Slide 1: Results for the half year ended 31 December 2008
For personal use only Cochlear Limited Results for the half year ended 31 December 2008 Chris Roberts - CEO Neville Mitchell - CFO
Slide 2: Cochlear Background
Cochlear Background For personal use only • 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 (
Slide 3: Record Financial Results for H1 F09
Record Financial Results for H1 F09 For personal use only H1 F09 H1 F08 $ millions $ millions +/(-)% Cochlear implants 301.1 247.5 ↑ 22% Bone Anchored (Baha) 45.8 36.7 ↑ 25% FX Contracts 8.3 13.8 ↓ (40)% Revenue 355.2 298.0 ↑ 19% EBIT 100.4 84.7 ↑ 19% Net Profit After Tax 69.9 57.1 ↑ 22% EPS 125.5 c
Slide 4: Sales in Constant Currency (CC)
Sales in Constant Currency (CC) For personal use only 700 600 • Total revenue (including FX contracts) up 19% to 500 $355.2 million CC Sales A$ millions 400 • Sales (ex FX contracts) up 22% to $346.9 million 300 • Sales in constant H2 200 currency (prior period restated at H1 F09 100 rates) up 12% H
Slide 5: Cochlear Implant (CI) Unit Sales
Cochlear Implant (CI) Unit Sales For personal use only 20,000 • H1 F09 cochlear 16,000 implant unit sales up 2% to 9,178 • Global market share CI Unit Sales 12,000 remains in 70% range • No sales to China of 8,000 H2 donation CI units in H1 F09 - negative Asia- Pacific CI unit sales 4,000 growth H1
Slide 6: Sales of Bone Anchored Solutions in Constant Currency
Sales of Bone Anchored For personal use only Solutions (BAS) in Constant Currency 90 • BAS sales (including Baha implants) up 25% to $45.8 million for H1 BAS CC Sales A$ millions 60 F09 • In constant currency, BAS sales were up 13% H2 • USA FDA Import Alert 30 (2/08) impacted sales in Q1F09, but was
Slide 7: H1 F09 Regional Split of Sales and Constant Currency Growth
H1 F09 Regional Split of Sales For personal use only and Constant Currency (CC) Growth Europe Americas 44% 43% CC growth Ç13% CC growth Ç 15% Asia Pacific 13% CC growth → 0%
Slide 8: Americas: Sales in Constant Currency
Americas: Sales in For personal use only Constant Currency (CC) 300 250 • Americas sales up 25% to $148.5 million Americas CC Sales A$ millions for half 200 • H1 F09 sales in CC up 15% 150 • FDA Import Alert (lifted 100 10/08) affected BAS H2 growth (< the regional 15% CC growth) 50 H1 0 F05 F06 F07
Slide 9: Europe: Sales in Constant Currency
Europe: Sales in For personal use only Constant Currency (CC) 300 • Europe sales up 25% 250 to $153.1 million for half Europe CC Sales A$ millions • H1 F09 sales in CC 200 up 12% • UK NICE guidelines on 150 CI published 28 Jan 09 • Direct after sales 100 H2 service in Germany going well 50 H1 0 F05
Slide 10: Asia Pacific: Sales in Constant Currency
Asia Pacific: Sales in For personal use only Constant Currency (CC) 100 • Asia-Pacific sales up 6% to $45.3 million for half 80 Asia Pacific CC Sales A$ millions • H1 F09 sales in CC flat 60 • Asia-Pacific had negative CI unit growth - no China donation units shipped 40 H2 • Korea, India, ANZ doing
Slide 11: Continuing Core Earnings Growth
Continuing Core Earnings Growth For personal use only 140 120 • COGS impacted by ↓ AUD because of PPV Core Earnings A$ millions 100 (short term effect only) 80 • R&D up 14% 60 • Operating expenses up 19% H2 40 • EBIT up 19% 20 H1 0 F05 F06 F07 F08 F09
Slide 12: Cochlear Weathering Global Financial Crisis (GFC)
Cochlear Weathering For personal use only Global Financial Crisis (GFC) • H1 F09 impact of GFC on major customers relatively minor overall and reimbursement remains intact • Cochlear remains vigilant and conservative: capital management, cost control, credit management, supplier liaison • No change
Slide 13: Hybrid
HybridTM For personal use only • Combines electrical stimulation (cochlear implant) with acoustic amplification (hearing aid technology) • For severe to profound high frequency SNHL with some low frequency residual hearing • Controlled market release of Hybrid L electrode and combined speech process
Slide 14: De-constructing Cochlear's Growth into a Range of Drivers
De-constructing Cochlear’s For personal use only Growth into a Range of Drivers • Product segments: CI, Hybrid, BAS, DACS • Unit sales for each product segment • Average selling prices • Direct versus distributors • New patients versus installed base sales • Unilateral versus bilateral • Market grow
Slide 15: Cochlear H1 F09 Overview
Cochlear H1 F09 Overview For personal use only • Record financial results: – Revenue up 19% to $355.2 million – NPAT up 22% to $69.9 million – Core earnings up 20% to $74.4 million • Hybrid controlled market release in Europe • Global financial crisis: Cochlear remains well positioned and vigilant (
Slide 16: Financial Results
For personal use only Financial Results Neville Mitchell - CFO
Slide 17: F09 Financial Performance
F09 Financial Performance For personal use only H1 F09 H1 F08 % $m $m Change Total Revenue 355.2 298.0 Ç 19% NPAT 69.9 57.1 Ç 22% Core Earnings 74.4 61.9 Ç 20% Dividends Interim Dividend 80c 70c Ç 14% Record Date 27 February 2009 Payable Date 17 March 2009 Franking 100% 100%
Slide 18: F09 Core Earnings Calculations
F09 Core Earnings Calculations For personal use only H1 F09 H1 F08 $m $m NPAT 69.9 57.1 Adjustment items (after tax) • R&D amortisation 0.2 0.6 • Acquired intangible amortisation 1.2 1.4 • Share based compensation 3.1 2.8 Total adjustments 4.5 4.8 Core Earnings 74.4 61.9
Slide 19: H1 F08 – H1 F09 Core Earnings Reconciliation
H1 F08 – H1 F09 Core Earnings For personal use only Reconciliation 100.0 15.5 (8.7) 90.0 (3.0) (4.0) 80.0 13.4 0.7 (1.4) 74.4 70.0 61.9 60.0 50.0 40.0 30.0 20.0 10.0 0.0 6 1 .9 1 3 .4 1 5 .5 -8 .7 -3 .0 -4 .0 0 .7 -1 .4 7 4 .4 H1 F08 Core FX Gross Margin Sales & Mktg Admin costs R&D costs Interest T
Slide 20: Impact of Depreciating AUD on F09 Core Earnings
Impact of Depreciating AUD For personal use only on F09 Core Earnings A$m F/(U) Income Statement Translation Impact Sales Revenue 23.0 Difference H1 F09 Total Expenses including tax (10.4) actual vs H1 F09 at H1 F08 rates 12.6 Transaction Impact - Decrease from H1 F08 of FX gain on hedged Net differ
Slide 21: F09 Debt
F09 Debt For personal use only 31 Dec 30 June 2008 2008 $m $m Loans and Borrowings Current 16.8 15.4 Non-current 180.5 154.6 Total Debt 197.3 170.0 Cash on hand 62.9 36.7 Net Debt 134.4 133.3 Net gearing ratio 32% 29% All debt covenants met at 31 December 2008
Slide 22: F09 Working Capital
F09 Working Capital For personal use only 120 250 • Inventory days down 100 200 22% to 166; inventory of Inventory ($ millions) $96.2m (June ’08, Days stock held 80 150 60 $99.2m) 100 40 • Debtors days down to 76 20 50 (June ’08, 81) - - Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Dec-08 • Cape
Slide 23: Cochlear H1 F09 Overview
Cochlear H1 F09 Overview For personal use only • Record financial results: – Revenue up 19% to $355.2 million – NPAT up 22% to $69.9 million – Core earnings up 20% to $74.4 million • Hybrid controlled market release in Europe • Global financial crisis: Cochlear remains well positioned and vigilant (
Slide 24: Thank you
For personal use only Thank you Any questions?
Slide 25: Foreign Exchange
Foreign Exchange For personal use only • Rates applied F09 vs. F08 H1 F09 H1 F08 % Average rates (used for translating P&L) USD 0.80 0.87 (8%) Euro 0.56 0.62 (10%) JPY 82.6 101.2 (18%) GBP 0.46 0.43 7% Contract rates (used to bring FX to Aust) USD 0.79 0.78 1% Euro 0.58 0.59 (2%) JPY 87.2 83.0 5%
Slide 26: Foreign Exchange
Foreign Exchange For personal use only • Period end rates applied F09 vs. F08 31 Dec 30 June % change 08 08 Period end rates (used for translating Bal Sheet) USD 0.68 0.95 (28%) Euro 0.49 0.61 (20%) JPY 62.3 102.1 (39%)
Slide 27: FX Contract Cover and Rates
FX Contract Cover and Rates For personal use only as at 31 December 2008 USD Euro JPY AUD Total Total FX cover at 31 Dec 2008 270m 184m 1,690m 709m Weighted average exchange 0.78 0.55 84.3 rates contracted H2 F09 weighted average 0.83 0.57 87.0 exchange rates contracted
Slide 28: H1 F09 Core Earnings Reconciliation
H1 F09 Core Earnings For personal use only Reconciliation H1 F09 H1 F08 $m $m Earnings before interest and tax 100.4 84.7 Core earnings adjustments pre-tax • R&D 0.2 0.8 • Acquired intangible amortisation 1.2 1.4 • Share based compensation 3.1 2.9 Core EBIT 104.9 89.8 Net interest (4.5) (5.0) Core t