Slide 1: Slide 1 Slide 2: Slide 2 Slide 3: Slide 3 Slide 4: Background Background Medical device company (24yr) with dominant global position (60+% share) in cochlear implants (bionic ear) Cochlear implants directly stimulate the auditory nerve providing speech understanding for profound and severely hearing impaired The patients include infants (~ 1 year) through to t
Slide 5: Record Financial Results for H1 F05 Record Financial Results for H1 F05 ¢ Total Revenue $163.6 million ~~ 18% * Sales (pre-FX) $148.5 million ~~ 21% Unit Sales 5014 units 42% EBITDA $44.8 million 12% PAT $29.5 million - 10% Dividend maintained at 35c (fully franked) Hear now. And always
Slide 6: Unit Sales: H1/H2 Split Unit Sales: H1/H2 Split | | | | | FO7 = F98-—s FQ. FOO = F011 FO2 FOZ FO4 = FOS Period ae . ay ye Hear now. And always"
Slide 7: Group Sales Revenue A Group Sales Revenue A$’m 146.8 148.5 150 - 137.7 141.8 129.7 117.3 122.8 100 | $m 50 | HiFO2 H2F02 HIFO3 H2FO3) HIFO4 HeFO4 Hi FOS Hear now, And always “
Slide 8: Group Sales Revenue A Group Sales Revenue A$’m Constant Currency (at F05 rates) 150 - 148.5 499 127.5 100 - $m 50 - 0 J Hi FOS 3 HI FD H2 re HIF H2 09 Ht FO H2 io : ye Hear now. And always “
Slide 9: Sales Revenue (AUD) by Geographic Region H1 F05 Sales Revenue (AUD) by Geographic Region H1 F05 Americas Europe 42% (T16%) _ 40% (144%) i Le ge ae Lie Asia-Pacific 18% (T2%)
Slide 10: Americas Sales Revenue - USD Americas Sales Revenue - USD US
Slide 11: Regional Profile - Americas Regional Profile - Americas « New President — Chris Smith started 8/04 * 22% sales increase in local currency (USD) ¢ USA reimbursement: positive changes * CMS supports candidature eligibility criterion increasing from 30% 40% sentence score * CMS increase in Medicare funding ¢ DOJ — status unchange
Slide 12: Europe Sales Revenue - Euros Europe Sales Revenue - Euros €M 33.4 32.7 28.3 24.9 $18 ; J ; ' Hi FO2 H2F02 H1F03 H2F03 H1F04 H2F04 ~~ Hi FO05 Period Hear now, And always “
Slide 13: Regional Profile - Europe Regional Profile - Europe ° 34% sales increase in local currency (euros) ¢ Sales growth across European markets ¢ Belgium and The Netherlands — acquired distributor effective July 04 ¢ France — acquired distributor effective Nov 04 * Integration gone well for Benelux and France * Italy — direct from
Slide 14: Asia Pacific Sales Revenue - AUD Asia Pacific Sales Revenue - AUD 958 26.7 037249139 a 20 -
Slide 15: Regional Profile - Asia Pacific Regional Profile - Asia Pacific ¢ New President — Mark Salmon joined 7/04 e Revenue increased by 3% ¢ Sales in China below expectations due to Customs review (relating to Cl tax exempt status) * COH’s relationships in China are excellent (CRRCDC, CDPF etc) * Investigation has caused uncertainty and
Slide 16: Competitive Dynamics Competitive Dynamics Two main competitors Advanced Bionics (BSX) e Product recall from late Sep 04 (~ 6 weeks) ¢ COH’s extra unit sales of ~ A$2.5M (~ 100 units) mostly in the USA Med-El * Med-El received FDA warning letter and importation ban (into the USA) (~ Dec 04) COH gained market share in H1
Slide 17: COH's implant reliability is a differentiator COH’s implant reliability is a differentiator Cumulative Failure Rate (%) a Ccl22M CI24M All Cl24M Mod Lore t0 Contour 4 qT 1 2 3 4 5 16 Years Implanted Data published by competitors show COH implant is up to 4 times less likely to fail than competitors’ implant Hear now, And always “y
Slide 18: Cochlear's current technology is ahead of the competition Cochlear’s current technology is ahead of the competition Compared to the competition, System 3 with Nucleus® 24 Contour™ has ... * Higher spatial resolution (electrodes) * Higher spectral resolution (bandwidth filtering) * Higher temporal resolution (time interval) ¢ Capability to represent fine ti
Slide 19: Technologic Innovation Technologic Innovation ¢ Excellent progress of “System 4” during H1 FO5 « “System 4” launch starts H2 FO5 ¢ Significant platform for current and future innovation ¢ Timing dependent on regulatory approvals ¢ Early clinical feedback very positive ye Hear now. And always “4
Slide 20: Outlook: H2 F05 Outlook: H2 F05 System 4 ¢« Launch on schedule, however, limited revenue impact for FO5 ¢ H2 FO5: invest ~$4 million extra “System 4” Financial Guidance ¢ Increase F05 PAT guidance from $50 - 51 million to $53 — 55 million ra Hear now. And always
Slide 21: Cochlear: H1 F05 Summary Cochlear: H1 F05 Summary * Record H1 financial results « Revenue $163.6 million (118%) * PAT $29.5 (110%) * Particularly strong growth in Europe and Americas (market share gains) ¢ Implant reliability a differentiator (regulatory actions against competitors) * Next generation technology on track for
Slide 22: Financial Results — F'04 Financial Results — F’04 a oe oo | |
Slide 23: H1 F05 Financial Performance H1 FO5 Financial Performance System Sales Total Revenue Operating Profit before tax PAT EPS Half year dividend Franking F’05 Dec 5,014 163.6 40.0 29.5 54.3 35c 100% F'04 Dec 4,482 A$’m 139.2 36.4 26.9 50.1 35c 100% % Change + 12% Hear now, And always “
Slide 24: Sales Revenue Reconciliation F'05 — F'04 Sales Revenue Reconciliation F’05 — F’04
Slide 25: PAT Reconciliation F'05 — F'04 PAT Reconciliation F’05 — F’04 F'05 Profit $29.5 Increase/ (Decrease) Agm Minorities 0.2 F°04 Profit $26.9 Hear now. And always”
Slide 26: Foreign Exchange Foreign Exchange Rates applied F’05 vs F’04 F05 + F’04 Average rates (used for translating P&L) USD 0.74 0.69 GBP 0.40 0.42 JPY 80 79 Contract rates (used to bring FX to Australia) USD 0.62 0.53 GBP 0.38 0.35 JPY 56 56 ee Hear now, And always
Slide 27: Foreign Exchange Rates Going Forward Foreign Exchange Rates Going Forward Average Contract Rates USD GBP JPY 6 months ending June 05 0.60 0.37 52 12 months ending June ’06 0.63 0.36 52 ¢ Total mark to market FX gain at 31 December 2004 A$31.9m * Hedge book profit rolling off ye Hear now. And always “4
Slide 28: Working Capital H1 F05 Working Capital H1 F05 Current assets Cash (net) Receivables Inventory Current liabilities Payables Provisions Intangibles Dec ‘04 A$m 43.0 55.5 40.7 37.5 20.0 21.7 50.0 54.0 44.8 June ‘04 A$m Hear now. And always
Slide 29: Purchase of Distributors Purchase of Distributors *Total net cash outlay $16.7m (Japan, France, Benelux) *Goodwill component $14.2m ¢ Goodwill being written off over 20 years * $0.3m write-off in H1 F’05 ¢ IFRS — No goodwill write-off ye Hear now. And always “4
Slide 30: IFRS Update (F06 start) IFRS Update (F06 start) FX ¢ Existing FX hedging qualifies => no change to existing disclosure ¢« FCTR no change R&D * Need to capitalise all development * ~ 50% of spend per annum * write off period - 3 years after commercialisation Stock Options ¢ Expense - already disclosed in notes Defined benef
Slide 31: Key Highlights Key Highlights Revenue, unit sales and profit are all record irst half results mplant reliability a differentiator (regulatory actions against competitors) Rollout of new products on track Regional highlights: * Europe up 44% * Positive developments in the USA ¢« Growth in Australia and Northern Asi
Slide 32: Hear now. And always Cochlear Hear now. And always Cochlear