Slide 1: Results for the full year ended 30 June 2011 (F11)
Cochlear Limited For personal use only Results for the full year ended 30 June 2011 (F11) 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) • ~ 2,500 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 F11
Cochlear: Financial Results for F11 For personal use only F11 F10 $ millions $ millions ±% Cochlear Implants 648.0 603.7 Ç7 Bone Anchored Solutions (Baha) 84.2 92.5 È9 FX Contracts 77.4 38.6 Ç101 Revenue 809.6 734.8 Ç10 EBIT 242.7 220.5 Ç10 Net Profit After Tax 180.1 155.2 Ç16 Earnings per Share (EP
Slide 5: Cochlear: Sales in Constant Currency
Cochlear: Sales in Constant Currency (CC) For personal use only • Total revenues of $809.6 million, up 10% • Sales (excluding FX contracts) up 17.3% in constant currency (prior periods restated at F11 H2 rates) • H1 sales momentum of 17.2% CC growth continued through H2 (CC sales growth of 17.4%) H1
Slide 6: Cochlear Implant (CI) Unit Sales
Cochlear: Cochlear Implant (CI) Unit Sales For personal use only • F11 cochlear implant (CI) unit sales up 17% to 24,661 units • F11: 70+% of implants were Nucleus 5 (N5) H2 • N5 release 3 successfully launched in H2 H1
Slide 7: Sales of Bone Anchored Solutions in Constant Currency
Cochlear: Sales of Bone Anchored Solutions (BAS) in Constant Currency For personal use only • BAS sales (including Baha implants) $84.2 million for F11, up 2% in constant currency • Baha 3 Power launched end of June 2011 H2 H1
Slide 8: F11 Regional Split of Sales
Cochlear: F11 Regional Split of Sales For personal use only EMEA1 Americas 40% 43% CC2 growth Ç14% CC growth Ç16% Asia Pacific 1 EMEA is Europe, Middle East 17% and Africa CC growth Ç31% 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 $317 million, up 16% in constant currency • USA field expansion being implemented (from 20 territories to 29 H2 territories) • Further expansion in Latin America, including establishment of operations in Panama H
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 $293.3 million, up 14% in constant currency • Sales growth across developed and emerging economies H2 • Challenging Middle East/North Africa situation H1
Slide 11: Cochlear Asia Pac: Sales in Constant Currency
Cochlear Asia Pac: Sales in Constant Currency For personal use only • Asia Pacific sales of $121.9 million, up 31% in constant currency • Australia (most penetrated adult market per capita) still double digit growth, reinforcing H2 the importance of awareness/referral path • Growth across Asia- Paci
Slide 12: Cochlear: Net Profit After Tax (NPAT)
Cochlear: Net Profit After Tax (NPAT) For personal use only • EBIT up 10% to $242.7 million • EBIT 30% of revenue, same as F10, (despite appreciation of the AUD) • NPAT up 16% to $180.1 million. • EPS of $3.18, up 15% H2 H1
Slide 13: Cochlear: Free Cash Flow and Dividends
Cochlear: Free Cash Flow and Dividends For personal use only • Free cash flow of $166 million similar to F10, as capital expenditure increased for new facility • Final dividend $1.20 per share (70% franked, 30% CFI), up 14% • Full year dividend (interim and final) $2.25 up 13%
Slide 14: Cochlear: Investing for Long Term Growth
Cochlear: Investing for Long Term Growth For personal use only • Ongoing commitment to technologic innovation (R&D ~ 13% of revenues) • Significant ongoing investments in manufacturing and global supply chain • New headquarters at Macquarie University (MU) completed –catalyst for local hearing preci
Slide 15: Cochlear at Macquarie University
Cochlear at Macquarie University For personal use only • 24,000m² head office facility housing specialist research and manufacturing functions on campus at Macquarie University • Future expansion over next 25 years • Part of a hearing precinct • Vision is to create a world leading hearing precinct a
Slide 16: Technologic innovation
Technologic innovation For personal use only • R&D spend ~ 13 % of revenue • Nucleus 5: release 3 has been very successful (eg improved remote assistant interface and N24 backwards compatibility) • BAS: Baha 3 and Baha 3 Power • Full pipeline of opportunities • Technology development and license agr
Slide 17: Technologic innovation
Technologic innovation For personal use only Outcome driven innovation / new benchmarks Hearing Performance Ease of Use Cosmetics / Ergonomics Miniaturisation / Reliability Manufacturing / Building blocks to scale Supply Chain clinical pathway
Slide 18: Cochlear F11 Overview
Cochlear H1 F11 Overview For personal use only • Record F11 financial results: • Revenue of $810 million,Ç10% with sales Ç17% in constant currency (CI units Ç17%) • NPAT Ç16% to $180.1 million • Net cash position of $9.4 million • Market trends remain favourable with opportunities in both developed
Slide 19: F11 Financial Results
F11 Financial Results For personal use only Neville Mitchell
Slide 20: F11 Financial Performance
F11 Financial Performance For personal use only F11 F10 % $m $m Change Total Revenue 809.6 734.8 Ç 10% EBIT 242.7 220.5 Ç 10% NPAT 180.1 155.2 Ç 16% Dividends Full Year (interim and final) 225c 200c Ç 13% Final Dividend 120c 105c Ç 14% Franking % 70% 60% Conduit Foreign Income % 30% 40% Record Date
Slide 21: F10 - F11 NPAT Reconciliation
F10 - F11 NPAT Reconciliation For personal use only 250 3.6 0.1 (17.2) 83.4 225 (26.6) (1.3) (2.2) 200 (14.9) 180.1 175 155.2 150 125 100 75 50 25 ‐ F10 NPAT Gross Margin Interest Admin Cost R&D Selling and Other Tax FX Impacts F11 NPAT Expenditure Marketing Income
Slide 22: F11 Working Capital
F11 Working Capital Inventory (Days Stock Held) / Debtors Days Outstanding For personal use only 120.0 250 100.0 Inventory ($ millions) 200 Days stock held 80.0 150 •• F11 F11 Inventory Inventory at at 60.0 173 173 days days (F10 (F10 192 192 days) days) 100 40.0 $106.1 $106.1 (F10 (F10 $104.4m) $10
Slide 23: Impact of Appreciating AUD on F11 NPAT
Impact of Appreciating AUD on F11 NPAT For personal use only A$m F/(U) Income Statement Translation Impact Sales Revenue (82.9) Difference F11 Total Expenses including tax 27.9 actual vs F11 at F10 rates (55.0) Transaction Impact Difference between - Increase from F10 of gain on FX Contracts 38.8 ac
Slide 24: Cochlear F11 Cash /(Debt)
Cochlear F11 Cash /(Debt) For personal use only 30 June 30 June 2011 2010 $m $m Operations Loans and Borrowings Current (60.0) - Non-current (3.0) (82.9) Total Debt – operations (63.0) (82.9) Cash 72.4 41.8 Net Cash/(Debt) – operations 9.4 (41.1) Gearing ratio - operations (2%) 9% (net debt/net debt
Slide 25: Cochlear F11 Overview
Cochlear H1 F11 Overview For personal use only • Record F11 financial results: • Revenue of $810 million,Ç10% with sales Ç17% in constant currency (CI units Ç17%) • NPAT Ç16% to $180.1 million • Net cash position of $9.4 million • Market trends remain favourable with opportunities in both developed
Slide 26: Thank you
For personal use only Thank you Any questions?
Slide 27: Completion of Global Headquarters
Completion of Global Headquarters For personal use only $m Proceeds from Macquarie University 130.3 Total cost (118.7) Onerous lease commitments at present value (3.7) Relocation expenses (1.8) Construction profit net of relocation expenses 6.1 (Note 28)
Slide 28: Corporate & Other Expenses
Corporate & Other Expenses For personal use only F11 F10 $m $m FX Contracts (77.4) (38.6) Research and Development 108.9 94.9 Corporate Administration & Marketing 58.4 55.0 Corporate Other Income (7.6) (9.3) Corporate and other net expense (note 10) 82.3 102.0
Slide 29: Foreign Exchange
Foreign Exchange For personal use only Rates applied F11 vs F10 F11 F10 % Average rates (used for translating P&L) USD 0.98 0.88 12% Euro 0.72 0.63 14% JPY 82.0 80.5 2% GBP 0.62 0.55 13% Contract rates (used to bring FX to Aust) USD 0.83 0.80 4% Euro 0.58 0.56 4% JPY 78.38 84.70 (7%)
Slide 30: Foreign Exchange
Foreign Exchange For personal use only Period end rates applied F11 vs F10 30 June 30 June % change 2011 2010 Period end rates (for translating Balance Sheet) USD 1.05 0.87 21% Euro 0.73 0.71 3% JPY 84.8 78.1 9%
Slide 31: FX Contract Cover and Rates
FX Contract Cover and Rates as at 30 June 2011 For personal use only Total FX cover at USD Euro JPY Total AUD 30 June 11 246.7m 216.7m 9.4m 472.8m % of total cover (in AUD) 52.2% 45.8% 2% 100% 3 yr weighted average rates FX contracts at 30 June 11 0.82 0.64 75.4 FX contracts at 30 June 10 0.78 0.57