Slide 1: Results for the half year ended 31 December 2010 (H1 F11)
For personal use only Cochlear Limited Results for the half year ended 31 December 2010 (H1 F11) Chris Roberts, CEO Neville Mitchell, CFO
Slide 2: Cochlear Overview
Cochlear Overview For personal use only • Cochlear Limited (ASX:COH) is the global leader in implantable devices for the hearing impaired (cochlear implants, auditory brainstem implants, hybrid implants, DACS and bone conduction implants) • ~ 2,200 employees • Direct operations in 20+ countries, and
Slide 3: Cochlear: Financial Results for H1 F11
Cochlear: Financial Results for H1 F11 For personal use only H1 F11 H1 F10 $ millions $ millions +% Cochlear Implants 309.6 290.5 Ç7 Bone Anchored (Baha) 45.6 46.4 È2 FX Contracts 21.9 10.7 Revenue 377.1 347.6 Ç8 EBIT 121.1 107.3 Ç13 Net Profit After Tax 87.2 75.2 Ç16 EPS 154.3 cps 134.0 cps Ç15 Int
Slide 4: Sales in Constant Currency (CC)
Cochlear: Sales in Constant Currency (CC) For personal use only • H1 F11 revenues up 8% to $377.1 million • H1 F11 sales (excluding FX contracts) up 5% to $355.2 million H2 • H1 F11 sales in constant currency (prior period restated at H1 F11 rates) up 17% H1
Slide 5: Cochlear Implant (CI) Unit Sales
Cochlear: Cochlear Implant (CI) Unit Sales For personal use only • H1 F11 cochlear implant (CI) unit sales up 20% to 11,765 implants • Emerging markets comprised ~ a third of CI H2 unit sales • Over two thirds of CI sales were Nucleus 5 implants H1
Slide 6: Sales of Bone Anchored Solutions (BAS) in Constant Currency
Cochlear: Sales of Bone Anchored Solutions (BAS) in Constant Currency For personal use only • BAS sales (including Baha implants) $45.6 million for H1 F11, up 10% in constant currency • Cochlear Baha 3 System launched H2 H1
Slide 7: H1 F11 Regional Split of Sales
Cochlear: H1 F11 Regional Split of Sales For personal use only EMEA1 Americas 38% 46% CC2 growth Ç13% CC growth Ç20% Asia Pacific 16% 1 EMEA is Europe, Middle East CC growth Ç20% and Africa 2 CC is Constant Currency
Slide 8: Americas: Sales in Constant Currency
Cochlear Americas: Sales in Constant Currency For personal use only • H1 F11 Americas sales of $162.5 million, up 20% in constant currency • Continued investments in field expansion, recipient H2 services and marketing programs driving awareness and demand H1
Slide 9: EMEA: Sales in Constant Currency
Cochlear EMEA: Sales in Constant Currency For personal use only • H1 F11 Europe sales of $136.5 million, up 13% in constant currency • Growth in both Western Europe and Middle East H2 • Continued building of field team and initiatives driving awareness and growth H1
Slide 10: Asia Pac: Sales in Constant Currency
Cochlear Asia Pac: Sales in Constant Currency For personal use only • H1 F11 Asia Pacific sales of $56.2 million, up 20% in constant currency • Cochlear Nucleus 5 H2 launched in Korea • Direct operations in India working well, including investment in infrastructure & people H1 • China: government te
Slide 11: Net Profit After Tax (NPAT)
Cochlear: Net Profit After Tax (NPAT) For personal use only • H1 F11 NPAT of $87.2 million, up 16% • EPS of $1.54, up 15% • EBIT of $121.1 million up 13% , being 32% of revenue (H1 F10: 31%) H2 • Interim dividend $1.05, up 11% (60% franked, 40% conduit foreign income) H1
Slide 12: Nucleus System
Cochlear Nucleus 5 System For personal use only • Cochlear Nucleus 5 remains very successful • Excellent clinical outcomes (hearing performance) • Best ever reliability • Custom Sound 3.2 software for release in H2 F11, provides more features and N24 upgradeability
Slide 13: Positive Trends
Positive Trends: For personal use only • Developed markets •Increasing penetration of adults (~ 60% of new recipients) •Increasing penetration of bilaterals (~ 25% of surgeries) •Emerging economies •Growing faster than developed markets •Driven up implants in children (~ 80% of new recipients) •Clin
Slide 14: Continues Investing for Long Term
Cochlear Continues Investing for Long Term For personal use only Nucleus cochlear implants sold • Ongoing commitment to technologic in the world innovation (R&D ~ 13% of revenues) 20,000 • Investments in scalability for healthcare professionals (Scalability Suite driving simplification, automaticity
Slide 15: H1 F11 Overview
Cochlear H1 F11 Overview For personal use only • Record H1 F11 financial results: • Sales up 17% in constant currency (to $355.2 million) driven by CI units up 20% • NPAT up 16% to $87.2 million • Net debt ↓ to $17.3 million • Market trends favourable (eg bilaterals and adult penetration in develope
Slide 16: H1 F11 Financial Results
For personal use only Cochlear Limited H1 F11 Financial Results Neville Mitchell, CFO
Slide 17: H1 F11 Financial Performance
Cochlear H1 F11 Financial Performance For personal use only H1 F11 H1 F10 % $m $m Change Total Revenue 377.1 347.6 Ç8% EBIT 121.1 107.3 Ç13% NPAT 87.2 75.2 Ç16% Dividends Interim Dividend 105c 95c Ç11% Record Date 25 February 2011 Payable Date 15 March 2011 Franking* 60% 100% * Unfranked portion dec
Slide 18: H1 F10 – H1 F11 NPAT Reconciliation
Cochlear H1 F10 – H1 F11 NPAT Reconciliation For personal use only AUD Millions 140 49.2 0.8 0.1 (9.5) 120 (7.4) (1.4) (3.3) (16.5) 100 87.2 80 75.2 60 40 20 ‐ H1 F10 Gross Interest Admin Cost R&D Selling & Other Tax FX Impacts H1 F11 NPAT Margin Expenditure Marketing Income NPAT
Slide 19: Completion of Global Headquarters
Completion of Global Headquarters For personal use only $m Proceeds from Macquarie University 130.3 Total cost (118.7) Onerous lease commitments at present value (3.7) Relocation expenses (1.8) Construction profit net of relocation expenses 6.1 (Note 12)
Slide 20: H1 F11 Working Capital
Cochlear H1 F11 Working Capital Inventory (Days Stock Held) / Debtors Days Outstanding For personal use only 120.0 250 200 •• H1 H1 F11 F11 Inventory Inventory days days Inventory ($ millions) Days stock held 150 increased increased to to 193 193 100.0 (June (June F10 F10 192 192 days) days) 100 ••
Slide 21: H1 F11 Debt
Cochlear H1 F11 Debt For personal use only 31 Dec 30 Jun 31 Dec 2010 2010 2009 Operations $m $m $m Loans and Borrowings Current - - - Non-current 80.9 82.9 142.5 Total Debt – operations 80.9 82.9 142.5 Cash 63.6 41.8 73.5 Net Debt – operations 17.3 41.1 69.0 Gearing ratio - operations 3% 9% 15% (net
Slide 22: Negative Impact of Appreciating AUD on H1 F11 NPAT
Negative Impact of Appreciating AUD on H1 F11 NPAT For personal use only A$m F/(U) Income Statement Translation Impact Sales Revenue (38.4) Difference H1 F11 Total Expenses including tax 12.2 actual vs H1 F11 at H1 F10 rates (26.2) Transaction Impact Net difference - Increase from H1 F10 of FX gain
Slide 23: FX Contract Cover and Rates
FX Contract Cover and Rates as at 31 December 2010 For personal use only Total FX cover at USD Euro JPY Total AUD 31 Dec 2010 312.8m 246.7m 10.5m 570.0m % of total cover (in AUD) 54.87% 43.28% 1.85% 100% 3 yr weighted average rates FX contracts at 31 Dec 10 0.77 0.57 75.5 FX contracts at 31 Dec 09 0
Slide 24: H1 F11 Overview
Cochlear H1 F11 Overview For personal use only • Record H1 F11 financial results: • Sales up 17% in constant currency (to $355.2 million) driven by CI units up 20% • NPAT up 16% to $87.2 million • Net debt ↓ to $17.3 million • Market trends favourable (eg bilaterals and adult penetration in develope
Slide 25: Thank you
For personal use only Thank you Any questions?
Slide 26: Foreign Exchange
Foreign Exchange For personal use only Rates applied H1 F11 vs. H1 F10 H1 F11 H1 F10 % Change Average rates (used for translating P&L) USD 0.94 0.87 8% Euro 0.72 0.60 20% JPY 79.5 79.9 (1%) GBP 0.60 0.53 13% Contract rates (used to bring FX to Aust) USD 0.80 0.80 - Euro 0.57 0.55 4% JPY 80.2 87.2 (8
Slide 27: Foreign Exchange
Foreign Exchange For personal use only Period end rates applied F11 vs. F10 31 Dec 30 June % change 2010 2010 Period end rates (used for translating Bal Sheet) USD 1.01 0.87 16% Euro 0.77 0.71 8% JPY 83.2 78.1 7%