Slide 1: Results for the full year ended 30 June 2010 (F10)
Cochlear Limited For personal use only Results for the full year ended 30 June 2010 (F10) Chris Roberts, CEO Neville Mitchell, CFO
Slide 2: Cochlear Overview
Cochlear Overview For personal use only • Cochlear Limited (ASX:COH) is the global leader in implantable devices for the hearing impaired (cochlear implants, auditory brainstem implants, hybrid implants, DACS and bone conduction implants) • ~ 2,200 employees • Direct operations in 20+ countries, and
Slide 3: Cochlear's implant systems include
Cochlear's implant systems include: For personal use only Cochlear Baha 3 Cochlear Nucleus 5 Cochlear implant electrode Baha Sound Processor Cochlear implant receiver/stimulator Baha Abutment Baha Implant Sound Processor Remote Assistant
Slide 4: Cochlear: Financial Results for F10
Cochlear: Financial Results for F10 For personal use only F10 F09 $ millions $ millions +% Cochlear Implants 603.7 614.0 2 Bone Anchored (Baha) 92.5 97.8 5 FX Contracts 38.6 (17.1) Revenue 734.8 694.7 6 EBIT 220.5 183.3 20 Net Profit After Tax 155.2 130.5 19 EPS 275.7 cps 233.7 cps 18 Final
Slide 5: Cochlear: Sales in Constant Currency (CC)
Cochlear: Sales in Constant Currency (CC) For personal use only • Total revenues $734.8 million, up 6% • Sales in constant currency (prior periods restated at F10 rates) up 12% • Sales in constant currency for H2 F10 up 20% demonstrating momentum H2 from Cochlear Nucleus 5 H1
Slide 6: Cochlear Implant (CI) Unit Sales
Cochlear: Cochlear Implant (CI) Unit Sales For personal use only • F10 cochlear implant (CI) unit sales up 13% to 21,023 units • H2 F10 CI unit sales up 20% • Successful launch of Cochlear Nucleus 5, which represented the H2 majority of CI sales in H2 H1
Slide 7: Sales of Bone Anchored Solutions (BAS) in Constant Currency
Cochlear: Sales of Bone Anchored Solutions (BAS) in Constant Currency For personal use only • BAS sales (including Baha implants) $92.5 million for F10, up 9% in constant currency • Successful launch of Cochlear Baha BP100 & new implant BI300 H2 H1
Slide 8: F10 Regional Split of Sales
Cochlear: F10 Regional Split of Sales For personal use only EMEA1 Americas 42% 44% CC2 growth 7% CC growth 18% Asia Pacific 1 EMEA is Europe, Middle East 14% and Africa CC growth 13% 2 CC is Constant Currency
Slide 9: Cochlear Americas: Sales in Constant Currency
Cochlear Americas: Sales in Constant Currency For personal use only • Americas sales of $307.6 million, up 18% in constant currency • USA: FDA approval for Nucleus 5 submission (implant and externals) in H1, and rechargeable batteries in H2 H2 • H2 F10 CC sales growth of 29% demonstrating H1 Cochlea
Slide 10: Cochlear EMEA: Sales in Constant Currency
Cochlear EMEA: Sales in Constant Currency For personal use only • EMEA (Europe, Middle East and Africa) sales of $291.5 million, up 7% in constant currency • Tender sales (primarily Middle East and Central/Eastern Europe) which were down in H1 H2 remained weak in H2 • Successful launch of H1 Cochlea
Slide 11: Cochlear Asia Pac: Sales in Constant Currency
Cochlear Asia Pac: Sales in Constant Currency For personal use only • Asia Pacific sales of $97.1 million, up 13% in constant currency • 500 CI units sold into China donation program • Restructured distribution in India (Cochlear now H2 direct) • WOFE established in H1 China
Slide 12: Cochlear: Earnings Before Interest & Tax (EBIT)
Cochlear: Earnings Before Interest & Tax (EBIT) For personal use only • Gross margin increased to 72.5% (from 71.8% in F09) • SGA reduced to 31.0% of revenue (33.1% in F09), and R&D to 12.9% of revenue (13.9% in F09) • Operating margin expansion: EBIT increased to 30% of revenues (26.4% in F09) • EB
Slide 13: Cochlear: Net Profit After Tax (NPAT)
Cochlear: Net Profit After Tax (NPAT) For personal use only • NPAT of $155.2 million, up 19% on F09 • EPS of $2.76, up 18%
Slide 14: Cochlear: Free Cash Flow and Dividends
Cochlear: Free Cash Flow and Dividends For personal use only • Free cash flow up 50% to $166 million • Inventory down 1% • Debtors up 4% • Final dividend of $1.05 per share 60% franked, 40% conduit foreign income • Full year dividend $2.00 up 14%
Slide 15: Cochlear Nucleus System
Cochlear Nucleus 5 System For personal use only • Cochlear Nucleus 5 launched in ~ 50 countries in F10, including USA • The majority of Cochlear implant sales now Nucleus 5 • Customer feedback (recipients and clinicians) has been extremely positive • Nucleus 5 launch benefited from substantial inves
Slide 16: Nucleus – Setting new benchmarks across many dimensions
Nucleus 5 – Setting new benchmarks across many dimensions For personal use only The introduction of Nucleus 5 has truly set new benchmarks across many important dimensions ……… Hearing Performance Ease of Use Cosmetics / Ergonomics Miniaturisation / Reliability Manufacturing / Building blocks to scal
Slide 17: Cochlear Baha – Combined Performance
Cochlear Baha 3 – Combined Performance For personal use only Baha Implant (BI300) • BP100: new build standard released with enhanced Allows measurement of features implant stability (RFA) Tight connection • BI300: new implant released Tight connection with improved implant stability, and surgical to
Slide 18: Global HQ Nearing Completion
Global HQ Nearing Completion For personal use only • Excellent progress on new 24,000m² head office facility housing specialist research and manufacturing functions on campus at Macquarie University • Completion late 2010 • Macquarie University’s “Hearing Hub” building is also at the advanced stage
Slide 19: Cochlear F10 Summary
Cochlear F10 Summary For personal use only • Net Profit After Tax (NPAT) of $155.2 million up 19%, with free cash flow up 50% to $166 million • Successful launch of Cochlear Nucleus 5 in ~ 50 countries, and majority of cochlear implant sales now Nucleus 5 • Customer feedback on Nucleus 5 is extremel
Slide 20: F10 Financial Results
F10 Financial Results For personal use only Neville Mitchell
Slide 21: F10 Financial Performance
F10 Financial Performance For personal use only F10 F09 % $m $m Change Total Revenue 734.8 694.7 6% EBIT 220.5 183.3 20% NPAT 155.2 130.5 19% Dividends Final Dividend 105c 95c 11% Record Date 2nd September 2010 Payable Date 23rd September 2010 Full Year (Interim and final) 200c 175c 14% Fr
Slide 22: F09 - F10 NPAT Reconciliation
F09 - F10 NPAT Reconciliation use only 250 67.3 (9.7) 200 (1.6) (1.7) (4.1) (10.4) (15.1) 155.2 150 $ million For personal 130.5 100 50 0 130.5 67.3 (9.7) (1.6) (1.7) (4.1) (10.6) (15.1) 155.2 Reported Gross Sales, Admin R&D Cost Interest Tax FX Reported F09 NPAT Margin Marketing Cost Impacts F10 NP
Slide 23: F10 Working Capital
F10 Working Capital Inventory (Days Stock Held) / Debtors Days Outstanding For personal use only • F10 Inventory at 192 days (F09 198 days) $104.4m (F09 $105.9m) • Further decrease in debtor days to 72 (F09: 73, F08: 81) • F10 debtors at $159.5m (F09 $153.3m)
Slide 24: Impact of Appreciating AUD on F10 NPAT
Impact of Appreciating AUD on F10 NPAT For personal use only A$m F/(U) Income Statement Translation Impact Sales Revenue (95.0) Difference F10 Total Expenses including tax 31.7 actual vs F10 at F09 rates (63.3) Transaction Impact Difference between - Increase from F09 of FX gain on FX Contracts 55.7
Slide 25: Cochlear F10 Debt
Cochlear F10 Debt For personal use only 30 June 30 June 2010 2009 $m $m Operations Loans and Borrowings Current - - Non-current 82.9 176.6 Total Debt – operations 82.9 176.6 Cash 41.8 77.9 Net Debt – operations 41.1 98.7 Gearing ratio - operations 9% 21% (net debt/net debt + equity) Net Debt for new
Slide 26: Foreign Exchange
Foreign Exchange For personal use only Rates applied F10 vs F09 F10 F09 % Average rates (used for translating P&L) USD 0.88 0.76 16% Euro 0.63 0.55 15% JPY 80.5 75.9 6% GBP 0.55 0.47 17% Contract rates (used to bring FX to Aust) USD 0.80 0.81 (1%) Euro 0.56 0.51 10% JPY 84.7 103.0 (18%)
Slide 27: Foreign Exchange
Foreign Exchange For personal use only Period end rates applied F10 vs F09 30 June 30 June % change 2010 2009 Period end rates (for translating Balance Sheet) USD 0.87 0.81 7% Euro 0.71 0.57 25% JPY 78.1 76.9 2%
Slide 28: FX Contract Cover and Rates
FX Contract Cover and Rates as at 30 June 2010 For personal use only Total FX cover at USD Euro JPY Total AUD 30 June 10 326.2m 182.7m 1,062m 644.9m % of total cover (in AUD) 58% 40% 2% 100% 3 yr weighted average rates FX contracts at 30 June 10 0.78 0.57 76.7 FX contracts at 30 June 09 0.75 0.53 83
Slide 29: Cochlear F10 Summary
Cochlear F10 Summary For personal use only • Net Profit After Tax (NPAT) of $155.2 million up 19%, with free cash flow up 50% to $166 million • Successful launch of Cochlear Nucleus 5 in ~ 50 countries, and majority of cochlear implant sales now Nucleus 5 • Customer feedback on Nucleus 5 is extremel
Slide 30: Thank you
For personal use only Thank you Any questions?