Cochlear Limited · ASX:COH
Cochlear — FY2009 Earnings Presentation
29 slides from Cochlear's earnings presentation, August 2009
Slide 1: Cochlear Limited Results for year ended 30 June 2009
Cochlear Limited Results for year ended 30 June 2009 Chris Roberts - CEO Neville Mitchell - CFO
Slide 2: Cochlear Background
Cochlear Background • Leader in implantable devices for hearing impaired: – Cochlear implants (CI) for sensorineural hearing loss (SNHL) – Bone anchored hearing implants (Baha®) for conductive hearing loss, mixed losses and single sided deafness – Electro-Acoustic Stimulation (HybridTM) for high fre
Slide 3: Cochlear's Implant Systems
Cochlear's Implant Systems Baha system Cochlear Implant system
Slide 4: Cochlear: Record financial results for F09
Cochlear: Record financial results for F09 F09 F08 $ millions $ millions +% Cochlear Implants 614.0 504.8 22 Bone Anchored (Baha) 97.8 75.6 29 FX Contracts (17.1) 21.3 Revenue 694.7 601.7 15 EBIT 183.3 167.3 10 Net Profit After Tax 130.5 115.2 13 EPS 233.7 cps 208.1 cps 12 Core Earnings* 138.0
Slide 5: Cochlear: 5 year Total Revenues
Cochlear: 5 year Total Revenues F09 • Total Revenue up 15% to $694.7 million (after $17.1 million FX contracts loss) • Sales - before FX contracts - up 23% to $711.8 million • Sales in constant currency (ie local currency) up 10%
Slide 6: Cochlear: 5 year CI Sales
Cochlear: 5 year CI Sales F09 • Cochlear implant/hybrid sales of $614 million, an increase of 22% (7% in constant currency) • Cochlear implant (CI) unit sales of 18,553, up 2% • CI surgeries (from implant registrations) up 11%
Slide 7: Cochlear: 5 year BAS Sales
Cochlear: 5 year BAS Sales F09 • Bone Anchored Solutions (BAS) sales of $97.8 million, an increase of 29% (17% in constant currency) • Next generation sound processor (Cochlear Baha BP100) launched 6/09
Slide 8: F09 Regional Split of Sales and Constant Currency Growth
F09 Regional Split of Sales and Constant Currency (CC) Growth Europe Americas 45% 42% CC growth 14% CC growth 10% Asia-Pacific 13% CC growth 5 %
Slide 9: Europe: 5 year sales in Constant Currency
Europe: 5 year sales in Constant Currency (CC) F09 • Europe sales $318.9 million up 24% (up 14% in constant currency) • UK NICE guidelines for CI (including simultaneous bilateral for children) became effective late in H2
Slide 10: Americas: 5 year sales in Constant Currency
Americas: 5 year sales in Constant Currency (CC) F09 • Americas sales $300.4 million up 29% (up 10% in constant currency) • Baha BP100 launched at the start of F10 • Awaiting FDA approval of Cochlear Nucleus 5
Slide 11: Asia Pacific: 5 Year sales in Constant Currency
Asia Pacific: 5 Year sales in Constant Currency (CC) F09 • Asia-Pacific sales $92.5 million up 2% (down 5% in constant currency) • No CI sales for China donation (700 units in F08) –negative unit growth for Asia-Pacific • Approval in Japan for Nucleus Freedom – launched 6/09
Slide 12: Cochlear: 5 year Net Profit After Tax
Cochlear: 5 year Net Profit After Tax F09 • Net Profit After Tax of $130.5 million, up 13% • EBIT of $183.3 million up 10% (26.4% of revenues) • R&D up 21% as we bring Nucleus 5 and BP100 to market
Slide 13: Dividends and Free Cash Flow
Dividends and Free Cash Flow • Free cash flow (FCF) of $111 million up 61% • Net debt reduced by $25 million to $109 million • Final year dividend increased by 19% to 95cps, for a full year dividend of $1.75 (up 17%) – fully franked
Slide 14: Pipeline of Opportunities
Pipeline of Opportunities Cochlear Nucleus 5 • Next generation cochlear implant Future Technologies system • CE Mark approval obtained in Europe. Awaiting FDA approval in • Direct Acoustic Cochlear USA. Stimulation (DACS) – first human implant in F10 Cochlear Baha BP100 • New electrodes in clinical
Slide 15: Construction started on new facilities at Macquarie University
Construction started on new facilities at Macquarie University
Slide 16: Cochlear F09 Overview
Cochlear F09 Overview • Record financial results: – Revenue up 15% to $694.7 million – NPAT up 13% to $130.5 million – Core earnings up 12% to $138.0 million • Free cash flow up 61% to $111 million • As we enter F10… – Cochlear Baha BP100 being released – Cochlear Nucleus 5 being released
Slide 17: F09 Financial Results
F09 Financial Results Neville Mitchell
Slide 18: F09 Financial Performance
F09 Financial Performance F09 F08 % $m $m Change Total Revenue 694.7 601.7 15% NPAT 130.5 115.2 13% Core Earnings 138.0 123.7 12% Dividends Final Dividend 95c 80c 19% Record Date 3rd September 2009 Payable Date 24th September 2009 Full Year (Interim and final) 175c 150c 17% Franking 100% 1
Slide 19: F09 Core Earnings Calculations
F09 Core Earnings Calculations F09 F08 $m $m NPAT 130.5 115.2 Adjustment items (after tax) • Net R&D (capitalisation & amortisation) 0.1 1.2 • Acquired intangible amortisation 2.5 2.6 • Share based compensation 4.9 4.7 Total adjustments 7.5 8.5 Core earnings 138.0 123.7
Slide 20: F08 – F09 NPAT Reconciliation
F08 – F09 NPAT Reconciliation 180 35.1 (9.4) 160 (8.7) (12.5) 140 3.8 (2.9) 130.5 9.9 120 115.2 $ million 100 80 60 40 20 0 1 1 5 .2 9 .9 3 5 .1 -9 .4 -8 .7 -1 2 .5 3 .8 -2 .9 1 3 0 .5 F08 NPAT FX Gross Margin Sales & Mktg Admin costs R&D costs Interest Tax F09 NPAT
Slide 21: F09 Working Capital
F09 Working Capital Inventory (Days Stock Held) / Debtors Days Outstanding 120.0 250 100.0 200 Inventory ($ millions) Days stock held 80.0 150 60.0 • F09 Inventory at 100 198 days, $105.9m 40.0 20.0 50 • Decrease in debtor - - days from 81 to 73 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-0
Slide 22: F09 Debt
F09 Debt 30 June 30 June 2009 2008 $m $m Loans and Borrowings Current - 15.4 Non-current 188.6 154.6 Total Debt 188.6 170.0 Net Debt 108.6 133.3 Gearing ratio (net debt / net debt + equity) 23% 30% New 3 year facility for $300m negotiated to 2012
Slide 23: Foreign Exchange
Foreign Exchange Rates applied F09 vs. F08 F09 F08 % Average rates (used for translating P&L) USD 0.76 0.90 (15%) Euro 0.55 0.61 (11%) JPY 75.9 99.3 (24%) GBP 0.47 0.45 4% Contract rates (used to bring FX to Aust) USD 0.81 0.80 1% Euro 0.51 0.59 (13%) JPY 103.0 84.3 22%
Slide 24: Foreign Exchange
Foreign Exchange Period end rates applied F09 vs. F08 30 June 30 June % change 2009 2008 Period end rates (used for translating Bal Sheet) USD 0.81 0.96 (15%) Euro 0.57 0.61 (5%) JPY 76.9 102.1 (25%)
Slide 25: FX Contract Cover and Rates as at 30 June 2009
FX Contract Cover and Rates as at 30 June 2009 Total FX cover at USD Euro JPY Total AUD 30 June 2009 264.4m 144.4m 1,418m 645.7m % of total cover (in AUD) 55% 42% 3% 100% 3 yr weighted average rates FX contracts at 30 June 09 0.75 0.53 83.2 FX contracts at 30 June 08 0.83 0.57 86.5 F10 weighted aver
Slide 26: F09 Net Finance Gain
F09 Net Finance Gain F09 F08 $m $m Net finance income/ (expense) Interest (expense) (7.1) (10.6) Net foreign exchange gain on translation of assets 8.7 4.7 Net finance income/(expense) 1.6 (5.9) First half F09 net foreign exchange gain $11.0m
Slide 27: Cochlear F09 Overview
Cochlear F09 Overview • Record financial results: – Revenue up 15% to $694.7 million – NPAT up 13% to $130.5 million – Core earnings up 12% to $138.0 million • Free cash flow up 61% to $111 million • As we enter F10… – Cochlear Baha BP100 being released – Cochlear Nucleus 5 being released
Slide 28: Thank you
Thank you Any questions?
Slide 29: F09 Core Earnings Reconciliation
F09 Core Earnings Reconciliation F09 F08 $m $m Earnings before interest and tax 183.3 167.3 Core earnings adjustments pre-tax • R&D 0.1 1.7 • Acquired intangible amortisation 2.5 2.6 • Share based compensation 4.9 4.7 Core EBIT 190.8 176.3 Net interest (7.1) (10.6) Core tax expense (45.7) (42.0) Cor