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Slide 3: Company Secretary Mr Neville Mitchell
...Company Secretary Mr Neville Mitchell Hear now, And always
Slide 4: Directors: Dr Chris Roberts
Directors Dr Chris Roberts
Slide 5: Directors: Mr Justus Veeneklaas
...Directors Mr Justus Veeneklaas Hear now, And always
Slide 6: Directors: Professor Brian Anderson AO
...Directors Professor Brian Anderson AO Hear now, And always
Slide 7: Directors: Mr Peter North
...Directors Mr Peter North Hear now, And always
Slide 8: Directors: Professor Ed Byrne
...Directors Professor Ed Byrne Hear now, And always
Slide 9: Directors
...Directors Hear now, And always
Slide 10: Directors: Dr John Parker
...Directors Dr John Parker Hear now, And always
Slide 11: Chairman: Mr Tommie Bergman
...Chairman Mr Tommie Bergman
Slide 12: Regional Presidents
Regional Presidents Mark Salmon Richard Brook Hear now, And always
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Slide 15: Results F'04
Results F’04 F’04 F’03 Units sold 9,306 9,322 Revenue $286m $307m Profit After Tax $36.7m $58.1m Cash $50m $28.9m Hear now, And always “y
Slide 16: Action to Address Poor Results
Action to Address Poor Results « New CEO e Refocus on core business ¢ Marketing strengthened « Cost base adjustments ee Hear now, And always
Slide 17: Context Going Forward
Context Going Forward « Niche market « 97% of sales offshore « 80 countries, 1,000 clinics worldwide e Sensitive to small markets ye Hear now. And always “4
Slide 18: Context Going Forward
Context Going Forward « Enormous unmet clinical need « Growth paced by: ° Awareness « Reimbursement * Clinic capacity « Excellent reliability ra Hear now. And always Ny
Slide 19: Dividend
Dividend F’04 F'03 7 Full Year 79c 77c 8% e Sufficient cash e Franked 100% e Reasonable return e Confidence in future ra Hear now, And always
Slide 20: Corporate Governance
Corporate Governance ° F’04 initiatives ¢ Establish Nominations Committee « Review Board charters ° Internal audit ¢ Early release of full financials/Remuneration Report ye Hear now. And always “
Slide 21: Executive Remuneration
Executive Remuneration « Remuneration Report agenda item ¢ Total remuneration policy ° CELTIP Hurdles - EPS CAGR growth 20% over 3 years - TSR — Top quartile Ambitious, but appropriate ye Hear now. And always “
Slide 22: Non-Executive Director
Non-Executive Director « Increase to $1m per annum ¢ Current limit reached e Additional amount applied to » Regular increases * New directors (no retirement benefits) ye Hear now. And always “
Slide 23: Board Renewal
Board Renewal ¢ Mrs Carol Holley not standing for re-election having served nine years ° New appointment within three months ¢ Further retirements over the next two years ye Hear now. And always “
Slide 24: DOJ
DOJ « Request received March 2004 ¢ No allegations e Legal fees accrued * No visibility on time frame ye Hear now. And always “
Slide 25: Outlook
Outlook In current year * Settle in new management team ¢ Bed down distributor acquisitions * Launch next generation product « Successfully execute growth strategies ye Hear now. And always “4
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Slide 28: Cochlear Summary
Cochlear Summary * COH has 60+% share of cochlear implant market » Business fundamentals are solid: unmet clinical need, excellent product performance, full product pipeline, favourable competitive situation * F’04 disappointing year in terms of growth (unit sales flat) and profit (A$36.8 million on
Slide 29: Components of the Nucleus Cochlear Implant System
Components of the Nucleus® Cochlear Implant System Implant body RF Transmission Coil (receiver/stimulator) Speech Processo (BTE shown) Electrode array : (inserted to cochlea) Hear now. And always
Slide 30: Prevalence of Hearing Impairment
Prevalence of Hearing Impairment Potential 4 million Profound > 90 dB cochlear people implant Severe 75-90 dB market somone Moderate - Severe 60-75 dB Moderate 40-60 dB 500 million / people Mild 25-40 dB VM MMe Incidence of profound hearing loss 50,000+ pa Hear now, And always
Slide 31: Competitive Dynamics
Competitive Dynamics ° Cochlear Limited has 60+% of global market ° 2 main competitors « Advanced Bionics (purchased by BSX) ¢ Med-El (private Austrian company) ° The 3 companies comprise 99% of market ° High barriers to entry for new competitors gear now. And always
Slide 32: Over 58,000 Nucleus recipients and more than 1,000 clinics
Over 58,000 Nucleus® recipients and more than 1,000 clinics in over 80 countries worldwide P SYDNEY Melbournéiy & e Cochlear corporate office @ Cochlear regional office = Cochlear distributors i, Hear now, And always
Slide 33: COH: Actual Unit Sales F'91 - F'04
COH: Actual Unit Sales F’91 — F’04 Unit Sales Unit growth (n=13yr) is 15.6 + 7.2% Range 0 to 31% | nll F'91 F'92 F93 F'94 F'95 F'96 F'97 F'98 F'99 F'00 F'01 F'02 F'03 F'04 ra Hear now. And always Ny
Slide 34: Summary F'04 Financial Performance
Summary F’04 Financial Performance System Sales Total Revenue Operating Profit before tax PAT Full year dividend Franking F’04 9,306 A$’'m 285.8 47.3 36.8 79¢ 100% F’03 % Change 9,342 - AS’m 307.6 7% 80.0 L 41% 58.2 L 37% 77c ~ 3% 100% nn ra Hear now. And always
Slide 35: Group Unit Sales
Group Unit Sales Units Group Unit Sales 4,91 4,824 O16 4,482 5,000 4,412 4,237 3,608 Hi Fo2 H2 Fo2 H1 FO3 H2 F03 H1 FO4 H2 F04 Period Hear now, And always
Slide 36: COH Sales by Region: F'04
COH Sales by Region: F’04 Asia Pacific 20% Americas 43% Europe 37% ye Wear now, And always oy
Slide 37: Group Sales Revenue A#039;m (Reported)
Group Sales Revenue A$’m (Reported) Group Sales Revenue AUD 'm (Reported) 141.8 146.6 137.5 131.3 a a 121.2 H1 Fo2 He Fo2 H1 FO3 H2 FO03 H1 FO4 H2 F04 Period Hear now, And always
Slide 38: Group Sales Revenue A#039;m (Constant Currency)
Group Sales Revenue A$’m (Constant Currency) Group Sales Revenue AUD 'm (F'04 Exchange Rate) 140.0 5 131.3 127.5 122.3 —— wee 120.0 { 1114 95.1 i Hi Fo2 H2 Fo2 Hi Fo3 H2 Fo3 Hi Fo4 H2 Fo4 Period Hear now. And always”
Slide 39: PAT Reconciliation F'04 - F'03
PAT Reconciliation F’04 — F’03 In constant currency P03 Profit $68.2 Increase/ (Decrease) Agm 7 GM & Hedge Book (10.5) Interest 1.7 F°04 Profit $37.6 Tax Minorities 84 0.6 iii Hear now. And always”
Slide 40: Working Capital F'04
Working Capital F’04 June ‘04 June ‘03 A$m A$m Current assets Cash (net) 50.0 28.9 Receivables 54.0 56.9 Inventory 44.8 45.0 Current liabilities Payables 31.7 28.5 Provisions 22.4 18.8 “ttt, ra Hear now. And always Ny
Slide 41: Core Strategies
Core Strategies: ° Retain the customer focus ° Get the right people in the right positions ° Internal effectiveness and efficiency ° Two key drivers of growth e (Technologic) Innovation e Internationalisation ra Hear now, And always “
Slide 42: People
People « Right people in the right positions ° New Regional Presidents e Chris Smith — President of Americas (8/04) e Richard Brook — President of Europe (5/03) e Mark Salmon — President of Asia-Pacific (7/04) « VP Quality and Regulatory - Dr Adrian Oates ye Hear now. And always “
Slide 43: Internal Efficiency / Effectiveness
Internal Efficiency / Effectiveness « Global management team * Functional Effectiveness/Efficiencies (R&D, Q&R, Marketing, Manufacturing....) ° Quarterly planning * Growth in sales (units and revenue) versus YOY (qtr) e EBIT asa % of sales ¢ SGA leverage (SGA growth < sales growth) * Cultural — eg:
Slide 44: Technologic Innovation
Technologic Innovation » ~13% of revenue on research and development * ~ 200 people in research and development in three locations (Sydney, Mechelen and Denver) * ~190 patents issued or pending (+ licenses) * Next generation Cl system for release in F’'05 * This is a platform for a range of innovati
Slide 45: Internationalisation
Internationalisation e Sales across 80+ countries (<3% in Australia) e 3 regions: Americas, Europe & Asia Pacific e Also, separate in “3 Tiers” » Tier 1 — “developed” countries « Tier 2 — “developing” countries * Tier 3 — “emerging” countries ° Manage growth differently in these tiers * For example,
Slide 46: Core Strategies
Core Strategies « Retain the customer focus e Get the right people in the right positions e Internal effectiveness and efficiency e Two key drivers of growth « (Technologic) Innovation ¢ Internationalisation ra Hear now, And always “4
Slide 47: Outlook
Outlook ° Strategies will have impact but need more time for visibility ° Comfortable with mean of F’05 Analysts’ expectations « PAT (A$50 — 51 million) ° Q1 trading at expectations ra Hear now, And always
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Slide 50: Question 1
Question 1: When is the share price likely to recover? ye Hear now. And always “4
Slide 51: Question 2
Question 2: What is the status of the Department of Justice enquiry in the USA? ra Hear now. And always
Slide 52: Question 3
Question 3: How can an increase in Director remuneration be justified when the company is performing so poorly? ra Hear now. And always Ny
Slide 53: Indicative Non-Executive Director Fees
Indicative Non-Executive Director Fees Fee Structure Current Proposed A$’000 = A$’000 Base - existing director 60 75 - new directors - 95 Chairman to remain at 3 x existing director base fee and no committee fees Chair, Technology C’tee 15 15 Chair, Audit C’tee 22 15 Committee Fees - Audit 15 IS we
Slide 54: Question 4
Question 4: Why aren’t Directors fees adjusted according to company performance? ye Hear now. And always “4
Slide 55: Question 5
Question 5: What is the company’s current intent regarding capital management? ye Hear now. And always “4
Slide 56: Question 6
Question 6: Does the company have any plans for a share split? ye Hear now. And always “4
Slide 57: Question 7
Question 7: Why does Cochlear not have a dividend reinvestment plan? ye Hear now. And always “4
Slide 58: Question 8
Question 8: How often do you rotate your audit partner and when was the last rotation? How do you ensure audit independence? ye Hear now. And always “4
Slide 59: Question 9
Question 9: Why were your R&D expenses up from $37m to nearly $45m? ra Hear now, And always “
Slide 60: Question 10
Question 10: “Why for heaven’s sake don’t you print your notice of AGM in black instead of that fancy silver / grey so | can read the bloody thing! “We are not all gimlet-eyed 20/20 vision yuppie typographic consultants.” gear now. And always
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Slide 62: Resolution No.
Resolution No. 1
Slide 63: Resolution: Receive Financial Report
Resolution No. 1 To Receive and Consider Financial Report Proxy Summary: « Total number of proxy votes available to be cast 23,342,559 100% « Votes in favour of the resolution 22,415,331 96% « Votes against the resolution 225,335 1% « Votes to be cast at the discretion of the proxy 145,001 1% « Vote
Slide 64: Resolution No.
Resolution No. 2
Slide 65: Resolution: Remuneration Report
Resolution No. 2 Remuneration Report Proxy Summary: « Total number of proxy votes available to be cast 23,342,559 100% « Votes in favour of the resolution 22,550,682 96% « Votes against the resolution 480,765 2% « Votes to be cast at the discretion of the proxy 145,001 1% « Votes directed to abstain
Slide 66: Resolution No.
Resolution No. 3
Slide 67: Resolution No. 3.1
Resolution No. 3.1
Slide 68: Resolution 3.1: Election of Mr Justus Veeneklaas
Resolution No. 3.1 Election of Directors — Mr Justus Veeneklaas Proxy Summary: « Total number of proxy votes available to be cast Votes in favour of the resolution Votes against the resolution Votes to be cast at the discretion of the proxy Votes directed to abstain from voting 23,342,559 100% 22,58
Slide 69: Resolution No.
Resolution No. 4
Slide 70: Resolution: Increase Non-Executive Directors' Remuneration
Resolution No. 4 To increase the maximum aggregate remuneration of Non-Executive Directors Proxy Summary: « Total number of proxy votes available to be cast 23,096,279 100% « Votes in favour of the resolution 21,181,615 92% « Votes against the resolution 1,401,899 6% « Votes to be cast at the discre
Slide 71: Resolution No.
Resolution No. 5 on
Slide 72: Resolution No. (continued)
Resolution No. 5 (continued)
Slide 73: Resolution: Securities Issued to President/CEO
Resolution No. 5 Approval of Securities Issued to the President/CEO Under the Cochlear Executive Long Term Incentive Plan Proxy Summary: Total number of proxy votes available to be cast 23,135,589 100% « Votes in favour of the resolution 21,998,077 95% « Votes against the resolution 843,385 3% « Vot
Slide 74: Resolution No.
Resolution No. 6
Slide 75: Resolution: Securities Issued to Executive Director
Resolution No. 6 Approval of Securities Issued to Executive Director Under Cochlear Executive Long Term Incentive Plan Proxy Summary: « Total number of proxy votes available to be cast 23,136,089 100% « Votes in favour of the resolution 21,980,393 95% « Votes against the resolution 851,276 3% « Vote
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Slide 80: Company Secretary Mr Neville Mitchell
...Company Secretary Mr Neville Mitchell Hear now, And always
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