Cochlear Limited · ASX:COH
Cochlear — H1 F06 Earnings Presentation
16 slides from Cochlear's earnings presentation, February 2006
Slide 1: Cochlear Limited: Results for the year ended 31 December 2005
Cochlear Limited Results for the year ended 31 December 2005 Chris Roberts CEO Neville Mitchell CFO Cochlear: Background • Medical device company (24yr): global leader in implantable solutions for the hearing impaired, including • Leading global position (~70% share) in cochlear implants (bionic ear
Slide 2: Record Financial Results for H1 F06
Record Financial Results for H1 F06 •Total Revenues $221.1 million ↑ 34% •Sales $208.7 million ↑ 36% •Core EBITDA $72.1 million ↑ 45% •Core Earnings $47.3 million ↑ 43% •Core EPS 86.9 cps ↑ 45% •Dividend 45 cps ↑ 29% H1 F06 CI Unit Sales of 6,518 units ↑30% 12000 10000 8000 ↑ 30% 6000 4000 2000 0 F9
Slide 3: CI Unit Sales and Sales Revenue by Half Years
CI Unit Sales: Consecutive Half Years 7000 6000 5000 Unit Sales 4000 3000 2000 1000 0 7 8 9 0 1 2 3 4 5 6 F9 F9 F9 F0 F0 F0 F0 F0 F0 F0 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 COH: Sales Revenue by Half Years 225 200 F05 175 Sales $318.2M Sales $m illions + 26% 150 + 20% (ex Baha) 125 Baha 100 Ci 75 50 25 0 H
Slide 4: Sales by Half Year in Constant Currency; Regional Split
Sales by Half Year in Constant Currency* 225 200 42% growth in 175 CC over Sales $millions 150 H1 F05 125 Baha 100 Ci 75 50 25 0 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 F01 F02 F02 F03 F03 F04 F04 F05 F05 F06 * CC is sales revenues restated at F06 exchange rates H1 F06 Sales Revenue Regional Split (AUD) and c
Slide 5: Americas and Europe: Half Year Sales in Constant Currency
Americas: Half Year Sales in Constant Currency (at F06 FX Rates) Americas 100.0 • Nucleus Freedom momentum 80.0 • Successful integration of Baha/CI field force S ales $m illions 60.0 • Entire Americas operation significantly 40.0 strengthened 20.0 0.0 H2 F02 H1 F03 H2 F03 H1 F04 H2 F04 H1 F05 H2 F05
Slide 6: Asia-Pacific Sales; Clinical Outcomes Continue Improving
Asia-Pacific: Half Year Sales in Constant Currency (at F06 FX Rates) Asia-Pacific 40.0 • CI unit sales growth stronger than sales revenue growth S a les $m illio n s - significant installed base 20.0 sales in pcp • Nucleus Freedom not yet launched in a number of key countries 0.0 H2 F02 H1 F03 H2 F0
Slide 7: Technology Advances in Freedom Implant
Technology Advances in Freedom Implant • 4th generation ASIC CMOS internal chip •Even more • Cleaner sound reproduction reliable • Less internal noise • Improve efficiencies – power consumption • Ultra-low-noise NRT amp (~1 V) Nucleus Freedom Cochlear Implant • Launch roll out started April 2005 – o
Slide 8: Baha Update; Developing Internal Capability
Baha Update Direct Bone Conduction Technology Baha® • Entific Medical Systems acquired 3/05 System Cochlea • Baha implant for conductive hearing loss and single sided deafness • Distribution integrated into the 3 regions Bone Conduction with Bone Anchored Solutions (BAS) 16 division based in Gothenb
Slide 9: Key Growth Drivers; Cochlear Summary: First Half F06
Key Growth Drivers include: • Demand: Increasing patient motivation Both patient & medical community understanding • Supply: Expanding patient access Eg Clinic/surgeon kinetics, reimbursement, health economics (cost/benefit) • Product portfolio: CI/Hybrid/DACS/BAHA • Expanding indications Eg bilater
Slide 10: Financial Results – H1 F'06
Financial Results – H1 F’06 Neville Mitchell Chief Financial Officer H1 F’06 Financial Performance F’06 F’05 % Change A$’m A$’m Total Revenue 221.1 165.2 ↑ 34% Core EBITDA 72.1 49.8 ↑ 45% Core Earnings 47.3 33.1 ↑ 43% Core EPS (cents per share) 86.9 59.8 ↑ 45% Interim dividend (payable 14/3/06) 45c
Slide 11: H1 F'06 Core Earnings Calculation
H1 F’06 Core Earnings Calculation F’06 F’05 $m $m AIFRS NPAT 43.8 33.0 Adjustment items (after tax) • R&D Capitalised (0.1) (2.4) Amortisation of capitalised R&D 0.8 0.5 • Acquired intangible amortisation 1.1 - • Share based compensation 1.7 2.0 Core earnings 47.3 33.1 H1 F’05 – F’06 Core Earnings R
Slide 12: H1 F'06 Baha Financial Impact
H1 F’06 Baha Financial Impact • First half of full contribution • Revenue of $24.6 million • Revenue growth up 30% (acquired March 2005) • Integration with CI business – no separation of expenses • Gothenburg head office costs included in Admin Expenses • Integration savings realised per plan H1 F’0
Slide 13: H1 F'06 Working Capital
H1 F’06 Working Capital Days Sales Outstanding (DSO) $100.0 90 80 Net Receivables ($ millions) $80.0 70 60 $60.0 50 Days 40 $40.0 30 $20.0 20 10 $0.0 0 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Dec-05 • DSO at 83 days (F’05 65) • Europe DSO higher as anticipated with direct business model • USA DSO higher
Slide 14: H1 F'06 Debt Management; AIFRS Key Messages
H1 F’06 Debt Management A$m 31 Dec 05 30 June 05 Cash on hand 104.4 106.1 Interest bearing liabilities, current & non current (194.9) (203.1) Net (debt) / cash (90.5) (97.0) Debt / equity ratio 44% 63% Manageable levels of debt (pre-tax cost of debt is 2.8%) H1 F’06 AIFRS: Key Messages • AIFRS did n
Slide 15: Cochlear Summary
Cochlear Summary • First half F06: Momentum continues • Revenue up 34% to $221.1 million • Core earnings up 43% to $47.3 million • Nucleus Freedom: excellent clinical results • Baha: successful integration of this complementary product line • Continued building internal capability and operating with
Slide 16: H1 F'06 Foreign Exchange Rates
H1 F’06 Foreign Exchange Rates •Rates applied F’06 vs F’05 H1 F’06 H1 F’05 Average rates (used for translating P&L) USD 0.755 0.733 Euro 0.632 0.587 JPY 86.5 79.6 Contract rates (used to bring FX to Australia) USD 0.68 0.61 Euro 0.56 0.56 JPY 59 55 Foreign Exchange Rates Going Forward Average Contra