Slide 1: Cochlear Limited – Results for the half year ended 31 December 2006
Cochlear Limited Results for the half year ended 31 December 2006 Chris Roberts - CEO Neville Mitchell - CFO Hage neva, Aoed vety Cochlear - Overview » Medical device company (~25yr): global leader in implantable devices for the hearing impaired: Leading global position (~70% share) in cochlear impl
Slide 2: Record Financial Results for H1 FY07
Record Financial Results for H1 FO7 Hi FO7 H1 FO6 $ millions $ millions +/(-)% Cochlear implants 240.3 184.1 tT 31% Bone Anchored (Baha) 30.4 24.6 |t 24% FX Contracts 5.4 12.4 |b 56% Revenue 276.4 221.4 [fF 25% EBIT 73.6 63.0 |t 17% Net Profit After Tax 48.8 43.8 t 12% Core Earnings* 52.8 47.3 |T 12
Slide 3: Cochlear Implant Sales up 22% to 7,939 units
Cochlear Implant Sales up 22% to 7,939 units 12000 + 10000 + @ = 8000; _ - B 2nd Half = 6000 5 Mist Half ~ © 4000 4 2000 + 0 4 F97 F98 F99 FOO FO1 FO2 FO3 FO4 FOS FO6 FO? = “Meweem Ars Cotear- Strong Sales Growth in all regions..... H1 FO7 Sales Revenue Regional Split (AUD) and constant currency (cc
Slide 4: Americas and Europe: Half Year Sales in Constant Currency
Americas: Half Year Sales in Constant Currency (at FO7 FX Rates) MOG 1200 Americas sales t 36% (cc) from continuing impact of: *Nucleus® Freedom™ performance «Freedom™ for N24 roll-out «Expanded field force «tT consumer awareness network *Upgraded internal capability «Bilateral sales growing Constan
Slide 5: Asia-Pacific and Bone Anchored Solutions (Baha)
Asia-Pacific: Half Year Sales in Constant Currency (at FO7 FX Rates) 6 Asia-Pacific sales T 31% (cc) *First sales of the China donation, with first a surgeries in H2 FO7 «? sales in the non-donation market in China «india continues with high 15 growth rates on the back of . excellent clinical outcom
Slide 6: Operating Expenses & EBIT Growth
Operating Expenses & EBIT Growth H1 FQ? growth on PCP $ millions % Total Revenue $276.1 25% Sales (before FX Contracts} $270.7 30% Cost of sales (29.1% of Revenue} $80.4 40% 28%«——Excluding PCP royalty* Selling General and Administration $84.1 12% Research and development $35.6 33% Operating expense
Slide 7: Adult and Child Cumulative Failure Rates; Global Supply Chain Update
Adult and Child Cumulative Failure Rates - Dec 06 Cumulative Faiture Percentage of Implants COMBINED {ADULT & CHILD) a 8 8 & ep RE CHAM AIT “© cstanpost Cuntuiative Paitiste Sof kmplants @ ood CHR | Time in Years Global Supply Chain Update » Global supply chain redesign for capacity expansion, flexi
Slide 8: Cochlear Brisbane Operations
Se” Cochlear Brisbane Operations * Acquired from key supplier in Jan 2007 ~ 200 people ~ All equipment Leases on buildings ~$35M annual production value of COH products * Builds electronics for all speech processors * Produces most Freedom™ accessories Cable coils, battery holders. ~ TV HiFi, PAC Bo
Slide 9: Cochlear Summary
Cochlear Summary Record financial results for H1 FO7 « Revenues $276.1 million T 25% « Core Earnings $52.8 million T 12% Success of Nucleus® Freedom™ « tt hearing performance improvements » Tf implant reliability « Freedom™ for N24 roll-out well received Ongoing investments in internal capability in
Slide 10: H1 FY07 Financial Performance
H1 FO7 Financial Performance Hi Hi FO7 FOG $miHions $ milions +/{-)% Total Revenue 276.1 221.1 tT 25% Reported NPAT 48.8 43.8 412% Core Earnings 52.8 47.3 T 12% Dividends Interim Dividend 55c¢ 45c¢ t 22% Record Date 2 March 2007 Payable Date 20 March 2007 Franking 100% 100% bernivasnan Caches Hi FO7
Slide 11: H1 FY06 - FY07 Core Earnings Reconciliation
Hi FO06 - FO7 Core Earnings Reconciliation in Constant Currency 607 473 5 FO6 Core Gross Margin Royalties SG&A costs R&D casts Interest Net FX Tax FO? Core Earnings: (excl. Earnings: Royalty) Heareom Ars swans — Cochbear- H1 FO7 Net Financing Expenses H1 FO7 Hi FO6 $ miHions $ millions Net financing
Slide 12: H1 FY07 Income Tax Reconciliation
H1 FO7 Income Tax Reconciliation H1 FO7 Hi FO6 $ millions $ millions Profit before tax 70.9 62.1 Income tax expense at 30% 21.3 18.6 Add: Increases in income tax Foreign tax rates 0.8 0.6 Amortisation and other 1.1 1.2 Less: Income tax allowances R&D allowance (1.4) (1.1) Other (0.2) (0.1) 21.6 19.1
Slide 13: Cash Generated H1 FY07
Cash Generated H1FO7 1 FO6 $ millions $ millions Net cash provided by operating activities 57.5 51.3 before changes in assets and liabilities Changes in assets & fiabilities (Increase) in trade debtors {16.2} (29.0) (Increase) in inventory (9.1) (7.2) (Increase)/decrease in net tax assets (3.4) 5.1
Slide 14: H1 FY07 Working Capital
H1 FO7 Working Capital Debtors (Days Outstanding) $420.0 ay . B ssooo re « Improvement in E ene 8 debtor days to 71 % suo ie ¢ (FO6 74) zu a igs . ¥ goo so » Specific countries, @ sae 3 eg. Southern 2 oo o Mediterranean hin-GS Jusn-O2 hu-O3 Jun-O04 kin-GS Jun-08 Oe0-05 longer Net Recetvables as % of
Slide 15: Thank you... Any questions?
Thank you... Any questions? Foreign Exchange Core Earnings FX — Hi FQ7 vs F06 FO7 $ millions Translation impacts (3.6) Transaction impact * H1 FO6 (12.4) H1 FO7 (5.4) (7.0) Net FX impact for H1 FO7 (10.6) *FX gains on hedged sales Har ean Ares Svcs Cochtear- 15
Slide 16: Foreign Exchange
Foreign Exchange Rates applied F07 vs F06 H1FO7 Hi FO6 Average rates (used for translating P&L) USD 0.76 0.76 Euro 0.60 0.63 JPY 90.3 86.5 Contract rates (used to bring FX to Aust) USD 0.74 0.68 Euro 0.57 0.56 JPY 65.9 59.0 Foreign Exchange Rates Going Forward Average Contract Rates USD Euro IPY SEK