 20: Capital Management
Capital Management Process ¢ External expert review and advice ¢ Understanding of debt/equity benchmarks ¢ Maximising options for shareholders * CEO to review ¢« CELTIP purchase - 70% dividend payout ratio confirmed____ , a ~ a Hear now, And always % a
Slide 21: F'04 Outlook
F’04 Outlook ¢ In line with December announcement * Double digit 2"¢ half growth ¢ F04 PAT marginally below last year’s record result ct , hit bos a _ ra Hear now. And always % &
Slide 22: Technology & Product Development
Technology & Product Development
Slide 23: Upcoming Product Releases
Technology & Product Development Upcoming Product Releases FO4 * Nucleus® 24 Contour Advance™ — Softip™ Electrode * Streamlined fitting * ESPrit 3G for Nucleus® 22 FOS * System4 - Implant - Processor poeta pee tht it i - Improved Streamlined Fitting ‘ wo Hear now. And always vA “ip
Slide 24: Contour Advance update
Contour Advance update Change in electrode tip and insertion 790 implants as at Jan04 Related studies: « NYU confirmed improved coiling (deeper & closer perimodiolar position) Clinical studies on residual hearing underway in US & Europe Side view a Long term goal to preserve residual hearing SY %, H
Slide 25: Insertion Tool for Contour Advance
Insertion Tool for Contour Advance « Full-function * Single-handed ¢ Sterile & disposable ini i i SRR ee hte,
Slide 26: Insertion Tool Studies
Insertion Tool Studies ¢ Surgical usability and safety complete « Market Acceptance Test worldwide to start Mar 04 Hear now, And always
Slide 27: Streamlined Fitting
Streamlined Fitting A range of important new features ¢ Support for the Nucleus22 NRT-based Mapping Bilateral MAP support Session History Translated user interface and many more. ° ° ° ° ° GER ay pe —— “a ee ie a Hear now. And always vA
Slide 28: Software in Japan (installed in clinics)
Software in Japan (installed in 50 clinics)
Slide 29: Results of Streamlined Fitting Study
Results of Streamlined Fitting Study European study* shows significant improvement in fitting times (n=51).: ¢ Standard mapping — 41.8 minutes ¢« NRT-based mapping — 20.7 minutes No significant difference in resulting performance * Angel Ramos Macias, Justine Maggs, Denise Cafarelli Dees, Paula Gree
Slide 30: New Streamlined Fitting Method
New Streamlined Fitting Method Combined Product & Service Development ¢ Option of NRT-based mapping or: * Interpolation and live-voice C-level setting ¢ Faster, simpler, “more natural” fitting 46 US clinics enrolled in clinical study ¢ Early results very promising * Fitting times of less than 15 min
Slide 31: Esprit 3G for N22 users
Esprit 3G for N22 users * Speak strategies for N22 users « 18,000 installed base « Addresses more recipients than original ESPrit * Provides Whisper Setting, FM integration er %, ra Hear now. And always vA
Slide 32: System Development
System 4 Development New Implant ¢ Higher Stimulation rates * Improved Streamlined Fitting * New Stimulation modes dit , yo “ty et “ty, %, ra Hear now. And always vA
Slide 33: System
System 4 * Clinical trial continues with expansion to the USA ¢ New algorithms appear very promising with small trial numbers ¢ Further trial expansion 1H04 ct , et “e he, o e, en Hear now. And always“
Slide 34: ica
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