Slide 1: Cochlear Limited 2005 Annual General Meeting
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Slide 2: Slide 2
Slide 3: Chairman: Mr Tommie Bergman
Chairman Mr Tommie Bergman Hear now. And always Cochlear~
Slide 4: Directors: Mr Justus Veeneklaas
...Directors Mr Justus Veeneklaas Hear now. And always Cochlear~
Slide 5: Directors: Dr John Parker
...Directors Dr John Parker Hear now. And always Cochlear~
Slide 6: Directors: Prof Brian Anderson AO
...Directors Prof Brian Anderson AO Hear now. And always Cochlear~
Slide 7: Company Secretary: Mr Neville Mitchell
...Company Secretary Mr Neville Mitchell Hear now. And always Cochlear~
Slide 8: Chief Executive Officer: Dr Chris Roberts
...Chief Executive Officer Dr Chris Roberts Hear now. And always Cochlear~
Slide 9: Directors: Prof Ed Byrne
...Directors Prof Ed Byrne ) Hear now. And always Cochlear~
Slide 10: Directors: Mr Rick Holliday-Smith
...Directors Mr Rick Holliday-Smith Hear now. And always Cochlear~
Slide 11: Directors: Mr Donal O'Dwyer
...Directors Hear now. And always Mr Donal O’Dwyer Cochlear”
Slide 12: Directors: Mr Paul Bell
...Directors Mr Paul Bell Hear now. And always Cochlear~
Slide 13: Directors: Mr Peter North
...Directors Cc ge ‘' Mr Peter North Hear now. And always
Slide 14: Regional Presidents
Regional Presidents Hear now. And always Cochlear~
Slide 15: Proceedings
Proceedings Chairman’s Address CEO’s Address Common Questions Answered Formal Resolutions Cochlear” Hear now. And always
Slide 16: Chairman's Address
y , 0 cy ear Limited 2005 Annual General Meeting Chairman’s Address And always
Slide 17: Results F'05
Results F’05 F’05 F’04 Units sold 10,802 9,306 Revenue $348.5m $286m Profit After Tax Debt/Cash Baha Revenue Sales Hear now. And always
Slide 18: Delivery on Programmes
Delivery on Programmes * Settle in new management team * Bed down acquired distributor businesses » Launch next generation of products on time and within budget * Successfully execute on growth strategies Hear now. And always
Slide 19: Nucleus Freedom launch
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Slide 20: Advocates' Programme
Advocates’ Programme sie Me Hear now. And always Cochlear~
Slide 21: Acquisition of Entific
Acquisition of Entific & Entific Medical Syste ms Direct Bone Conduction Technology acquired in March 05 for — sysen“w $195.3m * Baha for conductive hearing loss and single-side deafness Bone Conduction « Integration of the business has progressed well Hear now. And always
Slide 22: Phonak Joint Development Project
Phonak Joint Development Project * Good progress being made Hear now. And always Cochlear
Slide 23: Capital Management
Capital Management * The acquisition of Entific and distributor business meant that we needed to borrow money * Gearing ratio of net debt to net debt plus equity of 37% remains at a very manageable level Hear now. And always
Slide 24: Dividend
Dividend F’05 F’04 Full Year 80c 79c 1.5% » Final dividend of 45 cents per share * Total dividend for the year 80 cents per share » Franked 100% * Confidence in future Hear now. And always
Slide 25: Department of Justice (DOJ)
Department of Justice (DOJ) » Request received March 2004 « To date, no allegations have been made * No visibility on timing Hear now. And always
Slide 26: Executive Remuneration
Executive Remuneration » Remuneration Report to be voted on * Total reward = base, short term, long term incentives « External review * Long term incentive plan approved by shareholders at the 2003 AGM * Challenging hurdles that reward ambitious growth Hear now. And always
Slide 27: Corporate Governance
Corporate Governance * Cochlear fulfils the major recommendations of the ASX Corporate Governance Council's “Principles of Good Corporate Governance and Best Practice Recommendations” « Active succession planning process * Three new directors » Rick Holliday-Smith * Donal O’Dwyer * Paul Bell Hear no
Slide 28: Outlook
Outlook » Management settled in well » Nucleus Freedom product range successfully launched * Well positioned to maintain position as global leader Hear now. And always
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Slide 30: CEO's Address
i Cochlear Limited 2005 Annual General Meeting CEO’s Address 2. And always Cochlear”
Slide 31: Cochlear: Background
Cochlear: Background « Medical device company (24yr): global leader in implantable solutions for the hearing impaired, including * Dominant global position (~70% share) in cochlear implants (bionic ear) for sensorineural hearing loss » Bone anchored hearing implants (Baha) from recent — (3/05) acqui
Slide 32: Cochlear Implant System
Cochlear Implant System Implant body (receiver/stimulator) RF Transmission Coil Speech Processor (BTE shown) trode array Hear now. And always Cochlear~
Slide 33: Baha
Baha Direct Bone Conduction Technology Baha for Conductive Baha for Single Hearing Loss Sided Deafness Baha® System Conduction Hear now. And always
Slide 34: Record Financial Results for F'05
Record Financial Results for F’05 * Total Revenues: $348.5 million » Cl Unit Sales: 10,802 units * EBITDA: $88.5 million EBITDA 25% of revenues » PAT (excluding intangibles): $58.4M T * Strong second half: > Clunit sales T20% Nucleus Freedom launched » Sales T29% in CC (Freedom/Baha) Hear now. And a
Slide 35: Unit Sales: Consecutive Half Years
Unit Sales: Consecutive Half Years Unit Sales (ee) Q 2 Oo Hear now. And always
Slide 36: COH: F'97 to F'05 Sales Revenue
COH: F’97 to F’05 Sales Revenue* 350 5 250 - ® 200 4 o 7) ss 150- FA 100 "] i i 0 T T T T T T T T F'o7) F'98-— F'99.— F'00s—sF'01. Ss F'02—s ‘03s F'04 F'05 *Total Revenue ($348.5 million for F05) is Sales Revenue plus other items, principally FX contracts Hear now. And always
Slide 37: Constant Currency (CC) Sales
Constant Currency (CC) Sales* 350 » - a Entific m 300 - 2 29% 250 - Pl 2 6 200 - 5 © 150 - 5 100 - i © O 50 - 0 T T T T FO1 FO2 FO3 FO4 FO5 * CC is sales revenues restated at FO5 exchange rates Hear now. And always
Slide 38: F'05 Sales Revenue and growth by Region
F’05 Sales Revenue (AUD) and constant currency* growth by Region Americas Europe 41% (127%) 41% (137%) Asia-Pacific 18% (114%) * CC is Sales revenues restated at F'05 exchange rate
Slide 39: Cochlear: What did we do in F'05?
Cochlear: What did we do in F’05? Expanded our vision Strengthened global distribution Reworked marketing approach Focused on differentiators » Hearing performance and reliability Acquired Entific Launched Nucleus Freedom Continued building operational capability . Allin a way that makes financial s
Slide 40: Expanded Vision
Expanded Vision Cochlear is the global leader in innovative implantable solutions for the hearing impaired Hear now. And always
Slide 41: Key Growth Drivers
Key Growth Drivers Increasing patient motivation (Awareness+) Both patient & medical community understanding Expanding patient access Eg Clinic/surgeon kinetics, reimbursement, health economics (cost/benefit) Expanding indications Eg bilateral, single sided deafness Geographic expansion Active in 80
Slide 42: Most suitable for every age and lifestyle
Most suitable for every age and lifestyle (eg splashproof) Excellent reliability * Advanced, clinician friendly programming system (AutoNRT) * The best recipient lifelong solution Hear now. And always
Slide 43: Nucleus Freedom System
Nucleus® Freedom™ System SmartSound Technology for hearing in a wide range of listening situations #SmartSound Beam for understanding speech in noisy situations. *SmartSound Whisper for quiet and distant speech #SmartSound ADRO for dynamic listening situations. Hear now. And always Cochlear~
Slide 44: Preserving Residual Hearing: A key to Electroacoustic Stimulation
Preserving Residual Hearing: A key to Electroacoustic Stimulation Mean Unaided Audiometric Data US 10 mm Subjects (N=21) -10 -— T T T eee 10 Pevensie! QE Preoperative | 20 + —@ 3 Months Postactivation J 30 1 Mean LF (.125-1k 9-50B - 11.2 0B (ANSI - 1989) N 3 FOO Pern orecseceentnnnnmeinennnmnens ci
Slide 45: Bone Conduction Implants: Baha
Bone Conduction Implants: Baha Direct Bone Conduction Technology » Entific Medical Systems vate acquired 3/05 Syston ge » Baha implant for conductive hearing loss and single sided deafness Bone > Truly complementary product line ' Distribution integrated into the 3 regions » Bone Anchored Solutions
Slide 46: Direct Acoustic Cochlear Stimulator
Direct Acoustic Cochlear Stimulator (DACS) » Cochlear Acoustics Limited was founded by Phonak AG (PHBN.SW) and Cochlear Ltd in July of 2003. » Cochlear Acoustics is developing innovative products in the field of implantable acoustic hearing systems. These new products will specifically address an un
Slide 47: Direct Acoustic Cochlear Stimulator
Direct Acoustic Cochlear Stimulator (DACS) » The DACS (Direct Acoustic Cochlear Stimulator) investigational product implanted in 4 patients in 2 centres (Switzerland/Germany) » The results so far are very promising and encouraging. The patients show good benefit from the intervention. » Both Phonak
Slide 48: Cochlear Summary
Cochlear Summary * F’°05: Momentum gathered during the year » Revenue up 22% to $348.5 million > PAT (ex intangibles) up 59% to $58.4 million * Delivery of key strategic objectives » Strengthened internal capability > Launch of Nucleus Freedom on time » Broadened business with acquisition of Entific
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Slide 50: Questions
Hear now, And always Cochlear~
Slide 51: Question 1
Question 1: * Is it possible to produce a condensed financial report as well as the full Annual Report? Hear now. And always
Slide 52: Question 2
Question 2: * Can you quantify your intellectual property holdings? How do these compare with your competitors and how important are they in terms of protection against competitors? Hear now. And always
Slide 53: Question 3
Question 3: * What new technologies are in the pipeline? Hear now. And always
Slide 54: Question 4
Question 4: * Would the Board consider holding future AGMs in Melbourne? Hear now. And always
Slide 55: Question 5
Question 5: * Would you consider implementing a dividend reinvestment plan? Hear now. And always
Slide 56: Question 6
Question 6: * Considering that Boston Scientific had a recall in the USA and that Cochlear is doing more direct marketing to customers, can we expect a higher penetration of the available market in the USA? Hear now. And always
Slide 57: Question 7
Question 7: » How can you justify the salaries paid to the executives? Hear now. And always
Slide 58: Question 8
Question 8: * How often do you rotate your audit partner and when was the last rotation? How do you ensure auditor independence? Hear now. And always
Slide 59: Question 9
Question 9: * What is AIFRS? What is its impact on Cochlear? Hear now. And always
Slide 60: Question 10
Question 10: * Does the Company promote diversity in its workforce? Hear now. And always
Slide 61: Business of the Meeting
Cochlear Limited 2005 Annual General Meeting Business of the Meeting Hear now. And always Cochlear~
Slide 62: Resolution 1: Financial and other reports
Resolution No. 1 Financial and other reports To receive and consider the Company’s Financial Report, Directors’ Report and Auditor’s Report in respect of the year ended 30 June 2005. Hear now. And always
Slide 63: Resolution 1: Proxy Summary
Resolution No. 1 Financial and other reports 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 Hear now. And always 26,896,973 24,49
Slide 64: Resolution 2: Remuneration Report
Resolution No. 2 Remuneration Report To consider and, if thought fit, to pass the following non-binding resolution: 2.1. “THAT the Remuneration Report be adopted.” Hear now. And always
Slide 65: Resolution 2: Proxy Summary
Resolution No. 2 Remuneration Report 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 Hear now. And always 26,896,973 26,396,392 18
Slide 66: Resolution 3: Election of Directors
Resolution No. 3 Election of Directors To consider and, if thought fit, to pass the following resolutions as ordinary resolutions: Hear now. And always
Slide 67: Resolution 3.1: Mr Tommie Bergman
Resolution No. 3.1 Election of Directors - Mr Tommie Bergman “THAT Mr Tommie Carl-Erik Bergman, being a Director who is retiring by rotation in accordance with the Company’s constitution and, being eligible, offers himself for re-election as a Director of the Company.” Hear now. And always
Slide 68: Resolution 3.1: Proxy Summary
Resolution No. 3.1 Election of Directors - Mr Tommie Bergman 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 Hear now. And always
Slide 69: Resolution 3.2: Professor Edward Byrne
Resolution No. 3.2 Election of Directors - Professor Edward Byrne | “THAT Professor Edward Byrne, being a Director who is retiring by rotation in accordance with the Company’s constitution and, | being eligible, offers himself for — re-election as a Director of the Company.” Hear now. And always
Slide 70: Resolution 3.2: Proxy Summary
Resolution No. 3.2 Election of Directors - Professor Edward Byrne 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 Hear now. And al
Slide 71: Resolution 3.3: Dr John Louis Parker
Resolution No. 3.3 Election of Directors - Dr John Louis Parker “THAT Dr John Louis Parker, being a Director who is retiring by rotation in accordance with the Company’s constitution and, being eligible, offers himself for re-election as a Director of the Company.” Hear now. And always
Slide 72: Resolution 3.3: Proxy Summary
Resolution No. 3.3 Election of Directors - Dr John Louis Parker 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 Hear now. And alwa
Slide 73: Resolution 3.4: Mr Rick Holliday-Smith
Resolution No. 3.4 Election of Directors - Mr Rick Holliday-Smith “THAT Mr Rick Holliday-Smith, being a Director who has been appointed to fill a casual vacancy on the Board in accordance with the Company’s constitution and, being eligible, offers himself for election as a Director of the Company.”
Slide 74: Resolution 3.4: Proxy Summary
Resolution No. 3.4 Election of Directors - Mr Rick Holliday-Smith 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 Hear now. And al
Slide 75: Resolution 3.5: Mr Donal O'Dwyer
Resolution No. 3.5 Election of Directors - Mr Donal O’Dwyer “THAT Mr Donal O’Dwyer, being a Director who has been appointed to fill a casual vacancy on the Board in accordance with the Company’s constitution and, being eligible, offers himself for election as a Director of the Company.” Hear now. An
Slide 76: Resolution 3.5: Proxy Summary
Resolution No. 3.5 Election of Directors - Mr Donal O’Dwyer 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 Hear now. And always 2
Slide 77: Resolution 3.6: Mr Paul Ronald Bell
Resolution No. 3.6 Election of Directors - Mr Paul Ronald Bell “THAT Mr Paul Ronald Bell, being a Director who has been appointed to fill a casual vacancy on the Board in accordance with the Company’s constitution and, being eligible, offers himself for election as a Director of the Company.” Hear n
Slide 78: Resolution 3.6: Proxy Summary
Resolution No. 3.6 Election of Directors - Mr Paul Ronald Bell 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 Hear now. And always
Slide 79: Resolution 4: Securities issued to the CEO under the CELTIP
Resolution No. 4 Approval of securities issued to the CEO/President under the Cochlear Executive Long Term Incentive Plan (“CELTIP”) To consider and, if thought fit, to pass the following resolutions as an ordinary resolution: 4.1 “THAT approval be given to: a) The grant to Dr Christopher Graham Rob
Slide 80: Resolution 4: Proxy Summary
Resolution No. 4 Approval of securities issued to the CEO/President under the Cochlear Executive Long Term Incentive Plan (“CELTIP”) 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
Slide 81: Resolution No. 5: Securities issued to an executive director
Slide 82: Resolution No. 5: Proxy Summary
Slide 83: Close of Meeting
Slide 84: Slide 84