Cochlear Limited · ASX:COH
Cochlear — Shareholder Meeting (2004)
18 slides from Cochlear's shareholder meeting presentation, 2004
Slide 1: Cochlear Limited 2004 Annual General Meeting
Cochlear Limited 2004 Annual General Meeting CEO’s Address Dr Chris Roberts
Slide 2: 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$36.8 million on
Slide 3: Components of the Nucleus Cochlear Implant System
Components of the Nucleus® Cochlear Implant System Implant body RF Transmission Coil (receiver/stimulator) Speech Processor (BTE shown) Electrode array (inserted to cochlea)
Slide 4: Prevalence of Hearing Impairment
Prevalence of Hearing Impairment Potential 4 million Profound > 90 dB cochlear people implant Severe 75–90 dB market 250 million people Moderate - Severe 60-75 dB Moderate 40-60 dB 500 million people Mild 25-40 dB Incidence of profound hearing loss 50,000+ pa
Slide 5: Competitive Dynamics
Competitive Dynamics • Cochlear Limited has 60+% of global market • 2 main competitors • Advanced Bionics (purchased by BSX) • Med-El (private Austrian company) • The 3 companies comprise 99% of market • High barriers to entry for new competitors
Slide 6: Over 58,000 Nucleus recipients and more than 1,000 clinics in over 80 countries
Over 58,000 Nucleus® recipients and more than 1,000 clinics in over 80 countries worldwide Lithuania Estonia Scandinavia Latvia Brussels Poland LONDON Czech Republic HANNOVER BASEL Hungary TOULOUSE Spain Turkey TOKYO Greece DENVER Iran Korea Italy Israel BEIJING UAE Taiwan Saudi Arabia HONG KONG Mex
Slide 7: COH: Actual Unit Sales F'91 – F'04
COH: Actual Unit Sales F’91 – F’04 10000 9000 8000 Unit growth (n=13yr) is 15.6 ± 7.2% 7000 Range 0 to 31% Unit Sales 6000 5000 4000 3000 2000 1000 0 F' 91 F' 92 F' 93 F' 94 F' 95 F' 96 F' 97 F' 98 F' 99 F' 00 F' 01 F' 02 F' 03 F' 04
Slide 8: Summary F'04 Financial Performance
Summary F’04 Financial Performance F’04 F’03 % Change System Sales 9,306 9,342 - A$’m A$’m Total Revenue 285.8 307.6 ↓ 7% Operating Profit before tax 47.3 80.0 ↓ 41% PAT 36.8 58.2 ↓ 37% Full year dividend 79c 77c ↑ 3% Franking 100% 100%
Slide 9: Group Unit Sales
Group Unit Sales Group Unit Sales 6,000 4,916 4,824 4,482 5,000 4,412 4,237 3,608 4,000 Units 3,000 2,000 1,000 0 H1 F02 H2 F02 H1 F03 H2 F03 H1 F04 H2 F04 Period
Slide 10: COH Sales by Region: F'04
COH Sales by Region: F’04 Asia Pacific 20% Americas 43% Europe 37%
Slide 11: Group Sales Revenue A$'m (Reported)
Group Sales Revenue A$’m (Reported) Group Sales Revenue AUD 'm (Reported) 160.0 141.8 146.6 137.5 131.3 140.0 121.2 120.0 117.3 100.0 $ 'm 80.0 60.0 40.0 20.0 0.0 H1 F02 H2 F02 H1 F03 H2 F03 H1 F04 H2 F04 Period
Slide 12: Group Sales Revenue A$'m (Constant Currency)
Group Sales Revenue A$’m (Constant Currency) Group Sales Revenue AUD ' m (F' 04 Exchange Rate) 140.0 131.3 127.5 121.2 122.3 120.0 111.4 95.1 100.0 80.0 $m 60.0 40.0 20.0 0.0 H1 F02 H2 F02 H1 F03 H2 F03 H1 F04 H2 F04 Period
Slide 13: PAT Reconciliation F'04 – F'03
PAT Reconciliation F’04 – F’03 In constant currency GM & Hedge F’04 Profit Book $37.6 (10.5) F’03 Profit $58.2 SG&A (13.8) Tax Minorities Increase/ 8.1 0.6 R&D (Decrease) A$m (7.6) Interest 1.7
Slide 14: 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
Slide 15: 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 • (Technologic) Innovation • Internationalisation
Slide 16: People
People • Right people in the right positions • New Regional Presidents • Chris Smith – President of Americas (8/04) • Richard Brook – President of Europe (5/03) • Mark Salmon – President of Asia-Pacific (7/04) • VP Quality and Regulatory - Dr Adrian Oates
Slide 17: 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) • EBIT as a % of sales • SGA leverage (SGA growth < sales growth) • Cultural – eg: •
Slide 18: 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 CI system for release in F’05 • This is a platform for a range of innovatio