Cochlear Limited
Annual Report 2022
Cochlear has been the global leader in implantable hearing solutions
for over 40 years, providing a range of implants and sound processor
upgrades that deliver a lifetime of hearing outcomes.
Our goal is to deliver value by helping more people to hear, which
contributes to building a healthier and more productive society.
Contents
Overview
Our company
How we create value
FY22 highlights
Letter to shareholders
Strategy
Our strategy
Value creation
Growth opportunity
Strategic priorities
Retain market leadership
Grow the hearing implant market
Deliver consistent revenue and
earnings growth
A stronger organisation
Business risks
2
6
8
10
26
28
30
34
34
36
44
48
52
Performance
Operational review
Financial review
Governance
Overview
Board of directors
Executive team
Directors’ report
Remuneration report
Directors’ report
Financial report
54
56
60
62
66
70
90
95
Shareholder information
144
2022 shareholder reports
Available at the Investor section of the website
www.cochlear.com
Front cover
Lou Ferrigno, Cochlear™ Nucleus®
System recipient. Find out more about Lou’s
Cochlear journey on page 41.
Cochlear Limited
Corporate
Governance
Statement 2022
Cochlear Limited
Tax Contribution
Report 2022
Cochlear Limited
Sustainability
Report 2022
Cochlear Limited Annual Report 2022
Our story
For over 40 years Cochlear has been bringing people all over
the globe into the world of sound.
Professor Graeme Clark, an Australian ear surgeon, saw first-hand the isolation and
frustration that comes from living in a world of silence as his father struggled with
hearing difficulties. On holiday in 1977, fiddling with a shell and a blade of grass, Graeme
realised there was a safe way to insert electrodes into the inner ear. It was Graeme’s
determination to help others that realised our first implantable solution, reconnecting
Rod Saunders to hearing and bringing music into his life.
Professor Clark partnered with Australian entrepreneur Paul Trainor – and his Nucleus
Group – and the University of Melbourne to commercialise the cochlear
implant. With funding from the Australian government, they developed
the Cochlear™ Nucleus® 22 Implant, the first multi-channel cochlear
implant, and Cochlear, the company, was formed.
Today, Cochlear is the leader in implantable hearing solutions,
connecting hundreds of thousands of people globally to a life
full of hearing. The pioneering spirit that started Cochlear
all those years ago continues to drive us forward and our
commitment is stronger than ever. We’re transforming the
way people understand and treat hearing loss, and we’re
committed to reaching more people to provide support for
a lifetime of hearing.
About this report
The annual report has been
prepared in accordance with
the IFRS Foundation’s Integrated
Reporting Framework, which
we use to clearly articulate how
we aim to deliver long-term
sustainable value for all our key
stakeholders.
1
Cochlear Limited Annual Report 2022 Our company
About Cochlear
For over 40 years, Cochlear has been the global leader in
implantable hearing solutions.
Cochlear commenced operations in 1981 as part of the Nucleus
group and in 1995 listed on the Australian Securities Exchange.
Today, it is a Top 50 listed Australian company with a market
capitalisation of over $13 billion.
We aim to improve awareness of and access to implantable hearing
solutions for people indicated for our products. We have provided
more than 700,000 implant devices to people who benefit from
one – or two – of our implantable solutions. Whether these hearing
solutions were implanted today or many years ago, we continue to
bring innovative new products to market as well as sound processor
upgrades for prior generations of recipients.
We invest around 12% of sales revenue each year in R&D, with
over $2 billion invested since listing, and participate in over
100 collaborative research programs worldwide. Our global
headquarters are on the campus of Macquarie University in Sydney,
with regional offices in Asia Pacific, Europe and the Americas. We
have a deep geographical reach, selling in over 180 countries, with a
direct presence in over 30 countries and a global workforce of close
to 4,500 employees.
Our mission
We help people hear and be heard.
We empower people to connect with others and
live a full life.
We transform the way people understand and
treat hearing loss.
We innovate and bring to market a range of
implantable hearing solutions that deliver a
lifetime of hearing outcomes.
For over 40 years,
Cochlear has been
the global leader
in implantable
hearing solutions
We have a deep
geographical reach,
selling in over
180 countries
2
Cochlear Limited Annual Report 2022 Cochlear at a glance
Business segments
Cochlear implant
systems
57%
Cochlear
implants*
31%
Services*
Sound processor
upgrades, accessories
& other
12%
Acoustics*
Bone conduction
systems and sound
processor upgrades
Cochlear™ Nucleus® Profile™
Plus with Slim Modiolar
Electrode (CI632)
Cochlear™
Nucleus® 7
Sound Processor
Cochlear™
Nucleus® Kanso® 2
Sound Processor
Cochlear™
Osia® 2
System
Cochlear™
Baha® 6 Max
Sound Processor
Global sales
>$1.6b
in sales revenue
~80%
Developed markets*
~20%
Emerging markets*
48%
Americas*
35% 17%
EMEA*
Asia Pacific*
Market leader
Growing scale
$200m+
in annual R&D
700,000+
implants sold***
>60%
global market share**
~4,500
employees
30+
countries with
direct operations
100+
collaborative
research programs
6
key manufacturing
sites
3
* Based on sales revenue. ** Based on Cochlear estimates for cochlear implants. *** Includes cochlear and acoustic implants.Cochlear Limited Annual Report 2022 Our company
Investment proposition
Cochlear provides shareholders with an opportunity to invest in the global leader in implantable hearing
solutions, in an industry that has the potential to grow over the long term.
Global leader in implantable hearing solutions for over 40 years with
over 60% global market share and more than 700,000 devices sold
Long-term market growth opportunity with a significant, unmet and
addressable clinical need for implantable hearing solutions and less
than 5% market penetration
Unrivalled commitment to product innovation, bringing innovative
new products and services to market as well as sound processor
upgrades compatible with prior generation implants
Growing income stream from servicing our expanding recipient base
Strong free cash flow generation provides funding for market growth
activities and R&D as well as the ability to reward shareholders with a
growing dividend stream
$1000 invested in Cochlear at listing
worth ~$150,000
as at 30 June 2022
4
$40,000$80,000$120,000$160,000$200,000959697989900010203040506070809101112131415161718192021Cochlear total shareholder return since listingCochlear Limited Annual Report 2022 Financial history
Cochlear has a long track record of delivering growing sales revenue, profits* and dividends.
5%
in FY22
9%
in FY22
in CC**
18%
in FY22
18%
in FY22
Cochlear implants
units
Sales revenue
$million
Net profit
$million - underlying*
Dividends
per share
5
$3.00969798990001020304050607080910111213141516171819202122* Excluding one-off and non-recurring items. ** Constant currency.1,64196979899000102030405060708091011121314151617181920212227796979899000102030405060708091011121314151617181920212238,182969798990001020304050607080910111213141516171819202122Cochlear Limited Annual Report 2022 Our mission
The passion that drives the
organisation and focuses the
strategy
Our strategy
Where we focus our time and
resources to create value
We help people
hear and be heard
The factors driving
industry growth
How we focus our
resources
Our growth opportunity is
compelling and has remained
unchanged for many years.
Our strategic priorities are
focused on improving awareness
of and access to implantable
hearing solutions for people
indicated for our products.
Growth opportunity
Strategic priorities
We empower people
to connect with others
and live a full life
We transform the way
people understand and
treat hearing loss
We innovate and bring
to market a range of
implantable hearing
solutions that deliver
a lifetime of hearing
outcomes
• Hearing loss is prevalent and
under-treated
• Cochlear implants are a cost-
eff ective solution for all age
groups
• Product indications are
broadening and funding is
expanding
• Cochlear implants can deliver
superior outcomes to hearing
aids for indicated patients
• Good hearing is essential for
healthy ageing
How we
create value
Our goal is to deliver value by helping
more people to hear, which contributes
to building a healthier and more
productive society.
We have a responsibility to be here to support a lifetime of hearing for the children,
and adults, being implanted with our devices, which means we need to deliver
sustainable financial growth, benefiting all our stakeholders.
We achieve this through market-leading innovation capabilities in conjunction with a
global network of experts and collaborators; the strong and trusted relationships we
build with our candidates, recipients, professional customers and payers; and our
employees who are central to how we deliver our strategy and create value.
Retain market
leadership
Grow the
hearing implant
market
Deliver
consistent
revenue
and earnings
growth
6
Cochlear Limited Annual Report 2022 Value creation
How the outcomes of our activities impact
all key stakeholders - our customers, our people, our
shareholders and society more broadly
The pillars that set
the foundation for
success
To be successful over the long
term, our organisation needs to
be strong, agile and sustainable to
enable us to execute our strategy,
support our customers and deliver
on our growth ambitions.
A stronger organisation
The key inputs to
creating value
Customers & communities
Our capacity to create value
depends on the strong and
trusted relationships we
build with our candidates,
recipients, professional
customers and payers.
The value we create,
driving success now and
into the future
A healthier & more productive society
Delivering societal benefi t through improved
health outcomes, educational cost savings and
productivity gains.
Empowered customers
Improving the wellbeing of recipients and providing
convenience and confi dence to our professional
customers.
Shaping our
culture
Creating value
sustainably
Innovation
A lifetime of hearing solutions
We are pioneers and
global leaders in the
development, manufacture
and commercialisation of
implantable hearing solutions,
collaborating with a global
network of research partners.
Innovating to build a market-leading portfolio
of products and services that improve hearing
outcomes and provide a lifetime of hearing solutions
for recipients.
People
Thriving people
Being agile and
effi cient
Our people’s knowledge and
expertise are central to how
we deliver our strategy.
An engaged, capable, high-performing and
diverse workforce that delivers on our strategy
and supports the creation of sustained value.
Financial & environmental
Sustained value
Prudent management
of fi nancial capital and
responsible production and
consumption underpin the
delivery of sustainable growth
over time.
Maximising spending to grow the
market while maintaining our
competitive position.
Agile, effi cient and
environmentally
responsible business
processes to support
our growth
ambitions.
7
Cochlear Limited Annual Report 2022 FY22 highlights
In FY22, we helped over 40,000 people hear with one – or two – of our cochlear or
acoustic implants, providing an estimated net societal benefit of more than $6 billion
over the lifetime of the recipients from improved health outcomes, educational cost
savings and productivity gains.1
FY22 value
creation
A healthier
& more
productive
society
Empowered
customers
Helping more people hear
• We helped over 40,000 more
people hear with one – or two – of
our cochlear or acoustic implants
Developing a treatment pathway
for adults
• The World Health Organization
provided guidance for establishing
evidence-based programs
for hearing screening2 aimed at
improving the identification and
treatment of hearing loss
• The ‘Living guidelines’ initiative was
established to deliver clinical guidelines
to enable early identification and
referral for cochlear implant candidates
Providing convenience and
confidence to customers
• We became the first company
to offer app-based Remote Care
solutions to both acoustic and
cochlear implant recipients
• Cochlear™ Remote Assist achieved
FDA approval, enabling live video
appointments for both cochlear
implant and Baha® Implant recipients
Growing connectivity and
engagement with recipients
• Cochlear Family membership
grew 20% to 260,000, with a
60% join rate for new Cochlear™
Nucleus® implant recipients
Broadening indications and
reimbursement
• Achieved FDA approval for the
treatment of unilateral hearing loss
and single-sided deafness with a
Cochlear™ Nucleus® implant in the US
• Achieved reimbursement for the
Cochlear™ Osia® 2 System across
a number of countries including
the US, Germany and UK
• Achieved reimbursement for
remote programming in Australia
Improving access to education
• Formed a partnership3 with
Malala Fund aimed at removing
hearing loss as a barrier to
education in emerging markets
8
Cochlear Limited Annual Report 2022 A lifetime
of hearing
solutions
Thriving
people
Sustained
value
Market-leading technology
underpins over 60% global
market share
• Invested over $200m in R&D,
13% of sales revenue, with many
new products and services
achieving regulatory approval
over the past few years across
all parts of the portfolio
Providing the latest technology
to our existing customers
• The Cochlear™ Nucleus® 8 Sound
Processor achieved CE Mark
approval in August 2022
• Strong demand experienced
for the new Cochlear™ Baha®
6 Max Sound Processor
• Launched the Cochlear™
Nucleus® 7 S and Nucleus® 7
SE Sound Processors across
the emerging markets
Australian cochlear implant
pioneer honoured as 2021 NSW
Scientist of the Year
• Professor Jim Patrick, Cochlear’s
Chief Scientist – Emeritus,
recognised for his extraordinary
contribution to science
Shaping our culture
• Continued to roll out a range
of training and leadership
development programs
• Employee engagement
maintained at 80%
Broadening incentives to
benefit more employees
• Introduced changes to our
reward offering to achieve greater
alignment and consistency of
reward across the business
Strong financial position
• Delivered record sales revenue
of $1,641m, up 9% in CC*
• Underlying net profit** of
$277m, up 18% on FY21 and
within the guidance range
• Full year dividends up 18%, with the
payout in line with the 70% target
Investing to build scale
• Agreement to acquire Oticon
Medical, Demant’s hearing
implant business for ~A$170m
Emission reduction targets
• Established net-zero emissions targets
with net-zero in our operations (Scope
1 and 2) by FY30 and across our value
chain (Scope 1, 2 and 3) by FY50
• Manufacturing at 5 of our 6 facilities
transitioned to 100% renewable
energy
Gender equality
• Women in senior and executive
management roles increased to
41%, exceeding our 40% target
• 33% women on the Board
of directors, with the
transition in August 2021 to
our first female Chair
Reconciliation Action Plan
• Formalised our commitment
to recognition and
reconciliation through our first
Reconciliation Action Plan
* Constant currency. ** Excluding one-off and non-recurring items.
9
Cochlear Limited Annual Report 2022 Alison Deans, Chair
Dig Howitt, CEO & President
Letter to shareholders
We are pleased to report strong growth in sales revenue and profitability with all
regions and product segments tracking above pre-COVID levels. We continued
to invest in research and development (R&D) and awareness and access activities
with good progress made across the key value drivers.
Our compelling growth opportunity, the progress made on key strategic priorities
and strong balance sheet mean we are well placed to create value for our
stakeholders now, and over the long term.
Operational and financial review
We experienced improving momentum across
the year as surgeries recovered following COVID
shutdowns. Cochlear implants, however, continued
to experience variability in performance across
countries with COVID and hospital staffing
shortages impacting operating theatre capacity.
Record sales revenue of $1,641 million, up 10%
(9% in constant currency*), was driven by strong
demand for acoustic implants and sound processor
upgrades with all regions and product segments
tracking above pre-COVID levels.
Underlying net profit** increased 18% (10% in CC) to
$277 million, within the guidance range of $265-285
million, and with an underlying net profit margin
of 17%. Excluding the impact of cloud computing-
related expenses, the underlying net profit margin
was 18%, in line with our long-term target. Statutory
net profit of $289 million benefited from $12 million
in one-off gains.
Strong cash flow generation supports the 18%
increase in full year dividends. The dividend payout
of 71% of underlying net profit is aligned to our 70%
target payout.
10
* Constant currency (CC) removes the impact of foreign exchange (FX) rate movements to facilitate comparability of operational performance.** Excluding one-off and non-recurring items (refer page 59). Cochlear Limited Annual Report 2022
Creating long-term value
Our goal is to deliver value by helping more people
to hear, which contributes to building a healthier
and more productive society.
Our value creation model demonstrates how our
business creates value over the long term. For us,
this means describing the outcomes of our activities
in broader terms than just the progress against
our strategic priorities and the financial returns we
generate. Genuine value creation describes the
impact we have on all our key stakeholders – our
customers, our people, our shareholders as well as
society more broadly.
The following pages describe how the key
inputs into our business – our customers and
communities, our innovation capability, our people
and financial capital – create value.
We believe success will be defined by building
a healthier and more productive society, having
empowered customers, providing a lifetime of
hearing solutions for our recipients and having
thriving employees. Doing these things well should
enable us to achieve sustainable financial returns
over time.
Sales revenue
$m in CC*
Underlying net profit
$m**
Dividends
per share
$1,641m
$277m
$3.00
9%
in FY22
in CC**
18%
in FY22
18%
in FY22
11
-$0.50$1.00$1.50$2.00$2.50$3.00$3.5013141516171819202122-4509001,3501,80013141516171819202122-5010015020025030013141516171819202122Cochlear Limited Annual Report 2022 Letter to shareholders
A healthier & more productive society
We are focused on building a healthier and more productive society, delivering
societal benefit through improved health outcomes, educational cost savings and
productivity gains. We do this by transforming the way people understand and
treat hearing loss through awareness and access activities.
Helping more people hear
In FY22, we helped over 40,000 people hear with
one – or two – of our cochlear or acoustic implants,
providing an estimated net societal benefit of more
than $6 billion over the lifetime of the recipients from
improved health outcomes, educational cost savings
and productivity gains.1
Over the past few years, we have been expanding
our programs for driving growth of the adults
and seniors segment through direct-to-consumer
(DTC) marketing activities and building referrals
from hearing aid and ENT (ear, nose and throat)
clinics. We have expanded our DTC activities to
over 20 countries and increased the sophistication
of targeting and nurturing candidates from
awareness through to surgery. As a result, we are
attracting more high-quality candidates and seeing
improvements in the time to surgery.
The Cochlear Provider Network and Sycle business
in the US help educate hearing aid audiologists of
the indications and benefits of cochlear implants
and continues to provide a growing number of
referrals. We are taking the learnings from the US
and developing referral networks in other countries,
with a focus on helping our partners in the hearing
aid channel identify and refer potential patients.
Developing a treatment pathway for
adults
An important long-term goal for us is to support the
development of a consistent process by which all
healthcare professionals diagnose, refer and treat
adults eligible for cochlear implants. This goal is
supported by the growing recognition that hearing is
an essential part of healthy ageing and treating age-
related hearing loss is cost-effective.
In 2021, the World Health Organization (WHO)
provided guidance for establishing evidence-
based programs for hearing screening2 aimed at
improving the identification and treatment of hearing
loss in target age-groups, including adults.
And in 2022, the ‘Living Guidelines’ initiative was
established, an international taskforce of over 50
leading cochlear implant professionals, academics
and cochlear implant users tasked with delivering
clinical guidelines to enable early identification and
referral for cochlear implant candidates. The initiative
aims to create guidelines that can be adapted and
adopted in country to optimise the care for adults
eligible for cochlear implants.
12
Cochlear Limited Annual Report 2022 Cochlear and acoustic implants
contribute to building a healthier and
more productive society.
Mahrukh is a bilateral cochlear implant
recipient and works as an obstetrics and
gynaecology doctor in Delhi. When Mahrukh was
young, she didn’t believe she could be a doctor
because she hadn’t seen, read or heard of a
doctor with disabilities.
With encouragement from her teachers, Mahrukh
studied medicine in India even though Hindi is
not her first language. She is now thriving and has
become a passionate advocate, hoping to inspire
others with hearing loss to see medicine as a
possible career path.
Broadening indications and
reimbursement
Market access activities have been focused on
expanding indications and reimbursement for
our products. In January, Cochlear obtained FDA
approval for the treatment of unilateral hearing loss
and single-sided deafness (SSD) with a Cochlear™
Nucleus® implant in the US. This approval expands
the addressable market with around 60,000 people
in the US acquiring SSD every year.3
We also achieved reimbursement for the Cochlear™
Osia® 2 System in a number of countries, including
the US, Germany and UK.
In Australia, following advocacy from a coalition of
cochlear implant recipients, surgeons, audiologists
and service providers, the Australian Government
introduced reimbursement for remote programming
of auditory implants including cochlear and bone
conduction implants under the Medical Benefits
Schedule. This change will empower both implant
recipients and clinicians by improving the availability
of programming options that are not face to face
and creating flexibility in how care can be accessed
and provided.
Improving access to education
The emerging markets is an important segment,
with a primary focus on children. While this segment
has been growing rapidly, penetration rates remain
very low. We know that if children with hearing
loss do not receive support early in life, they often
experience lower performance at school and
ultimately this can impact economic outcomes over
their lifetime.
We are focused on building awareness in these
markets of the importance of addressing hearing
health through public education campaigns, and on
improving the rates of hearing screening for children.
In September, we announced a partnership4
between Cochlear Foundation and Malala Fund
with the joint aim of removing hearing loss as a
barrier to education. We hope this partnership will
raise awareness of the need for governments and
societies to prioritise hearing health in children.
In doing so, children with hearing loss will be
empowered to connect with life’s opportunities on a
more even playing field.
13
Cochlear Limited Annual Report 2022 Letter to shareholders
Empowered customers
We aim to improve the wellbeing of our recipients by providing them with the
latest sound processor technology as well as easy-to-use after-care to support a
lifetime of hearing outcomes. And we invest in education and clinical support tools
to ensure our professional customers have convenience and confidence in caring
for implant candidates and recipients.
Providing convenience and confidence
to customers
Continuing our history of meaningful innovations that
make a difference in people’s lives, we are the first
company to offer app-based Remote Care solutions
to both acoustic and cochlear implant recipients.
This means that recipients can conveniently access
care from their clinician without a clinic visit – from
home, at work, or when travelling. Remote Care is
available through two solutions, Cochlear™ Remote
Check and Cochlear™ Remote Assist, which achieved
FDA approval in October.
With Cochlear™ Remote Check, cochlear implant
recipients can complete a hearing health check
through the Nucleus® Smart App without visiting the
clinic. Their clinician can then review the results at a
convenient time to determine if they are performing
as expected or need follow-up.
Cochlear™ Remote Assist enables live video
appointments for both cochlear implant and Baha®
Implant recipients. The clinician can assess how the
recipient is progressing and discuss any issues they
are experiencing. The clinician can also connect
remotely to the recipient’s sound processor to make
adjustments or enable features in real-time.
COVID has accelerated use of smartphone
technology by adults and seniors, including video
calling. It has also changed the way recipients think
about care delivery with most adults with hearing
loss, when surveyed, saying they would use remote
care if it was offered by their clinician.6
By offering app-based Remote Care solutions, we
are meeting a recipient need and making care more
convenient. We are also assisting our professional
partners to increase clinic efficiency, providing
greater flexibility and allowing clinicians to see more
patients, including new candidates.
Cochlear™
Remote Check
Cochlear™
Remote Assist
14
Cochlear Limited Annual Report 2022 Remote Care solutions empower
our customers.
Katie is a cochlear implant recipient with a
Cochlear™ Nucleus® 7 Sound Processor. She has
a busy life as a physiotherapist with two young
children and she enjoys swimming, running and
cycling.
With the new Cochlear™ Remote Check, Katie is
now able to do a hearing health check from home.
It saves her two hours of time travelling to her
audiologist’s clinic, enabling her to better balance
maintaining her hearing care with her busy lifestyle.
Katie can complete the check when it’s convenient
for her and she doesn’t have to complete all the
activities at the same time.
“Having Remote Check is really convenient. You
can do it in the comfort of your home environment,
when you want to do it. It takes away the stress of
having to go all the way to the clinic.”
Growing connectivity and
engagement with recipients
We invest to provide our recipients with a world-
class customer experience with increased
connectivity and engagement. Cochlear Family, the
recipient membership program, provides us with the
opportunity to connect directly with recipients to
provide service and support.
Membership continues to grow rapidly, increasing by
20% over the last 12 months, to 260,000 members
with a 60% join rate for new Cochlear™ Nucleus®
implant recipients. An acceleration in recruitment
in recent years has been driven by a combination
of direct outreach programs and improvements in
customer onboarding.
Elena, Cochlear Nucleus System recipient
15
Cochlear Limited Annual Report 2022 Letter to shareholders
A lifetime of hearing solutions
We innovate to build a market-leading portfolio of products and services that
supports a lifetime of hearing outcomes for recipients. We have achieved this
through a multi-decade philosophy of investing to grow and an unwavering
commitment to innovation. Our market-leading technology underpins our global
market share of over 60%, and in FY22 we invested over $200 million in R&D,
representing 13% of sales revenue.
Providing the latest technology to our
existing customers
The Cochlear™ Nucleus® 8 Sound Processor
achieved CE Mark approval in August 2022.
Commercial availability commences in European
countries over the coming months and is expected
to be launched across other markets by the end of
2022, subject to the timing of regulatory approvals.
The Cochlear™ Baha® 6 Max Sound Processor
was launched in the second half of FY21 with strong
demand experienced for the new sound processor.
The Baha 6 Max Sound Processor provides a fitting
range of up to 55 dB sensorineural hearing loss in the
same small size as current 45 dB devices, with longer
battery life and direct streaming from both Android™
and Apple devices.
In late 2021 we launched the Cochlear™ Nucleus® 7 S
and Nucleus® 7 SE Sound Processors across the
emerging markets, providing many of the benefits of
our latest technology platform to more people around
the world.
Michelle, Baha 6 Max recipient
16
Cochlear Limited Annual Report 2022 Our products and services provide
a lifetime of hearing outcomes for
recipients.
Jack lost his hearing at age 11 as the result of a
bacterial infection. He received his Cochlear™
Nucleus® 22 implant a year later, in 1988. For the
past 34 years Jack has upgraded his external
sound processor to the latest technology at every
opportunity, most recently in October 2020 when he
got his Cochlear™ Nucleus® 7 Sound Processor.
Jack is grateful that Cochlear makes modern
technologies compatible with legacy implants like
his. Each sound processor upgrade ensures that Jack
keeps pace with lifestyle changes and his working
needs. “Each advancement in the technology puts
in my hands access to tools or methods by which I
can hear more clearly and with less effort. Without a
doubt, my quality of life improves.”
Australian cochlear implant pioneer
honoured as 2021 NSW Scientist of the
Year
Professor Jim Patrick, Cochlear’s Chief Scientist
– Emeritus, and one of the original engineers to
pioneer the development of the multi-channel
cochlear implant, was named the 2021 NSW
Scientist of the Year. The award recognises and
celebrates the extraordinary contribution that NSW
scientists and engineers make to our everyday lives.
In 1981, Jim was a member of the Cochlear
‘Tiger Team’ tasked with developing a clinically
applicable cochlear implant. As a long-time
member of Cochlear’s senior team, Jim held a
number of technology management roles, including
responsibility for R&D, Quality and Manufacturing.
NSW Chief Scientist & Engineer Professor Durrant-
Whyte said Jim is “not only a giant in health
technology, but an exemplar of how a great idea can
be translated into a highly successful commercial
outcome, while delivering ongoing benefits to
society.”
Professor Jim Patrick, Cochlear’s Chief Scientist –
Emeritus
We are proud and humbled by the work of
Professor Jim Patrick and the early innovators who
commercialised the first multi-channel cochlear
implant, founding a business that employs close to
4,500 people today.
17
Cochlear Limited Annual Report 2022 Letter to shareholders
Thriving people
Our people are our most valuable asset and are an engaged, capable and high-
performing team that delivers on our strategy and supports the creation of
sustained value. We have a diverse workforce with close to 4,500 people across
the globe. Their knowledge, expertise, passion and focus on delivering excellence
is key to achieving future success.
Shaping our culture
We have an inclusive organisation and a healthy
corporate culture that is strongly connected to our
mission and puts the customer at the centre of
everything we do. As our workforce continues to
expand, we work hard to intentionally shape the
culture that will enable us to grow and deliver for our
customers in the future.
Over the past few years, we have introduced a range
of training and leadership development programs
to evolve our organisational culture to ensure it
continues to support our business strategy and long-
term growth goals.
80%
We are pleased to report
that overall employee
engagement continues
to remain strong at 80%,
with 91% of employees
reporting that they feel
proud to tell people they
work at Cochlear and
94% understanding how they contribute to the
satisfaction of our customers.
Employee
engagement
Broadening incentives to benefit more
employees
Our total reward framework is an important part
of building a strong and cohesive culture. In FY22,
we introduced changes to our reward offering to
achieve greater alignment and consistency of how
we reward employees across the business.
The key highlights include aligning employees to the
global short term incentive plan, ensuring more of
our employees have some form of performance-
based reward, and introducing a new global
employee share plan.
These changes support our cultural priorities,
improve our market competitiveness to ensure
we are able to attract and retain talent across all
the markets in which we operate, and provide an
opportunity for our employees to own shares in the
company and be part of our future success.
18
Cochlear Limited Annual Report 2022 A focus on career development and
internal promotion helps build thriving
people.
Melinda joined Cochlear 13 years ago as an
Engineering Intern with a desire to grow in a dynamic
and collaborative environment and contribute to the
health and well-being of society. She believes that
rotating through different departments is a fantastic
way to get a glimpse of the career possibilities ahead.
Melinda is currently a Professional Marketing
Manager for our Australia & New Zealand team. She
credits her growth and success to understanding
her strengths, building supportive networks across
the organisation and having a realistic action plan to
develop her skills. Reflecting on her experience, she
says, “I have developed from a quiet achiever to a
people leader because of the career opportunities at
Cochlear.”
Gender equality
Support and flexibility
Achieving gender equality is one important element
of our Diversity and Inclusion strategy. We strive for
a gender balance of 40:40:20, which means that 40-
60% of either gender is represented (40% women,
40% men, 20% open).
We are committed to ensuring the safety and
wellbeing of our people. We also support our
employees in better integrating their work and
personal commitments so they can thrive at both
work and home.
By year end we achieved 41% female representation
amongst our senior leaders, exceeding our 40%
target 18 months ahead of expectations. And at
Board level, the target of at least 30% female
representation on the Board was achieved in FY21,
with 33% female directors by year end.
Achievement of this target is supported by focused
activities in the areas of talent and succession
planning and talent acquisition, with the aim of
increasing our pipeline of female talent.
A range of additional activities and policies
recognised as key enablers to gender equality
continue to be implemented to support improved
access to work for all employees. These include
a focus on continuing to embed flexible working
for employees globally, further deployment of
our inclusive leadership programs with a focus on
unconscious bias education for all leaders, and
continuing work to ensure gender pay equity across
our global workforce.
Flexible work is a foundational piece of our global
Diversity and Inclusion framework and is key to
supporting employee wellbeing by providing our
people with different ways of working, no matter
their life stage or responsibilities.
As employees return to the workplace following the
easing of COVID restrictions, we are seeing a greater
uptake of flexible working arrangements, which is
working well, supported by the rapid evolution of
our IT infrastructure to enable efficient and inclusive
remote working capabilities.
We continue to educate and support our employees
working in a hybrid work environment and have
provided additional resources to support both
physical and mental health, with a focus on staying
connected to colleagues.
19
Cochlear Limited Annual Report 2022 Letter to shareholders
Board renewal
Reconciliation Action Plan
Over recent years we have continued our process
of Board renewal, adding new directors with
diverse perspectives and relevant experience, while
maintaining continuity and corporate knowledge.
We are pleased with our recent appointments, with
Christine McLoughlin, Michael Daniell and Michael
del Prado adding valuable new perspectives to our
Board discussions.
We look forward to working with Karen Penrose
who joined the Board in July. Karen is a highly
respected company director and Audit and Risk
Committee Chair, having served on the boards of
a number of ASX100 companies and experienced
across health care, financial services, property
and infrastructure industries. Prior to this, Karen
had a distinguished executive career in senior
leadership and Chief Financial Officer roles in
financial services. Her skills and executive, board
and governance experience will be invaluable to
Cochlear and serve to further enhance the financial
expertise of the Board.
We believe that our Board has an appropriate mix
of skills and experience and as we consider ongoing
renewal, we will continue to review the skills needed
to best serve Cochlear now and into the future.
In December we proudly launched our first
Reconciliation Action Plan (RAP). In recent years
we have made some small but significant steps in
advancing reconciliation and celebrating the unique
and central role of First Nations peoples in Australia’s
past, present and future.
As a leading Australian company – and one with
a mission to help people hear and be heard – we
can and must do more. Our Reflect RAP formalises
this commitment and sets out a pathway for us to
explore opportunities to have real influence and
impact. This includes helping to tackle the ear and
hearing health gap between First Nations and non-
First Nations Australians.
The Reconciliation Australia framework sets out
four domains for action – relationships, respect,
opportunities and governance. We have developed
commitments and actions across these domains
that reflect the unique opportunities and issues
for Cochlear and our sector including supporting
improvement of First Nations hearing and ear health,
and healthcare support systems, and promoting
Science, Technology, Engineering and Math (STEM)
development and career pathways for First Nations
students.
Other priority actions include improving employment
opportunities and outcomes for First Nations
peoples within Cochlear, increasing support for First
Nations suppliers and working towards creating a
culturally safe and welcoming workplace for First
Nations peoples.
20
Cochlear Limited Annual Report 2022 The Joy of Sound artwork by First Nations design agency, Balarinji, was commissioned by Cochlear to tell the
story of our foundation and beginnings. It represents Professor Graeme Clark’s determination to find a new and
more effective way to treat hearing. It reflects our mission to help more people hear and be heard, to connect
with others and live a full life.
21
Cochlear Limited Annual Report 2022 Letter to shareholders
Sustained value
To deliver consistent revenue and earnings growth over time, we balance
maximising spending to grow the market with investment to maintain our
competitive position while ensuring we have agile, efficient and environmentally
responsible business processes to support our growth ambitions.
Pathway to net-zero carbon emissions
We are committed to taking an active role in the
global effort to tackle climate change, targeting net-
zero emissions in our operations (Scope 1 and 2) by
FY30 and across our value chain (Scope 1, 2 and 3)
by FY50. Our carbon reduction strategy is aligned
with the Science Based Target Initiative (SBTi) and
is consistent with efforts to limit warming to 1.5
degrees above pre-industrial levels.
We have a relatively low level of carbon emissions as
a business, with around 50% of total FY19 reported
carbon emissions generated from Scope 3 – or
indirect – emissions, with business flights our single
biggest source of reported carbon emissions.
For these Scope 3 emissions, we have a target of
50% reduction in business flight-related emissions
by FY25. We are in the process of developing a
complete Scope 3 inventory and will define our
broader Scope 3 SBTi-aligned target by FY25.
Our targets reflect our strategy of transitioning to
renewable energy as well as the broader global
transition toward a net-zero economy. By the end of
FY22, manufacturing at five of our six facilities had
transitioned to 100% renewable energy, with the
sixth transitioning in July 2022.
Underlying net profit increases 18% to
$277 million
Underlying net profit** increased 18% (10% in CC)
to $277 million, within the guidance range of $265-
285 million, and with an underlying net profit margin
of 17%. Excluding the impact of cloud computing-
related expenses, the underlying net profit margin
was 18%, in line with our long-term target. Statutory
net profit of $289 million benefited from $12 million
in one-off gains, primarily relating to the revaluation
of Epiminder.
Record sales revenue of $1,641 million, an increase
of 10% (9% in CC), was driven by strong demand for
acoustic implants and sound processor upgrades
with all regions and product segments tracking
above pre-COVID levels.
Gross margin increased from 73% to 75%, aligned to
the 75% longer-term target.
Operating expenses increased by 15% (15% in CC),
reflecting growing investment in R&D and market
growth activities with a material increase in cloud
computing-related investment. Excluding cloud
investment, operating expenses increased 13%.
22
* Constant currency. ** Excluding one-off and non-recurring items.Cochlear Limited Annual Report 2022 Sustained value means having
environmentally responsible business
processes to support our growth
ambitions.
We are taking practical action to meet our targets of
reducing Scope 2 carbon emissions and moving our
manufacturing to 100% renewable energy.
Our site at Lane Cove, Sydney was our first global
headquarters and manufacturing facility. As
part of a project to modernise and improve the
environmental performance of the site, we are
installing a 750-kW roof top solar system, which will
generate onsite renewable electricity.
Once installed the system will nearly halve the
facility’s demand for grid power, reducing its Scope
2 carbon emissions by just over 50% from our FY19
baseline.
Strong financial position
The balance sheet remains strong, with operating
cash flows sufficient to fund investing activities and
capital expenditure whilst delivering dividends to
shareholders.
Net cash increased $22 million to $587 million, driven
by strong free cash flow generation, with operating
cash flows increasing by $111 million to $377 million
and free cash flow increasing $57 million to $238
million.
A final dividend of $1.45 per share has been
determined, with full year dividends declared of
$3.00 per share, an increase of 18% on last year and
representing a payout of 71% of underlying net profit.
Investing to improve efficiency
and agility
We are strengthening our business processes
and IT platforms to improve efficiency and agility
with an investment of $100-150 million in cloud-
based technology solutions over four to five years.
Successfully executing this transformation program
will enable us to scale more effectively and provide
even better solutions for our customers.
In April 2021, the International Financial Reporting
Standards Interpretations Committee handed down
an accounting interpretation on the treatment of
cloud computing arrangements, which limits the
ability to capitalise customisation and configuration
costs related to cloud computing products. As a
result, investment in cloud computing has been
reclassified from capital expenditure to operating
expenses, effective from FY21. This change has no
impact on cash flow but reduces reported profits.
As the change in accounting treatment has
coincided with the commencement of a major
investment in cloud-based technology, we expect it
to impact our ability to deliver our net margin target
of 18% over the next few years.
For FY22, $22 million before tax ($15 million after
tax) of cloud computing-related investment was
recognised as an operating expense (previously
would have been reported as capital expenditure).
FY21 financials have been restated to reflect the
change with operating expenses increasing by $4
million ($3 million after tax).
23
Cochlear Limited Annual Report 2022 Letter to shareholders
Proposed Oticon Medical acquisition
In April we agreed to acquire Oticon Medical for
DKK850 million (approx. $170 million) following
Demant’s decision to exit its hearing implants
business activities. As part of the transaction, we
have committed to providing ongoing support for
Oticon Medical’s base of approximately 75,000
hearing implant recipients, which includes cochlear
and acoustic implants.
We look forward to welcoming Oticon Medical’s
implant customers to the Cochlear family. Driven
by our mission to innovate and deliver a lifetime
of hearing outcomes, we will seek to ensure
that Oticon Medical’s customers continue to be
supported with a lifetime of hearing solutions.
We will work closely with Demant to ensure a
seamless transition, with continued access to current
Oticon Medical technology for customers in the
coming years. We will develop next generation
sound processors and services that will enable
customers to transition to and benefit from
Cochlear’s technology platform over time.
The acquisition of Oticon Medical will provide us
with greater scale and will enable us to increase our
investments in R&D and market growth activities.
While Cochlear is a market leader in implantable
hearing, we are a small player in the hearing loss
segment where hearing aids remain the primary
treatment option.
Oticon Medical is expected to add $75-80 million
to annual revenue. The business is currently loss
making. Our priority post-closing of the transaction
will be to determine and implement a plan that
returns the business to profitability as quickly
as possible. Integration costs, which include the
development of compatible next generation sound
processors, are yet to be determined and could
range from $30-60 million.
Completion of the transaction is conditional upon
satisfaction of customary closing conditions and
receipt of competition approvals in jurisdictions
where the transaction meets relevant notification
thresholds. Cochlear will not be assuming any
liability for issues that may arise from the voluntary
field corrective action for Oticon Medical’s Neuro Zti
cochlear implant announced in October 2021.
24
Cochlear Limited Annual Report 2022
FY23 outlook
As we look to the future, we remain confident
of the opportunity to grow our markets. There
remains a significant, unmet and addressable clinical
need for cochlear and acoustic implants that is
expected to continue to underpin the long-term
sustainable growth of the business. Our clear growth
opportunity and strategy, combined with a strong
balance sheet, mean we are well placed to create
value for our stakeholders now, and over the long
term.
For FY23, we expect to deliver underlying net profit
of $290-305 million, a 5-10% increase on FY22
underlying net profit, an increase of 8-13% when
adjusted for the increase in cloud computing-related
expenses. We expect to deliver strong growth in
sales revenue and around 18% underlying net profit
margin before cloud computing-related expenses.
FY23 net profit is expected to be weighted to
the second half. We expect trading conditions
to progressively improve across the year, with
intermittent COVID-related hospital or region-
specific elective surgery restrictions likely to
continue. The release of the Cochlear™ Nucleus® 8
Sound Processor is expected to contribute from
the second quarter as commercial availability
commences in European countries. The new sound
processor is expected to be launched across other
markets by the end of December, subject to the
timing of regulatory approvals. Launch costs are
expected to be primarily incurred during the first
half, with sales revenue weighted to the second half.
We will continue our investment in R&D and market
growth activities to support long-term market
growth.
Cloud computing-related investment is expected to
lift in FY23 to around $36 million ($25 million after
tax), a $14 million increase ($10 million after tax) on
FY22.
Guidance is based on a 70 cent AUD/USD and 68
cent AUD/EUR.
Capital expenditure is expected to be around $80
million.
The Board maintains a dividend policy that targets a
70% payout of underlying net profit.
Guidance does not factor in earnings from the
proposed acquisition of Oticon Medical, which is
expected to complete by end CY22.
A more material disruption from COVID or hospital
capacity restrictions that significantly impacts sales
remains a risk factor that does not form part of
guidance.
Alison Deans
Chair
Dig Howitt
CEO & President
25
Cochlear Limited Annual Report 2022
Our strategy
Our goal is to deliver value by helping more people to hear, which contributes to
building a healthier and more productive society.
We have a responsibility to be here to support a lifetime of hearing for the children, and adults, being implanted
with our devices, which means we need to deliver sustainable financial growth, benefiting all our stakeholders.
We achieve this through market-leading innovation capabilities in conjunction with a global network of experts
and collaborators; the strong and trusted relationships we build with our candidates, recipients, professional
customers and payers; and our employees who are central to how we deliver our strategy and create value.
The following pages outline our strategy to create long-term value. We have a long track record of delivering
growing sales revenue, profits and dividends which stems from maintaining focus on our core strength,
implantable hearing solutions, a multi-decade philosophy of investing to grow, combined with disciplined
management of capital. This focus continues to drive us into the future.
Our mission
Our strategy
Value creation
The passion
that drives the
organisation
and focuses the
strategy
• Empower
• Transform
• Innovate
Where we focus
our time and
resources to create
value
• Growth
opportunity
• Strategic
priorities
• A stronger
organisation
How the outcomes
of our activities
impact all key
stakeholders -
our customers,
our people, our
shareholders and
society more
broadly
• A healthier & more
productive society
• Empowered
customers
• A lifetime of
hearing solutions
• Thriving people
• Sustained value
How we
create value
Growth opportunity
Our growth opportunity is compelling and has remained unchanged for many years. Hearing loss is a prevalent
and under-treated condition and implantable hearing solutions provide life-changing outcomes for recipients.
Importantly, they provide a cost-effective solution for all age groups, delivering significant returns on the
investment made by the healthcare system. The factors driving industry growth include:
• Hearing loss is prevalent and under-treated
• Cochlear implants are a cost-effective solution for all age groups
• Product indications are broadening and funding is expanding
• Cochlear implants can deliver superior outcomes to hearing aids for indicated patients
• Good hearing is essential for healthy ageing
26
Cochlear Limited Annual Report 2022 Strategic priorities
Our strategic priorities outline how we focus our time and resources to create value.
Retain market leadership
We are committed to retaining our market leadership position in the industry by continuing
to make substantial investments in R&D that enable us to bring to market implantable hearing
solutions that deliver a lifetime of hearing outcomes.
Grow the hearing implant market
We grow the hearing implant market by transforming the way people understand and treat
hearing loss. Our efforts are targeted at improving awareness, expanding access and building
on the clinical evidence that demonstrates the effectiveness of our products.
Deliver consistent revenue & earnings growth
To deliver consistent revenue and earnings growth over time, we balance maximising spending
to grow the market with investment to maintain our competitive position.
A stronger organisation
To be successful over the long term, our organisation needs to be strong, agile and sustainable to enable us to
execute our strategy, support our customers and deliver on our growth ambitions. Our key priorities in
strengthening our organisation are centred around shaping our culture, creating value sustainably and being
agile and efficient.
Shaping our culture
Our people are our most valuable asset and are an engaged, capable, high-performing and
diverse team. The way our people work together is a critical determinant of our success.
Creating value sustainably
We have a responsibility to be here to support a lifetime of hearing for the children, and adults,
being implanted with our devices, which means we need to deliver sustainable financial
growth. Sustainable business practices contribute to the creation of long-term value for all our
stakeholders.
Being agile and efficient
We are investing in strengthening our business processes and IT platforms to improve
efficiency and agility. Successfully executing this transformation program will enable us to scale
more effectively and provide even better solutions for our customers.
27
Cochlear Limited Annual Report 2022
Value creation
Value creation describes the impact we have on all our key stakeholders – our customers, our people, our
shareholders as well as society more broadly. For us, success will be defined by building a healthier and more
productive society, having empowered customers, providing a lifetime of hearing solutions for our recipients and
having thriving employees. Doing these things well should enable us to achieve sustainable financial returns over
time.
The value
we create
Strategic
focus
Over the coming years, we
are focusing our efforts on
delivering value across the
following initiatives and/or
achieving important targets.
A healthier
& more
productive
society
Empowered
customers
Grow the hearing implant market
• Improve the awareness of
cochlear and acoustic implants
World-class customer
experience
• Grow connectivity and
• Broaden reimbursement and
improve the indications for
cochlear and acoustic implants
engagement with recipients
• Introduce connected care solutions
and skills training tools for recipients
• Support the development of consistent
• Introduce sound processor
practice guidelines to strengthen
the referral pathway for adults
• Build on the clinical evidence
that supports the superior
outcomes of cochlear implants
over hearing aids for people with
severe or higher hearing loss
• Collaborate with research institutions
studying the links between
hearing loss and healthy ageing
upgrades that provide functional
and aesthetic benefits
• Develop technology
solutions that provide greater
convenience and confidence
to professional customers
How
stakeholders
benefit
Success means achieving
the following outcomes for
our stakeholders:
Payers and society more broadly
• Appropriate funding for a cost-
effective intervention
• Standard treatment pathway
for implantable hearing
devices for all age groups
• Education and productivity
opportunities for children and adults
• Understanding of the link between
good hearing and healthy ageing
and the need to take action
Our customers
Services that deliver:
• Convenience and confidence
• Improving quality of life
• Improving hearing outcomes
• Positive customer experience
• Reduced cost to serve for
professional customers
28
Cochlear Limited Annual Report 2022 A lifetime
of hearing
solutions
Thriving
people
Sustained
value
Market-leading technology
• Maintain market leadership through
growing levels of investment in R&D
(targeted at 12% of sales revenue)
• Innovation focus on hearing
implants, sound processing
technology, connectivity and
clinical and surgical support
• Introduce new products that
provide improved hearing
outcomes, functionality,
connectivity and aesthetic benefits
A stronger organisation
• Learning and development to
facilitate innovation
• Talent attraction and retention
• Strengthen and nurture the
organisational culture
• Competitive, inclusive
compensation and benefits to
attract, motivate and retain talent
• Succession planning
• Embracing diversity in all forms
Our customers
Products that deliver:
• High quality and reliability
• Improving hearing outcomes for
both new and existing customers
from next generation implants
and sound processors
• Improving quality of life
• Expanded product indications
Our people
• Engaged, capable and high-
performing employees
• Diverse, equitable and
inclusive workplace
• Strong health, wellbeing
and safety culture
Consistent & sustainable growth
• Optimise growth investment
• Target an 18% net profit
margin over the long term
• Target net-zero carbon emissions
in our operations by 2030 and
across our value chain by 2050
• Grow our contribution to the
United Nations Sustainable
Development Goals
• Maintain a strong balance sheet
• Improve efficiency and agility
• Maintain high levels of
corporate governance
Our shareholders
Creating value sustainably
• Consistent financial performance
• Disciplined capital management
• Strong corporate governance
• Ethical and sustainable supply chain
Advancing environmental
responsibility
• Reduced carbon emissions
• Smaller environmental impact
29
Cochlear Limited Annual Report 2022 Growth opportunity
1.3.5 ESTIMATES OF HEARING LOSS9
Growing awareness of the cost-effectiveness and quality of life benefits
of our products has the potential to underpin long-term industry growth.
Hearing loss currently affects more than 1.5 billion people or 20% of the global
population; the majority of these (1.16 billion) have mild hearing loss. However,
a substantial portion, or 430 million10 people (i.e. 5.5% of the global population)
experience moderate or higher levels of hearing loss which, if unaddressed, will
most likely impact their daily activities and quality of life. More detailed information
about the severity and distribution of hearing loss is presented in the following data.
Opportunity
Description
HEARING LOSS ACCORDING TO SEVERITY
Hearing loss is
prevalent and
under-treated
The World Health Organization
estimates that there are over
60 million people worldwide
who experience severe
or higher hearing loss.1
A challenge for hearing care
providers is that less than 5% of
the people that could benefit
from an implantable hearing
solution have received one.2
Cochlear implants
are a cost-effective
solution for all
age groups
Cochlear implants provide
life-changing outcomes
for recipients, empowering
them to connect with
others and live a full life.
Besides the 1.16 billion people worldwide with mild hearing loss, about 400 million
live with hearing loss that ranges from moderate to severe; nearly 30 million have
profound or complete hearing loss in both ears (Figure 1.5).
Figure 1.5 Number of people and percentage prevalence according to grades
of hearing loss
>60m people with severe or
higher hearing loss
Figure 1.5 Number of people and percentage prevalence according to grades of hearing loss
1153
million
266
million
103
million
30.7
million
17.2
million
12.6
million
14.9%
3.4% 1.3% 0.4% 0.2%
0.2%
Mild
Moderate
Moderately
severe
Severe
Profound
Complete
Globally 1.5 billion people live with hearing loss
Source: World Health Organization; 2021
9 GBD 2019 Hearing Loss Collaborators. Hearing loss prevalence and years lived with disability, 1990–2019: findings from the Global
Burden of Disease Study 2019. The Lancet. (2021). doi: 10.1016/S0140-6736(21)00516-X.
10 Refers to number of people with hearing threshold higher than 35 dB in the better hearing ear.
The estimated lifetime societal
costs for a pre-lingual deaf
child in developed markets
exceeds US$1.5 million.3-5
40
WORLD REPORT ON HEARING
They also provide a cost-
effective solution for all age
groups, delivering significant
returns on the investment
made by the healthcare system.
The effective use of implants
is cost-effective in adults and
seniors with an estimated
return on investment of 10:1.6
Cochlear implants
can deliver superior
outcomes to
hearing aids for
indicated patients
Cochlear implants can provide
a significant improvement
in hearing outcomes and
quality of life when compared
to hearing aids for many
people with a severe or
higher hearing loss.
We are the market leader in cochlear
implants but a small player in the severe
or higher hearing loss segment where
hearing aids dominate
>60%
global market share
~4%
global market share
Cochlear implant
market share
Hearing devices treating the severe
or higher hearing loss segment
30
Cochlear Limited Annual Report 2022 How we are responding
We are focused on transforming the way people understand and treat hearing loss through awareness and access
activities aimed at improving the penetration of implantable hearing solutions.
For cochlear implants, three key market segments have been prioritised comprising adults and seniors in
developed markets, children in developed markets and children in emerging markets, with strategies to improve
awareness and access that vary by segment. For acoustic implants, we have developed the Cochlear™ Osia® 2
System, a product that we believe provides the opportunity to drive deeper category penetration by providing a
significant improvement in performance and aesthetics for bone conduction patients.
We collaborate closely with governments, academic and research institutions, hearing care providers, consumer
and professional representative NGOs and significant health setting bodies such as the WHO to build awareness
of the importance of properly treating hearing loss. And our investment in R&D continues to focus on improving
outcomes for recipients which broadens the population of candidates that can benefit from our hearing solutions.
The cost-effectiveness of health interventions is becoming a more important consideration in the allocation of
healthcare spending with payers increasingly demanding cost-effectiveness data to support funding for health
interventions. We believe we are well positioned with many studies demonstrating the cost-effectiveness of
cochlear implants for both children and adults with severe or higher hearing loss.
For a pre-lingual deaf child, the return to society is more than 13 times every dollar spent on a cochlear implant
solution based on the cost savings in education and improved productivity as an adult.3-5
The effective use of implants is cost-effective and has been proven in adults and seniors with an estimated return
on investment of 10:1.6 Dementia and other cognitive decline diseases are some of the costliest conditions to treat
in the world7, at an estimated US$1 trillion in 2018 and estimated to double by 2030.8 Unfortunately, individuals with
severe hearing loss are almost five times more likely to develop dementia than people without hearing loss.
A challenge for professionals and consumers is understanding the potential improvement in hearing outcomes
that can be attained from a cochlear implant. There is a growing body of evidence of the superior outcomes of
cochlear implants over hearing aids for many people with a severe or higher hearing loss (>70dB).9
In 2018, a Cochlear study of recipient experiences10 found that the number of participants reporting satisfaction
with their hearing performance increased significantly after receiving a cochlear implant, rising from 9% when
using hearing aids only to 95% after receiving a cochlear implant.
In 2021 a trial commenced to compare communication and quality of life outcomes for adults with cochlear
implants compared to hearing aids. Cochlear has provided funding to the University of Nottingham, UK, for the
trial, which will aim to provide gold standard clinical evidence of the relative efficacy of cochlear implants for this
patient group, with results expected in the next several years. These studies are important in helping to educate
hearing aid professionals and cochlear implant candidates on the benefits of cochlear implants when compared to
hearing aids.
31
Cochlear Limited Annual Report 2022 Growth opportunity
Opportunity
Description
Product indications
are broadening and
funding is expanding
Product indications and
funding are expanding as
payers increasingly recognise
the improved outcomes and
cost-effectiveness of our
implantable solutions.
US: lowered the age of
cochlear implantation
from 12 to 9 months
and included single-
sided deafness as an
indication for Cochlear’s
Nucleus implant
Japan, UK and
Belgium: expansion
of reimbursement
criteria for cochlear
implants to include
severe hearing loss
Cochlear™ Osia® 2 System:
reimbursement achieved
across a number of
countries including the
US, Germany and UK
New Zealand: cochlear
implant funding to reduce
the adult waiting list
Australia: reimbursement
for remote programming
of cochlear and bone
conduction implants
France: reimbursement
approved for Baha
sound processors
Good hearing
is essential for
healthy ageing
Growing understanding of the link between
good hearing and healthy ageing
Cognitive decline
Hearing loss associated
with accelerated cognitive
decline and dementia in
older adults.14
Depression
Significant association
between hearing
impairment and moderate
to severe depression.15-17
Falls
Higher risk of
dizziness causing
falling.16
Hearing loss is particularly
prevalent in people over the
age of 60, with one in four
suffering moderate or higher
hearing loss.11
There is a growing
understanding of the
importance of properly
treating hearing loss in
this age group. It affects
communication and is
associated with social
isolation, anxiety, depression
and cognitive decline.12
Social isolation
Hearing loss linked to
withdrawal from social
interactions, which can
have a significant impact on
psychological well-being
and physical health.18-19
Ability to work
Hearing loss can affect
sufferers’ ability to
work or stay in the
workforce.20-22
Loss of
independence
Seniors with hearing
loss less likely to be
able to self-care.17
32
Cochlear Limited Annual Report 2022 How we are responding
Cochlear implants started as a solution for people with a profound hearing loss, equivalent to a hearing loss of
greater than 90 decibels (dB). Advancements in the technology have driven significant improvements in hearing
outcomes for patients with our products today able to provide life-changing outcomes for people with a severe
or higher hearing loss (>70dB).
At the same time, there is a better understanding of the importance of properly treating hearing loss as we age
and a growing body of evidence supporting the cost-effectiveness of cochlear implants. These factors have
driven an expansion of indications and/or funding in many markets over the past few years, including the UK, US,
Japan, France and Belgium.
Our job is to continue to work with governments and payers to recognise the benefits of treating hearing loss so
we can continue to increase access to our products.
Cochlear implantation for seniors is an important trend, with hearing loss ranked as the leading cause of
global years lived with disability for people over the age of 70.13 We have been increasing our public advocacy
engagement, our investment in health economics, our market access capability and the collaborations we have
with the medical research community to build on the clinical evidence that demonstrates the effectiveness of
our products, particularly for seniors.
In 2018, we pledged to gift US$10 million over 10 years to the Johns Hopkins Bloomberg School of Public
Health to establish the ‘Cochlear Center for Hearing and Public Health’. The Center is the first of its kind at any
academic institution focused on addressing hearing loss as a global public health priority.
33
Cochlear Limited Annual Report 2022 Strategic priorities:
Retain market leadership
We create value through innovation, bringing to market new products and
services that improve hearing outcomes and provide a lifetime of hearing
solutions for recipients.
Cochlear has been the global leader in implantable hearing solutions for over 40 years. The investment in
R&D aims to strengthen our leadership position through the development of market-leading technology. We
invest around 12% of sales revenue each year in R&D, with over $2 billion invested since listing.
We have a global innovation network with over 500 R&D employees across the globe. Primary R&D is co-
located with the Australian Hearing Hub in Sydney, with the ‘Cochlear Technology Centre’ in Mechelen,
Belgium focused on advanced innovation. We have over 100 research partners in over 20 countries and a
global network of design consultants and suppliers.
Our market-leading product & services portfolio
Cochlear implants
Acoustic implants
Benchmark in size, implant reliability and neural
interface, with proven perimodiolar advantage
Benchmark in performance
and aesthetics
Cochlear™ Nucleus®
Profile™ Plus implant
Slim Modiolar
electrode
Cochlear™ Osia® 2
System
Sound processors
Benchmark in size, smartphone connectivity and hearing performance
Cochlear™
Nucleus® 7
Sound Processor
Cochlear™
Nucleus® Kanso® 2
Sound Processor
Cochlear™
Baha® 6 Max
Sound Processor
34
Cochlear Limited Annual Report 2022 Convenience & confidence
Apps and rehabilitation tools aimed at improving ease of use and quality of life for
recipients
Nucleus, Baha & Osia Smart Apps
Cochlear™ CoPilot
Clinical & surgical support
Streamlining customer care for surgeons and clinicians
Custom Sound® Pro Fitting Software
Nucleus® SmartNav System
Telehealth solutions
Convenient, at-home testing for routine cochlear
implant checks outside the hearing clinic
Responsive &
convenient service
Cloud-based service reducing
time spent ‘off air’ when recipients
need a replacement processor
Remote Check solution
for cochlear implants
Cochlear™
Remote Assist
Cochlear™ Link
35
Not all products are available in all countries.Cochlear Limited Annual Report 2022 Strategic priorities:
Grow the hearing implant market
We grow the market by transforming the way people understand and treat hearing
loss. Our efforts are targeted at improving awareness, expanding access and building
on the clinical evidence that demonstrates the effectiveness of our products. Our
biggest opportunities to create value will be from building a sustainable adult referral
pipeline for cochlear implants and by broadening the acoustics market.
Segment
Description
Cochlear implants:
Children in
developed markets
Cochlear implantation has
been established as the
standard of care for newborns
across many developed
markets, with bilateral implants
indicated across most markets
as evidence supports the
benefit of binaural hearing.
Addressable market*
~130,000 people
Current penetration*
>80% under 3-year-old children
Cochlear implants:
Adults and seniors in
developed markets
Adults and seniors in the
developed markets provide
the biggest opportunity for
us to address the unmet need
for hearing implants given the
large, and growing, market size
as the population ages and the
low levels of penetration.
Addressable market*
>6m people
Current penetration*
~3%
36
* Cochlear estimates of segment prevalence of severe or higher hearing loss.Cochlear Limited Annual Report 2022 What are we doing
Cochlear implants started as a solution for children with a profound hearing loss. Over the last 30 years, neonatal
screening has been successfully established across the developed world leading to high rates of cochlear
implantation for children.
The key priority for this segment is to maintain our leadership position while aiming to improve the rate of
implantation, and/or the uptake of bilateral implants, in markets where current levels are below average.
There is also an opportunity to strengthen the treatment pathway for acquired or progressive hearing loss in
older children. Lack of screening for children who have progressive hearing loss in childhood means that hearing
loss often remains unidentified and without care. The WHO’s World Report on Hearing notes the importance of
hearing in education and says that the inclusion of ear and hearing care in school health services is essential. It
highlights pre-school and school children as a group ‘at risk’ and proposes that screening and early intervention
programs be put in place for this group as part of the holistic package of ear and hearing care interventions it
proposes all countries adopt.
According to the WHO, hearing loss is particularly prevalent in people over the age of 60, with 65%
experiencing hearing loss and one in four people suffering moderate or higher hearing loss. It affects
communication and is associated with social isolation, anxiety, depression and cognitive decline.1 The
segment is however challenging to penetrate as most candidates suffer from a progressive hearing loss
and, together with their care providers, either do not know about cochlear and acoustic implants or do not
understand the indications for them.
While penetration rates are currently very low, at around 3%, the seniors segment has been the fastest
growing segment for us over the past few years as awareness begins to improve. We have three programs for
driving growth of the adults and seniors segment including:
• Direct-to-consumer (DTC) marketing – building awareness directly with candidates motivated to find a
better solution for their hearing loss;
• Hearing aid channel referrals – building a referral path from hearing aid and ENT clinics to cochlear and
acoustic implants; and
• Standard of care initiatives – supporting initiatives to deliver a consistent treatment pathway for all adults
with severe or higher hearing loss.
37
Cochlear Limited Annual Report 2022 Strategic priorities:
Grow the hearing implant market
Segment
Description
Cochlear implants:
Children in
emerging markets
Cochlear’s emerging markets
business has been growing
rapidly as awareness of
cochlear implants increases
and wealth grows across many
emerging economies.
Addressable market*
>1.3m people
Current penetration*
<10%
Acoustic implants:
Next generation
bone conduction
hearing solutions
The bone conduction market is
under-penetrated and currently
has limited geographic reach.
We have developed a product
that we believe provides the
opportunity to drive deeper
category penetration.
Addressable market*
>3m people in developed
markets
Current penetration*
<1%
38
* Cochlear estimates of segment prevalence of severe or higher hearing loss and mixed or conductive hearing loss.Cochlear Limited Annual Report 2022 What are we doing
China has become a leading market for cochlear implants driven by a commitment from the government to
fund implants for children, which has driven the development of clinical infrastructure. Most other markets
however remain under-penetrated. Our priorities for this segment are focused around market expansion with
activities targeted at:
• Building awareness – public education campaigns, direct-to-consumer marketing and hearing screening;
• Expanding funding – driven by the compelling health economics of implantation in children;
• Expanding our presence – distributor relationships combined with an expanding direct presence;
• Developing professional capability – surgeon training and audiology education; and
• Maximising penetration through a tiered product offering.
We have recently introduced the next generation of bone conduction hearing solutions into our Acoustics portfolio
with the Cochlear™ Osia® 2 System, providing a significant improvement in performance and aesthetics for bone
conduction patients.
Pre-market trials have demonstrated significant improvements in outcomes for patients2 over traditional bone
conduction hearing solutions, and we are already experiencing high demand for the new implant in the US, where
it was first launched.
We believe the Osia 2 System has the opportunity to become the gold standard acoustics implant in our current
markets, more effectively competing with reconstructive surgery, and is the right product to pursue geographic
expansion, with our Acoustics business today generating the majority of revenue from just two markets, the US
and UK.
39
Cochlear Limited Annual Report 2022 Strategic priorities:
Grow the hearing implant market
Developing a treatment pathway for adults
Standard of care initiatives aim to establish a consistent process for diagnosing
and referring adult cochlear implant candidates by all healthcare professionals.
Adults and seniors in the developed markets provide the biggest opportunity for us given the large, and
growing, market size as the population ages and the low levels of penetration. One of our challenges is that
awareness of cochlear implantation among primary and hearing health care clinicians is inadequate, leading to
poor identification of eligible candidates. Clearer referral and cochlear implantation candidacy pathways would
help increase access to cochlear implants.3
We are making investments in long-term initiatives to develop a standard clinical pathway for adults that aims to
establish a more sustained referral model. These investments are geared towards:
• Developing consistent referral guidelines to enable early identification and referral;
• Building clinical and economic evidence that compels early adult referral and coverage; and
• Driving awareness and advocacy through hearing professionals.
Developing consistent referral guidelines
The development of a standard treatment pathway for care by which all healthcare professionals diagnose, refer
and treat adults eligible for cochlear implants has many aspects and requires a co-ordinated effort between
industry, hearing health professionals and public policy makers. There have been some important developments
over the past few years.
In 2020 a global consensus on a minimum standard of care for treating adult hearing loss with a cochlear
implant was published in the leading Journal of the American Medical Association, JAMA Otolaryngology. This
International Consensus Paper is an important step forward, providing the foundation for the development of
formal clinical practice guidelines.
In 2021, the World Health Organization (WHO) provided guidance for establishing evidence-based programs
for hearing screening via the World Report on Hearing4, aimed at improving the identification and treatment of
hearing loss in target age-groups, including adults.
And in 2022, the ‘Living Guidelines’ initiative was established, an international taskforce of over 50 leading
cochlear implant professionals, academics and cochlear implant users tasked with delivering clinical guidelines
to enable early identification and referral for cochlear implant candidates. The initiative aims to create guidelines
that can be adapted and adopted in country to optimise the care for adults eligible for cochlear implants.
40
Cochlear Limited Annual Report 2022 “It’s like I’m reliving my life”
Lou Ferrigno, on hearing with a cochlear implant
Stories from hearing implant recipients also help to raise awareness of the benefits of implantable hearing
solutions, and give candidates the confidence to consider whether their current hearing aid is bringing them
any benefit. Since May 2021, we’ve been working with Lou Ferrigno, 69, actor, fitness expert and retired
bodybuilder, to share his story about receiving a cochlear implant and addressing his hearing loss.
Most known for his role in the TV series “The Incredible Hulk” and for being the youngest – and only – two-
time consecutive and Guinness World Record™ holder for the IFBB (International Federation of Bodybuilders) Mr.
Universe title, Lou has been impacted by profound hearing loss for almost his whole life.
Hearing loss started for him when he was a toddler due to ear infections, and he began wearing hearing aids at
4 years of age. Over the years, Lou tried a number of different types of hearing aids, none of which helped him
achieve the hearing he needed.
In February 2021, Ferrigno underwent surgery for his cochlear implant, the Cochlear™ Nucleus® Profile™ Plus
Implant, and now hears successfully with his Cochlear Kanso® 2 Sound Processor.
Taking the step to treat his profound sensorineural hearing loss with a cochlear implant is aiding Lou’s desire
to remain fit and healthy as he ages. “I worked very hard to speak and hear with hearing aids for so long, but I
finally learned that with my profound hearing loss, the best hearing aid in the world was not going to give me the
clarity in speech I needed,” said Lou. “My cochlear implant has so quickly taken me to a new level of hearing. It’s
like I’m reliving my life.”
Cochlear’s US team have been working with Lou Ferrigno to share his story across media tours, professional
conferences, candidate and recipient events and social media.
41
Cochlear Limited Annual Report 2022 Building clinical and economic evidence
The evidence supports the establishment of an effective clinical pathway for adults. There is growing
recognition that hearing is an essential part of healthy ageing and treating age-related hearing loss is cost-
effective.
An important first of its kind randomised controlled trial has just commenced in the UK. The Comparing
Cochlear implants with Hearing aids in adults with severe hearing loss (COACH) study is the first randomised
controlled trial to compare communication and quality of life outcomes with hearing aids to unilateral cochlear
implants for adults with severe sensorineural hearing loss.
The trial will provide the highest standard of clinical evidence and is aimed at resolving uncertainty associated
with the treatment of severe or higher sensorineural hearing loss.
The study is being is sponsored by the University of Nottingham and co-ordinated by Nottingham Clinical Trials
Unit and Cochlear has provided a grant to conduct the study.
The COACH study will assess whether a cochlear implant or hearing aids are better at improving speech
understanding for adults with severe hearing loss. Half of the trial participants will be randomly assigned with
new hearing aids, with the other half receiving a cochlear implant.
A second randomised control trial known as The Aging and Cognitive Health Evaluation in Elders (ACHIEVE)
study is being undertaken by our partners at Johns Hopkins University and their Cochlear Implant Center. In
observational studies, hearing loss has been independently associated with accelerated cognitive decline and
incident dementia. To date, there has not been a randomised trial to determine whether hearing loss treatment
could reduce cognitive decline and dementia in older adults. ACHIEVE is taking place at four centres in the US
and will be the first randomised controlled trial to test the efficacy of hearing treatment in reducing cognitive
decline in older adults.
There is growing evidence of the individual and societal economic value of treating age-related hearing loss,
with cochlear implants considered to be a highly cost-effective medical intervention. In 2022, The Lancet
published the first-ever global investment case for integrating ear and hearing care interventions in countries’
universal health coverage services5. Based on the WHO’s proposed interventions, which include cochlear
implants for people with severe or higher hearing loss, the study concluded that the investment required to
execute these interventions would result in substantial health gains, with an overall return of nearly US$15 for
every US$1 invested.
42
Cochlear Limited Annual Report 2022 Driving awareness and advocacy
An important part of developing a treatment pathway for adults involves working with hearing health
professionals and patient advocacy groups to amplify the work being done on the referral guidelines and
evidence building to create broad-based awareness.
We engage with a broad range of advocacy groups globally. The Cochlear Implant International Community of
Action (CIICA) was formed in 2021 and is the first global cochlear implant user and family advocacy network. It
currently has 80 member organisations across more than 50 countries. CIICA aims to increase the number of
people globally who have access to cochlear implants and lifelong support. It does this by raising the awareness
of the health, social and economic benefits of cochlear implants for those who could benefit from implantation,
to health care practitioners and the wider society.
Along with many other groups, CIICA plays an important role in building awareness of cochlear implants and
lobbying for changes to funding. The Nordic Adult CI Action Group Declaration is a good example of advocacy
in action. The declaration bought together hard of hearing and cochlear implant user associations from five
Nordic countries to co-ordinate efforts in improving access to cochlear implants for adults.
We also have research partnerships with academic institutions including Johns Hopkins University and
Macquarie University, engaging on issues of public health, cost-effectiveness and broad awareness.
What standard of care looks like for adults
Links between good hearing and healthy ageing established
Links between hearing loss, cognitive decline and dementia are understood by all medical
professionals
Primary care providers routinely assess hearing loss in older patients
Professionals know when to refer for a cochlear implant assessment
The hearing aid channel is educated and the referral process is simple for a cochlear implant
After-care is simple
43
Cochlear Limited Annual Report 2022 Strategic priorities:
Deliver consistent revenue and
earnings growth
We create value by maintaining discipline around our long-term investment model
and continuing to refine our capital allocation processes to ensure we optimise
investment. We balance maximising spending to grow the market with investment
to maintain our competitive position while ensuring we have agile, efficient and
environmentally responsible business processes to support our growth ambitions.
Investment
priority
Invest to grow
We take a long-
term approach
to investing and
have invested in
growing the market
for implantable
solutions since
listing in 1995.
Consistent investment in sales and marketing
Our investment in sales and marketing activities is building awareness of and
access to implantable solutions and driving market growth.
The increase in investment in selling, marketing & general expenses (SG&A) over
many years has supported sales force expansion and investment in awareness
building activities, particularly direct-to-consumer marketing initiatives, across a
growing number of markets.
Selling, general & administration expenses
44
65836%40%0001020304050607080910111213141516171819202122SG&A expenses ($m)SG&A / Sales revenue %Cochlear Limited Annual Report 2022 Sales revenue
$m in CC
Revenue drivers
Cochlear implants
• Growing awareness and uptake by adults
and seniors
• Emerging market expansion
• New products driving market growth and
market share
Services
• Growing recipient base
• Greater connectivity and engagement with
recipients
• Next generation sound processor upgrades
Acoustics
• New products
• Market expansion led by Cochlear™ Osia® 2
System
Growing R&D capability
Delivering stable net profit margins
The investment in R&D continues to strengthen our
leadership position through the development of
market-leading technology.
We have a wide range of fully featured products and
a broad patent portfolio that protects our intellectual
property. Over $2 billion has been invested in R&D
since listing and we target an annual R&D investment
of 12% of sales revenue.
We will continue to invest operating cash flows
into market growth activities with the objective of
delivering consistent revenue and earnings growth
over the long term.
Through disciplined investment, we are targeting
to maintain the net profit margin, reinvesting any
efficiency gains, currency or tax benefits into market
growth activities.
R&D
Net profit margin
45
* Excluding one-off and non-recurring items.21115%13%969798990001020304050607080910111213141516171819202122R&D expenditure ($m)R&D / Sales revenue %27715%18%17%969798990001020304050607080910111213141516171819202122Net profit* ($m)Net profit* / Sales revenue %935504202-4509001,3501,80013141516171819202122Cochlear implantsServicesAcousticsCochlear Limited Annual Report 2022 Strategic priorities:
Deliver consistent revenue and
earnings growth
Investment
priority
Operational
improvement
Disciplined capital
investment and
optimising cost
of production
strengthens our
competitive
position.
Disciplined use of capital
Operating cash flows have been primarily used to fund
dividends, capital expenditure and acquisitions.
The dividend policy has been to target a payout 70% of
underlying net profit as dividends to shareholders since
FY00.* Since listing, we have cumulatively paid out around
70% of operating cash flows as dividends.
Key acquisitions have been focused on building the core
implant business and include:
• Sycle – hearing aid practice management software
business (FY17)
• Otologics – implantable microphone technology (FY10)
• Brisbane manufacturing facility (FY07)
• Entific – bone conduction implant business (FY05)
Cumulative use of operating cash
flows since listing
The innovation fund has invested around $140 million in companies with novel
technologies that may, over the longer term, enhance or leverage our core technology.
The innovation fund includes investments in Nyxoah, Precisis, Epiminder, Seer Medical
and Sensorion.
High return on capital employed (ROCE)
ROCE measures the cash return for each dollar invested in the business. We generate a high
ROCE reflecting our competitive position in the market and the high barriers to entry to the
cochlear implant industry which have proven to be robust over many decades.
The high ROCE is also a function of the relatively low level of tangible assets employed by
the business. Our competitive advantage is driven by our strong product and patent portfolio,
a result of investment in R&D over many years, as well as customer knowledge and strong
relationships. As R&D investment is expensed through the income statement, no value for this
important asset is captured on the balance sheet.
ROCE
Investment
priority
Strong
financial
position
Strong free cash
flow generation
provides funding
for market growth
activities and R&D
as well as the
ability to reward
shareholders
with a growing
dividend stream.
46
Capitalexpenditure22%Acquisitions& other12%Dividends66%1,09922%26%969798990001020304050607080910111213141516171819202122Capital employed ($m)ROCE % (after tax EBIT* / Capital employed)Cochlear Limited Annual Report 2022 Stable gross margin
Capital employed
The gross margin has been relatively stable since listing.
We use our scale to generate efficiency gains to
reinvest back into market growth activities.
Gross margin
Capital employed is comprised of three broad
categories: Working capital (24%), which is primarily
inventories; Property, plant & equipment (21%) and
Intangibles & other (55%).
Property, plant & equipment includes our key
manufacturing equipment in Australia, Sweden,
Malaysia and China. Intangibles & other includes
goodwill from acquisitions and innovation fund
investments.
Capital employed
$m
Quality operating cash flows
Conservative gearing levels
One of the highlights of our financial history has been
the conversion of reported profits to cash. There has
been a strong and consistent correlation between
reported net profit and the operating cash flows
generated by the business.*
We have a strong balance sheet. We are a growth
company that has, until FY20, been able to fund investing
activities, dividends, capital expenditure and acquisitions
whilst maintaining conservative gearing levels.
A capital raising in FY20 was made to enhance liquidity in
response to the significant impact of an adverse litigation
judgement combined with the impact of COVID on sales
revenue.
Operating cash flow v net profit
$m
Net cash / (debt)
$m
47
* Disrupted in FY20 by the impact of an adverse litigation outcome and COVID. Dividends were suspended in March 2020 until trading conditions improved.** Operating cash flow in FY20-21 excludes the cash impact of patent litigation expenses. 277377969798990001020304050607080910111213141516171819202122Net profit* ($m)Operating cash flows** ($m)1,23074%75%0001020304050607080910111213141516171819202122Gross profit ($m)Gross margin %969798990001020304050607080910111213141516171819202122Working capitalProperty, plant & equipmentIntangibles & other1,099(181)587969798990001020304050607080910111213141516171819202122Net cash / (debt) ($m)Cochlear Limited Annual Report 2022 A stronger organisation
To be successful over the long term, our organisation needs to be strong, agile
and sustainable to enable us to execute our strategy, support our customers and
deliver on our growth ambitions.
Shaping our culture
Our people are our most valuable asset and are an engaged, capable, high-performing
and diverse team. The way our people work together is a critical determinant of our
success.
Cochlear has a rich history, helping people to hear for over 40 years, underpinned by a strong culture
of innovation and customer focus. To continue to serve our customers and fulfil our mission, we have a
responsibility to build a reputable and sustainable organisation, now and into the future. We achieve this by
nurturing those important elements of our culture that have brought us success, while continuing to evolve,
intentionally shaping the culture that will enable us to grow and deliver for our customers as our workforce
expands.
Over the past few years, our focus has been on building a stronger achievement culture, improving the way we
collaborate to achieve company-wide goals. Focused training and development enable us to establish clearer
priorities and work more-effectively together, removing boundaries and improving focus on what matters most,
our customers.
We have continued to develop our systems, processes and organisation design in a deliberate fashion to
reinforce this target culture. We have invested in leadership development, notably in Inclusive Leadership and
Unconscious Bias and Culture Conversations, with an increased focus on building critical skills and capabilities
both at an individual and organisational level. Our top 100 senior leaders and our 100 culture champions – a
diverse group of employees from various regions, functions, backgrounds and experience – are engaged in
driving and role modelling our culture. This collaborative approach layers a top-down, bottom-up and peer-to-
peer approach to reach and inspire all employees to work towards our culture objectives.
Overall employee engagement remains strong at 80%, with 91% of employees reporting that they feel proud
to tell people they work at Cochlear and 94% understanding how they contribute to the satisfaction of our
customers.
HEAR THE
CUSTOMER
EMBRACE
CHANGE &
INNOVATE
ASPIRE
TO WIN
REMOVE
BOUNDARIES
Our HEAR
behaviours bring
our mission to life
and reflect what
we value as an
organisation.
48
Cochlear Limited Annual Report 2022 Creating value sustainably
We have a responsibility to be here to support a lifetime of hearing for the children, and
adults, being implanted with our devices, which means we need to deliver sustainable
financial growth. Sustainable business practices contribute to the creation of long-term
value for all our stakeholders.
This year we made significant progress in integrating sustainability into our corporate strategy aligned with our
value creation model. Our sustainability approach underpins our commitment to create sustainable long-term
value by contributing to a healthier and more productive society, empowering customers, providing a lifetime of
hearing solutions, thriving people, creating value responsibly and advancing environmental sustainability.
We have continued to invest in awareness and
access focused on our goal to deliver value by
helping more people to hear. In 2022 the ‘Living
Guidelines’ initiative was established, an international
taskforce aimed to deliver clinical guidelines
and enable early identification and referral for
cochlear implant candidates. In September,
Cochlear Foundation and Malala Fund announced
a partnership2 with the aim of removing the barriers
that keep millions of children and young people with
hearing loss from accessing a quality education and
encouraging governments and societies to prioritise
hearing health in children.
We strongly support the objectives of the United
Nations Sustainable Development Goals, a global
call to action on the most urgent sustainable
development challenges. We also joined the United
Nations Global Compact, committing to the
ten universal principles relating to human rights,
labour, environment and anti-corruption across our
business.
Courtesy of Malin Fezehai / Malala Fund
We advanced in gender balance and achieved our target to have at least 40% female representation amongst
our senior leaders by June 2023 ahead of time, with 41% today. At the Board level, we are targeting at least 30%
female representation, a target we first achieved in FY21, with 33% female directors at the end of June.
We formalised our commitment to recognition and reconciliation through a Reconciliation Action Plan. We
advanced our reconciliation strategy, recognising the impact of dispossession on generations of First Nations
peoples, celebrating the important role of First Nations peoples in Australia’s past, present and future and our
commitment to engaging and working more closely with First Nations communities.
We developed our carbon reduction strategy, aligned with Science Based Target Initiative and consistent with
efforts to limit warming to 1.5 degrees above pre-industrial levels. We are targeting net-zero emissions in our
operations (Scope 1 and 2) by FY30 and across our value chain (Scope 1, 2 and 3) by FY50.
For more information, you can read our Sustainability Report at www.cochlear.com.
49
Cochlear Limited Annual Report 2022 A stronger organisation
Being agile and efficient
We are investing in strengthening our business processes and IT platforms to improve
efficiency and agility. Successfully executing this transformation program will enable us
to scale more effectively and provide even better solutions for our customers.
Our recipient base is fast approaching one million. As we look to the future, we recognise the need for more
scalable ways to provide customer service and customer solutions. And with an increasing suite of digital
products and services, we must ensure our processes, data and platforms are consistently deployed across
the globe. At the same time, we seek to ensure we continue to meet the challenge of increasingly stringent
regulatory and security standards that require strong process governance and transparency.
Improving strategy execution and meeting customer needs for digital solutions require greater organisational
integration and more consistent business processes. To achieve this, we will invest $100-150 million in cloud-
based technology solutions over four to five years.
We have been preparing for this transformation over the past few years, simplifying our organisational structure,
clarifying decision rights and working to standardise processes across the business. We have established
strong governance structures for processes and platforms and will build sustainable continuous improvement
processes to capture efficiencies in the years to come.
We have commenced this program, and expect to progressively introduce scalable, flexible platforms and build
the capability to support these platforms.
Business process transformation provides broad benefits
Employee outcomes
• Better, more accessible information
• Easier to do higher value work
• Easier to train people
Business outcomes
• Lower costs through scalable and efficient business processes and platforms
• Agility and the ability to change quickly
• Better data and use of data to enable growth and support decision making
• Continuous improvement in key processes to drive ongoing scale benefits
Customer outcomes
• Seamless digital experience for recipients and increased self help
• Integrated solutions for professionals making it easier and lower cost to work with Cochlear
• Lower cost of care for payers
50
Cochlear Limited Annual Report 2022
51
Cochlear Limited Annual Report 2022 Business risks
Cochlear has a sound and robust risk management framework to identify, assess
and appropriately manage risks.
Our principal business risks are outlined below. These are risks that may have a material adverse effect on the
business strategy, financial position or future performance. It is not possible to identify every risk that could
affect the business and the actions taken to mitigate these risks cannot provide absolute assurance that a risk
will not materialise. Cochlear’s Risk Management Policy and details of its risk management standard can be
found in the Corporate Governance Statement, both available on the website.
Risk
Description and potential consequences
Strategies used to mitigate the risk
Pandemics
Product
innovation and
competition
As COVID has demonstrated, pandemics have the
potential to impact our markets as elective surgeries
may be deferred to reduce the strain on healthcare
systems. Travel restrictions, government mandated
shutdowns and potential supply chain impacts could
also have business impacts.
Increased competition exposes us to the risk of losing
market share and lower average selling prices. This risk
may be exacerbated by failure to produce innovative
products and services. We are also exposed to the
risk that our products are superseded by medical,
biological and/or technological advancements
resulting in alternative products or treatments being
commercialised, which may impact new business.
In addition to developed business continuity
and crisis management plans, our geographic
spread of customers may mitigate the impact
of a pandemic on our business.
Our active and continuous assessment of
markets (new and existing) informs our
strategy, operating plans and innovation
programs.
The creation and protection of intellectual
property are a key focus for us. We target an
annual investment of 12% of sales revenue on
R&D aimed at retaining our market leadership
position and growing the hearing implant
market.
Misappropriation
of Cochlear’s
know-how
and intellectual
property
infringement
We are exposed to the risk that our proprietary
know-how may be misappropriated through hacking
of our systems, or by employees, consultants or third
parties who may have access to systems. Our market
share is at risk of competitors accessing and using this
information.
We are also exposed to allegations of infringement by
third parties, including competitors, which could result
in us paying damages and/or receiving injunctions
preventing us from selling our products and/or paying
royalties to continue selling.
Confidentiality agreements are in place with
staff and third parties with access to our
know-how. We limit access to key systems
by business need and monitor access by
individuals.
We have an increasing and evolving patent
portfolio across our technologies to assert
against competitors, and internal and external
legal resources to manage litigation, and our
internal product development processes
include ‘freedom to operate’ checks.
Medical device
regulations
We operate in a highly regulated industry. Medical
devices and the information they produce are strictly
regulated in countries where our products are sold.
Failure to meet regulations may result in product
sanction or recall resulting in loss of sales and
reputational harm.
Regulatory uncertainty is assessed as part of
product development. We actively monitor
the regulatory environment with regulators
and incorporate requirements and changes
into our product quality assurance system.
Product quality Delivery of high quality and safe outcomes for our
customers is central to our ongoing development of
innovative product. As the developer, manufacturer,
marketer and distributor, any failure in product
quality might lead to injury, litigation, liability, recall
and reputational harm.
Our focus on quality throughout the design,
testing, manufacture and post-market
monitoring of our products ensures high
standards of product safety and efficacy.
Effective collaboration with customers aligns
clinical processes and technology with
evidence-based practices. We also maintain
product liability insurance.
52
Cochlear Limited Annual Report 2022 Risk
Description and potential consequences
Strategies used to mitigate the risk
Market access
Credit and
currency
Interruption to
product supply
The majority of our developed market customers
rely on a level of reimbursement from insurers and
government health authorities to fund their purchases.
Pressure on healthcare budgets globally may lead to
pressure on reimbursement levels. Healthcare-related
taxes by government agencies could also impact
candidates’ ability to access our products.
We provide credit to a limited number of
governments, government-supported universities
and clinics or major hospital chains. The extension
of credit creates a risk that borrowers fail to
pay resulting in interrupted cash flow and lower
earnings.
Over 90% of our revenues and over 50% of costs
are denominated in currencies other than Australian
dollars. We bear exchange rate risk from AUD
fluctuation against primarily US dollars, Euros,
Japanese yen, Sterling, Swedish kroner and Swiss
francs. Long-term permanent changes in market
rates may impact earnings.
Our reliance on suppliers for key materials and services
carries inherent risk of delay and disruption. This
risk is distinct from that where alternative materials/
sources and regulatory requirements make substitution
costly, time-consuming or commercially unviable.
While products are manufactured across six sites
globally, supply may be disrupted by a site becoming
inoperative. New manufacturing facilities require
regulatory approval for products to be saleable. Such
approval could take many months or years.
Privacy and
information
security
We handle and store personal information, including
health information, for our customers and employees.
With expanding information privacy and security
regulations, we recognise its security as a key element of
our relationship with our customers.
We continue to work with reimbursement and
government agencies throughout the world to
emphasise the health and economic benefits
of cochlear and acoustic implants.
Credit risk is not significantly concentrated
and varies by location and customer type.
Credit and receivables management
(including identifying high risk customers
and potential restrictions on future trading)
is executed at a regional level, subject to
country limits set by the Chief Financial
Officer and overseen by the Audit & Risk
Committee. Monthly credit balances and
ageing are monitored by the Board.
Financial instruments are used to manage
foreign exchange risk in accordance with the
Board approved policy.
We work closely with our suppliers to mitigate
potential interruption or delay to supplies.
In addition, purchase quantities of inventory
are managed to avoid short-term impacts.
Where appropriate, lifetime buys, strategic
raw materials purchases, alternate sources
and other supply chain interventions are
undertaken to mitigate production impacts.
We also review the business continuity plans
for manufacturing and maintain business
interruption insurance.
We regularly assess our privacy governance
and information security controls to ensure
that when customer information is held it is
secure. Whilst we maintain cyber insurance
as part of our overall risk mitigation strategy,
our pro-active approach aims to ensure that
controls of these risks are prevalent.
Talent
management
We operate in a competitive environment in relation
to attracting and retaining scientific, technology and
engineering talent. The absence of this talent may cause
key positions to be unfilled, impacting our ability to
innovate and grow.
Talent management programs are in
place, both within Australia and in our key
international markets. These programs
develop the longer-term capabilities required
for us to achieve our strategic goals.
Geo-political
risk
Our business is subject to risks associated with
doing business internationally. Unexpected geo-
political events in foreign countries in which we
operate could adversely affect our supply chain or
manufacturing through increased cost or a reduced
choice of supply, impacting our ability to execute
our strategic plans.
Whilst the international politics which
influence the level of risk are, and will
remain, outside our control, we closely
monitor our key suppliers, and assess
opportunities to diversify supply and reduce
key dependencies. Engagement with
governments, experts and regulators, enables
us to ensure compliance with the latest
regulations, economic sanctions and trade
rulings.
53
Cochlear Limited Annual Report 2022 Operational review
Business segment performance
Sales revenue increased 10% (9% in constant currency*) to a record $1,641 million, driven by strong demand
for acoustic implants and sound processor upgrades with all regions and product segments tracking above
pre-COVID levels. While cochlear implant revenue growth rates improved across the year, we continued to
experience variability in performance across countries with COVID and hospital staffing shortages impacting
operating theatre capacity.
Cochlear implants
Cochlear implant units increased 5% to 38,182 units, with emerging markets growing ahead of developed markets.
Sales revenue increased 3% in CC to $935.2 million.
Developed market units grew low single-digits for FY22 with second half volumes growing following a decline in the
first half. Units overall were around 10% above pre-COVID levels.
US volumes were around 20% above pre-COVID levels with a swift and strong recovery in FY21 following COVID
shutdowns partly offset by a small volume decline in FY22. While our professional partners reported strong patient
pipelines and growing waiting lists, access to operating theatres was constrained throughout the year as a result
of hospital staffing shortages. Our strong market share position continued to be supported by our market-leading
product portfolio and growing suite of service offerings.
Performance in Western Europe was strong throughout the year following a COVID-affected FY21. The rate of
recovery however continued to vary by country. Continental Europe volumes exceeded pre-COVID levels while
volumes in the UK were still below pre-COVID levels.
In the Asia Pacific region, Australian volumes were impacted by COVID-driven elective surgery deferrals with units
still below pre-COVID levels.
The emerging markets experienced a strong recovery following COVID-related shutdowns with many countries
trading above pre-COVID levels, including China and the Middle East. India and Brazil recovered well although
volumes were still below pre-COVID levels.
54
* Constant currency (CC) removes the impact of exchange rate movements and foreign exchange (FX) contract gains/(losses) to facilitate comparability. See Notes on page 59 for further detail.Cochlear Limited Annual Report 2022 Cochlear implant
sales revenue
$m in CC
Services
sales revenue
$m in CC
Acoustics
sales revenue
$m in CC
3%
in FY22
in CC*
15%
in FY22
in CC*
28%
in FY22
in CC*
Services (sound processor upgrades and other)
Services revenue increased 15% in CC to $503.9 million with the growing recipient base underpinning growing
demand.
Sound processor upgrade revenue experienced strong growth, particularly in the first half, following the
restricted access to clinics during COVID lockdowns.
Acoustics
Acoustics revenue increased by 28% in CC to a record $202.0 million, representing strong demand for new products
and a recovery from COVID-related surgery delays.
The Cochlear™ Osia® 2 System achieved CE Mark accreditation during the second half of FY21, with the rollout
commencing across Western Europe during FY22. Demand for the Osia 2 System continued to be strong in the US.
The Cochlear™ Baha® 6 Max Sound Processor was launched in the fourth quarter of FY21 and drove strong demand
for sound processor upgrades across all regions.
55
0100200300400500600700800900100013141516171819202122H1H205010015020025030035040045050055013141516171819202122H1H205010015020025013141516171819202122H1H2Cochlear Limited Annual Report 2022 Financial review
Profit and loss
Sales revenue increased 10% (9% in CC) to $1,641.1 million and underlying net profit increased 18% (10% in CC)
to $277.0 million, within the guidance range of $265-285m, and with an underlying net profit margin of 17%.
Excluding the impact of cloud computing-related expenses, the underlying net profit margin was 18%, in line
with our long-term target. Statutory net profit of $289.1 million includes $12.1 million in one-off gains after-tax.
Key points of note:
• Cost of sales of $411.0 million was in line with last year (in both reported and CC) with the gross margin
increasing two percentage points to 75%, back in line with the longer-term target gross margin;
• Selling, marketing and general expenses increased 12% (12% in CC) to $498.7 million reflecting continued
investment in market growth activities, standard of care and market access initiatives;
• Investment in R&D increased 8% (9% in CC) to $210.7 million with continued investment made in key R&D
projects and development of the product and services pipeline;
56
* Excluding one-off and non-recurring items ** Constant currency (CC) removes the impact of exchange rate movements and FX contract gains/(losses) to facilitate comparability. See Notes on page 59 for further detail.Cochlear Limited Annual Report 2022 • Administration expenses (excluding cloud investment) increased 22% (22% in CC) to $137.4 million driven
primarily by increases in IT expenses, and also includes increases in insurance and costs associated with the
Oticon Medical transaction; and
• Other income increased $19.7 million to $13.8 million primarily reflecting $15.8 million in balance sheet FX
revaluation losses in FY21.
Cash flow
Operating cash flow increased $111.1 million to $376.5 million.
Key points of note:
• Strong sales growth and improved gross margin resulted in a $56.4 million improvement in underlying EBIT;
• The $36.8 million increase in working capital and other primarily reflects an increase in inventories;
• Income taxes paid of $26.1 million includes the benefit of a $61.5 million tax refund resulting from an
overpayment of tax instalments paid in FY21;
• Capital expenditure (capex) increased by $10.5 million to $77.2 million, reflecting stay-in-business capex;
• Other net investments of $61.7 million comprises additional investment in the innovation fund – Nyxoah,
Precisis and Epiminder; and
• Dividends paid increased $118.4 million reflecting the return to full dividend payments following COVID-
related suspension.
57
Cochlear Limited Annual Report 2022 Financial review
Capital employed
Capital employed declined by $26.0 million to $1,099.0 million since June 2021.
Key points of note:
• The increase in working capital was primarily driven by a $54.1 million increase in inventory, reflecting the
building of safety stocks of both finished goods and some componentry in anticipation of potential global
supply chain shortages;
• The $38.9 million decrease in investments & other financial assets includes cash investments in Precisis and
Epiminder and net revaluation losses for publicly listed innovation fund investments Nyxoah and Sensorion;
• The $85.7 million reduction in other net liabilities primarily reflects the utilisation of tax losses from prior years;
• Net cash increased $22.1 million to $586.7 million.
Dividends
A final dividend of $1.45 per share has been determined, taking full year dividends to $3.00, an increase of 18%
and representing a payout of 71% of underlying net profit.
The interim dividend was unfranked, and the final dividend is 40% franked. The franking balance had been
depleted by losses incurred in FY20.
The ex-dividend date is 22 September 2022. The record date for calculating dividend entitlements is 23
September 2022 with the final dividend expected to be paid on 17 October 2022.
58
* Jun21 capital employed has been restated to reflect the impact of changes to recognition of cloud computing investments.Cochlear Limited Annual Report 2022 Notes
Forward-looking statements
Cochlear advises that this document contains forward-looking statements which may be subject to significant
uncertainties outside of Cochlear’s control. No representation is made as to the accuracy or reliability of
forward-looking statements or the assumptions on which they are based. Actual future events may vary from
these forward-looking statements and it is cautioned that undue reliance is not placed on any forward-looking
statements.
Non-International Financial Reporting Standards (IFRS) financial measures
Cochlear uses non-IFRS financial measures to assist readers in better understanding Cochlear’s financial
performance. Cochlear uses three non-IFRS measures in this document: Sales revenue, Underlying net profit
and Constant currency. The Directors believe the presentation of these non-IFRS financial measures are useful
for the users of this document as it reflects the underlying financial performance of the business. Each of these
measures is described below in further detail including reasons why Cochlear believes these measures are of
benefit to the reader.
These non-IFRS financial measures have not been subject to review or audit. However, Cochlear’s external
auditor has separately undertaken a set of procedures to agree the non-IFRS financial measures disclosed to the
books and records of the Group.
Sales revenue
Sales revenue is the primary revenue reporting measure used by Cochlear for the purpose of assessing revenue
performance of the Consolidated Entity. It represents total revenue excluding foreign exchange contract gains/
losses on hedged sales.
Underlying net profit
Underlying net profit allows for comparability of the underlying financial performance by removing one-off
and non-recurring items. The determination of items that are considered one-off or non-recurring is made
after consideration of their nature and materiality and is applied consistently from period to period. Underlying
net profit is used as the basis on which the dividend payout policy is applied. The Financial Review section
includes a reconciliation of Underlying net profit (non-IFRS) to Statutory net profit (IFRS) which details each item
excluded from Underlying net profit.
Constant currency
Constant currency removes the impact of foreign exchange rate movements to facilitate comparability of
operational performance for Cochlear. This is done by converting the prior comparable period net profit of
entities in the Group that use currencies other than Australian dollars at the rates that were applicable to the
current period (translation currency effect) and by adjusting for current year foreign currency gains and losses
(foreign currency effect). The sum of the translation currency effect and foreign currency effect is the amount by
which EBIT and net profit is adjusted to calculate the result at constant currency.
Reconciliation of constant currency net profit to reported net profit
59
* FY22 actual v FY21 at FY22 rates. ** FY21 net profit has been restated to reflect the reclassification of cloud-related investment from capex to opex.Cochlear Limited Annual Report 2022 Governance
Cochlear’s Board and executive team are committed to high standards of
corporate governance and transparency, with a focus on long-term sustainability
and preserving and enhancing our reputation.
The Board is responsible for overall corporate governance including adopting appropriate policies and
procedures designed to ensure that Cochlear is properly managed to create, protect and enhance shareholder
value. The Board and its committees regularly review governance arrangements and practices to maintain
compliance with regulatory requirements and industry practice, and to ensure that they continue to support
business objectives. Directors, senior executives and employees are expected to act ethically, lawfully and
responsibly at all times.
The Board considers that Cochlear’s corporate governance practices have been consistent with the
recommendations contained in the 4th edition of the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations released on 27 February 2019 (ASX Principles and
Recommendations) throughout the reporting period from 1 July 2021 to 30 June 2022.
Further details are set out in the Corporate Governance Statement, which outlines key aspects of our corporate
governance framework and practices, and is available at the ‘Investors’ section of our website
www.cochlear.com.
Structure and composition of the Board
The Board is committed to ensuring its composition continues to include directors who bring an appropriate mix
of skills, experience, knowledge, expertise and diversity, including gender diversity, required to discharge the
Board’s duties.
The Board is of the view that the tenure profile, represented by the length of service of each director on the
Board, is appropriately balanced such that Board succession and renewal planning are managed over the
medium to longer term. The directors possess an appropriate mix of skills, experience, knowledge, expertise
and diversity to enable the Board to discharge its responsibilities, including overseeing the delivery of the
Company’s strategic priorities.
Roles and responsibilities of the Board and management
The role of the Board is to set Cochlear’s strategic direction for the creation, maintenance and enhancement
of long-term sustainable value, to guide and monitor the management of the Company and its implementation
of the strategy and to oversee good governance practice. The Board aims to protect and enhance the interests
of Cochlear’s shareholders, while taking into account the interests of other stakeholders, including employees,
customers, suppliers and the wider community.
In performing its role, the Board is committed to a high standard of corporate governance practice and to
fostering a culture of compliance which values ethical, lawful and responsible behaviour, personal and corporate
integrity, accountability, transparency and respect for others. The Board has a charter which clearly sets out
its role and responsibilities and describes those matters expressly reserved for the Board’s determination. The
Board Charter is available on our website.
The CEO & President has responsibility for the implementation of Cochlear’s strategic objectives, operating
within the risk appetite set by the Board and for the day-to-day management of Cochlear.
60
Cochlear Limited Annual Report 2022 Board’s key responsibilities
Strategy
Financial
oversight
Set strategic direction, provide input into management’s development of corporate
strategy and oversee management’s implementation of strategy.
Approve and monitor the progress of major capital expenditure, capital management,
operational budgets, acquisitions and divestments and dividend policy.
Financial and
other reporting
Approve Cochlear’s interim and annual financial statements and oversee the integrity of
Cochlear’s accounting and corporate reporting systems.
Corporate
governance
Review, ratify and monitor the effectiveness of Cochlear’s systems of governance, risk
management and internal compliance and control, legal compliance, codes of conduct
and other corporate governance policies and practices.
Risk management
framework
Satisfy itself that Cochlear has in place an appropriate risk management framework. Set
the risk appetite within which the Board expects the CEO & President and the Executive
team to operate.
Board
performance and
composition
Leadership
selection
Succession and
remuneration
planning
Sustainability
Undertake regular external and independent evaluation of Board performance. Review
annually the composition of the Board.
Evaluate the performance, and selection, of the CEO & President.
Plan for Board, CEO & President and Executive succession and remuneration and set
non-executive director remuneration.
Consider the social, ethical and environmental impact of Cochlear’s activities and
operations. Set standards and monitor compliance with Cochlear’s sustainability
responsibilities and practices.
Material
transactions
Approve any unbudgeted expenditure and capital transactions, outside the authority
delegated to management.
Board and Board committee membership as at 30 June 2022
Board
Audit and Risk
Committee
Nomination
Committee
Medical
Science
Committee
People and
Culture
Committee
Technology
and Innovation
Committee
Director
Alison Deans
Dig Howitt
Yasmin Allen
Glen Boreham
Sir Michael Daniell
Michael del Prado
Andrew Denver
Christine McLoughlin
Prof Bruce Robinson
Chair
Member
61
Cochlear Limited Annual Report 2022 Governance
Board of directors
Board composition
As at 30 June 2022
Board gender diversity
Board tenure
Alison Deans
Chair
Appointed to the Board 1
January 2015 and as Chair 21
August 2021
Chair of the Nomination Committee.
Background
Extensive experience leading
technology-enabled businesses across
e-commerce, media and financial
services. Former Chief Executive
Officer of netus, Hoyts Cinemas, ecorp
and eBay Australia and New Zealand.
Other boards
Director, Ramsay Health Care Limited
and Deputy Group Pty Ltd. Member
of Investment Committee, CSIRO
Innovation fund (Main Sequence
Ventures) and member of AICD
Corporate Governance Committee.
Director of SCEGGS Darlinghurst
Limited and The Observership Program.
Former directorships
Westpac Banking Corporation,
Insurance Australia Group Limited and
Social Ventures Australia.
Qualifications
BA, MBA, GAICD
Dig Howitt
CEO & President and Managing
Director
Appointed to the Board
14 November 2017 and as
CEO & President 3 January 2018
Member of the Medical Science
and Technology and Innovation
Committees.
Background
Dig joined Cochlear in 2000 and has
a wealth of experience across the
Company in roles including Chief
Operating Officer, President, Asia
Pacific and SVP, Manufacturing and
Logistics.
Prior to joining Cochlear, Dig worked
for Boston Consulting Group and held a
General Management role at Boral.
Dig is a member of the Champions of
Change Coalition, STEM group. He
was appointed as President of Cochlear
on 31 July 2017 and became CEO &
President on 3 January 2018.
Qualifications
BE (Hons), MBA
62
Board tenure chart excludes Managing Director.67%33%Board gender diversityMaleFemale38%13%25%25%Board tenure0-3 years3-6 years6-9 years9+ yearsCochlear Limited Annual Report 2022 Yasmin Allen
Non-executive Director
Glen Boreham, AM
Non-executive Director
Appointed to the Board
1 January 2015
Chair of the People and Culture
Committee. Member of the Audit and
Risk, Nomination and Technology and
Innovation Committees.
Background
Led organisations in information
technology, new media and the
creative industries through periods of
rapid change and innovation. Former
Managing Director of IBM Australia and
New Zealand.
Other boards
Director, Southern Cross Media Group
and Link Group. Strategic Advisor, IXUP.
Former directorships
Chairman of Screen Australia, Advance
(Global Australian Network), Business
School and Industry Advisory Board for
the University of Technology, Sydney
and Advisory Board IXUP.
Qualifications
BEc, FAICD
Appointed to the Board
2 August 2010
Chair of the Audit and Risk Committee.
Member of the People and Culture,
Nomination and Technology and
Innovation Committees.
Background
Extensive career in investment banking
with senior roles in strategic analysis
and corporate advice. Former Vice
President of Deutsche Bank AG,
Director of ANZ Investment Bank and
Associate Director of HSBC London.
Other boards
Chair of Australian Federal Government
Steering Group for Digital Skills
Organisation and Tic:Toc Home
Loans. Director, Santos Limited, ASX
Limited, QBE Insurance Group Limited
and The George Institute for Global
Health. Acting President Australian
Government Takeovers Panel.
Former directorships
Insurance Australia Group Limited
and National Portrait Gallery. National
director of the Australian Institute
of Company Directors. Member of
The Salvation Army Advisory Board.
Chair of Macquarie Specialised Asset
Management, Faethm.org and Advance
(Global Australian Network).
Qualifications
BCom, FAICD
Sir Michael Daniell, KNZM
Non-executive Director
Appointed to the Board
1 January 2020
Chair of the Technology and Innovation
Committee. Member of the Audit and
Risk, Nomination and Medical Science
Committees.
Background
Over 40 years’ experience in the
medical device industry with extensive
executive leadership experience.
Former Managing Director and CEO of
Fisher & Paykel Healthcare Corporation
Limited responsible for the global
business and operations including the
design, manufacture and marketing of
innovative products and systems for use
in respiratory care, acute care and the
treatment of obstructive sleep apnea.
In June 2021, Sir Michael was made a
Knight Companion of the New Zealand
Order of Merit for his services to
business, healthcare and governance.
Other boards
Director, Fisher & Paykel Healthcare
Corporation Ltd. Director, Tait
International Limited. Advisory Board
Chair, Te Titoki Mataora (NZ). Director,
Medical Research Commercialisation
Fund.
Qualifications
BE (Hons) Electrical, CMInstD (NZ)
63
Cochlear Limited Annual Report 2022 Governance
Board of directors
Michael del Prado
Non-executive Director
Appointed to the Board 1
January 2022
Member of the Medical Science,
Nomination and Technology and
Innovation Committees.
Background
Over 34 years’ global experience in the
medical device and pharmaceutical
industries with senior executive
leadership roles in Johnson & Johnson
medical device businesses in the US,
Asia-Pac and EMEA. Former Company
Group Chairman of Ethicon, the world’s
largest and most comprehensive
surgical company.
Other boards
Ambu A/S
Former directorships
Co-lead Director, Verb Surgical.
Advisory Board, Singapore
Management University Lee Kong
Chian School of Business.
Qualifications
BSc Industrial Engineering, MBA, MA
Andrew Denver
Non-executive Director
Christine McLoughlin, AM
Non-executive Director
Appointed to the Board
1 February 2007
Member of the Audit and Risk, Medical
Science, Technology and Innovation
and Nomination Committees.
Background
Extensive experience in the life sciences
industry. Former Managing Director of
Memtec Limited and President Asia for
Pall Corporation.
Other boards
Chairman, SpeeDx and Director, Vaxxas
and QBiotics.
Former directorships
Executive Chairman, Universal
Biosensors.
Qualifications
BSc (Hons), MBA, FAICD
Appointed to the Board
1 November 2020
Member of the Audit and Risk,
Nomination, People and Culture
and Technology and Innovation
Committees.
Background
Ms McLoughlin has served on
the boards of a number of ASX50
companies and is a highly respected
company director with domestic
and international experience. She
has had wide ranging experience
covering health, insurance, resources,
infrastructure and financial services.
In June 2021, Ms McLoughlin was
awarded a Member of the Order
of Australia in the Queen’s Birthday
Honours for her services to business,
the not-for-profit sector and women.
Other boards
Chairman of the Suncorp Group
Limited, Chancellor of the University
of Wollongong. Chairman, Destination
NSW.
Former directorships
NIB Holdings, the McGrath Foundation
and Venues NSW.
Qualifications
BA, LLB (Hons), FAICD
64
Cochlear Limited Annual Report 2022 Karen Penrose
Non-executive Director
Appointed to the Board 1 July
2022
Member of the Audit and Risk,
Nomination and Technology and
Innovation Committees.
Background
Extensive executive career in senior
leadership and Chief Financial Officer
roles in financial services. A highly
respected company director, having
served on the boards of a number of
ASX100 companies and experienced
across health care, financial services,
property and infrastructure industries.
Other boards
Director, Ramsay Health Care
Limited, Estia Health Ltd, Bank of
Queensland Limited and Vicinity
Centres (resignation effective 15
September 2022). Director, Ramsay
Sante (associated with her directorship
of Ramsay Health Care Limited), Rugby
Australia and Marshall Investments.
Former directorships
Include Director, Spark Infrastructure
Group.
Qualifications
BCom, CPA, FAICD
Prof Bruce Robinson, AC
Non-executive Director
Appointed to the Board 13
December 2016
Chair of Medical Science Committee.
Member of the Nomination, People and
Culture and Technology and Innovation
Committees.
Background
Over 20 years’ leadership experience as
an academic physician/scientist across
research, healthcare and medicine, and
tertiary education. Former Dean, The
University of Sydney’s Sydney Medical
School, Head of Medicine at Sydney’s
Royal North Shore Hospital and Head of
the Cancer Genetics Laboratory at the
Kolling Institute for Medical Research.
Other boards
Director, MaynePharma, QBiotics and
Ecofibre. Director, Woolcock Institute
of Medical Research. Senior Advisor to
McKinsey & Company and Advisor to
MinterEllison.
Former directorships
Chairman, National Health and Medical
Research Council. Chairman, Medical
Benefits Schedule Review Taskforce.
Director, Lorica Health Pty Limited,
Firefly and Digital Health Agency CRC.
Qualifications
MD, MSc, FRACP, FAAHMS, FAICD
65
Cochlear Limited Annual Report 2022 Governance
Executive team
Executive team & senior
leader composition
As at 30 June 2022
Executive team
gender diversity
Senior leaders
gender diversity
Dig Howitt
CEO & President
Stu Sayers
Chief Financial Officer
Dig joined Cochlear in 2000 and has
a wealth of experience across the
Company in roles including Chief
Operating Officer, President, Asia
Pacific and SVP, Manufacturing and
Logistics.
Prior to joining Cochlear, Dig worked
for Boston Consulting Group and held
a General Management role at Boral.
Dig is a member of the Champions
of Change Coalition, STEM group.
He was appointed as President of
Cochlear on 31 July 2017 and became
CEO & President on 3 January 2018.
Stu was appointed as Chief Financial
Officer in February 2021. Stu joined
Cochlear in July 2016 as inaugural
President, Services.
Stu has a strong financial background
and a wealth of experience in
establishing and building customer
focused technology and online
businesses. Stu ran Amazon’s
subsidiary Audible in Asia Pacific,
as well as E*TRADE and Yahoo!7
in Australia and New Zealand. He
previously held senior roles with ANZ
Bank and McKinsey.
Executive team tenure
Qualifications
BE (Hons), MBA
Qualifications
BEc (Hons), MBA
66
82%18%59%41%MaleFemale18%27%18%36%0-5 years6-10 years11-15 years15+ yearsCochlear Limited Annual Report 2022 Jan Janssen
Chief Technology Officer
Lisa Aubert
President, North America
Richard Brook
President, EMEA
Jan joined Cochlear in 2000. He
was appointed Senior Vice President
Research & Development in 2005 and
became Chief Technology Officer in
2017.
Jan leads a team of over 500 highly
qualified engineers and scientists
who implement the R&D strategy
with responsibility for identifying and
developing cutting‐edge technology
and bringing these innovations through
to commercialisation. He is also
responsible for Business Development,
Quality and Regulatory Affairs.
Jan holds 10 granted patents in
the field of implantable hearing
technology.
Qualifications
MScEE
Lisa is responsible for the development
and execution of the strategic direction
for our North America operations.
Lisa was appointed as President,
Americas Region in March 2022. Lisa
joined Cochlear in 1994 and has deep
experience across the Company in
roles in Europe and the United States,
including General Manager of UK/
Ireland/South Africa, Regional Director
of Europe North and most recently
Vice President of Sales for Cochlear
North America and Chair of Cochlear’s
Global Sales Council.
Qualifications
BA Communication Disorders, MA in
Audiology, MBA
Richard is responsible for the
development and execution of the
strategic direction for all our operations
in Europe, the Middle East and Africa
(EMEA).
Before joining Cochlear in 2003,
Richard held senior roles in Guidant
Corporation and Alaris Medical
Systems. He has over 30 years’
experience in the medical device
industry.
Qualifications
BSc Management, MBA
67
Cochlear Limited Annual Report 2022
Governance
Executive team
Anthony Bishop
President, Asia Pacific
& Latin America
Dean Phizacklea
Senior Vice President,
Global Strategic Marketing
David Hackshall
Chief Information Officer
Anthony was appointed President,
Asia Pacific in July 2016 and took on
responsibility for Latin America in June
2021. Anthony is responsible for the
development and execution of the
strategic direction for all our operations
in Australia, Asia, the South Pacific and
Latin America.
Prior to Cochlear, Anthony spent 21
years at Johnson & Johnson Medical
in various roles including marketing,
sales and general management
around the world including Managing
Director, Johnson & Johnson Medical,
Australia/New Zealand.
Qualifications
BBus (Hons), MManagement, GAICD
Dean joined Cochlear in June 2016.
Dean has responsibility for product
marketing and commercialisation,
consumer marketing, innovation,
market access, market insights and
corporate communications.
Dean has more than 20 years’
experience in medical devices and
pharmaceuticals, covering a range
of senior commercial roles in the
US, Japan, Europe and Australia.
Prior to joining Cochlear, Dean
led Global Strategic Marketing for
Abbott Diabetes Care. Other roles
include General Manager for Abbott’s
pharmaceutical and diabetes care
businesses in Australia/New Zealand
and commercial roles in Asia with
AstraZeneca.
Qualifications
BSc Microbiology, MBA
David joined Cochlear in July 2015
as Cochlear’s first Chief Information
Officer and has global responsibility
for the Company’s information
technology strategy and management.
David’s focus is to ensure Cochlear
has the platforms in place to deliver
and drive growth. This capability is
critical in connecting Cochlear with
both professionals and recipients and
evolving Cochlear into both a business-
to-business as well as business-to-
customer organisation.
Prior to Cochlear, David was Chief
Information Officer at Wesfarmers
Insurance Ltd and brings over 15 years
of executive experience across the
communications, logistics and finance
sectors.
Qualifications
DipFN, MIT, MBA
68
Cochlear Limited Annual Report 2022
Greg Bodkin
Senior Vice President,
Global Supply Chain
Jennifer Hornery
Senior Vice President,
Global People & Culture
Greg has functional responsibility for
new product industrialisation, sourcing
& procurement, global manufacturing,
and logistics. These functions enable
the technologies developed in design
and development to be supplied as
commercial products in Cochlear’s
global markets. In addition, he leads
the management of Cochlear’s Global
Property, facilities and corporate
procurement functions.
Greg joined Cochlear in 2007 as
Head of Supply with 20 years’
prior experience in supply chain
management and operations
consulting positions, including
appointments at Taylor Ceramic
Engineering, Warman International
Ltd, Weir Minerals PLC and National
Australia Bank.
Qualifications
BE (Hons), MComm (UNSW)
Jennifer joined Cochlear in 2008
working in senior HR business
partnering roles until her appointment
as SVP People & Culture in 2017. Her
focus is to ensure the right strategic
capabilities, organisation and culture
are in place to support Cochlear’s
performance and growth aspirations.
Prior to Cochlear, Jennifer worked
in commercial, finance, strategy and
HR leadership roles across a number
of industries in Australia and the US,
including senior positions at Campbell
Arnott’s and Booz & Company.
Qualifications
BComm, MBA, GAICD
Brian Kaplan
Senior Vice President,
Global Clinical Strategy and
Innovation
Brian joined Cochlear in 2016 and
manages clinical strategy and
innovation for Cochlear. He is
responsible for the clinical data to
support present and future products
and services. Brian dedicates two-
thirds of his time to his role at Cochlear,
while continuing to direct a cochlear
implant surgical practice at the Greater
Baltimore Medical Center.
Brian’s past research interests have
included hearing loss, balance
disorders, and hair cell regeneration.
His current practice focuses on
adult and paediatric otology, with an
emphasis on hearing restoration. Brian
is board-certified in otolaryngology
and is a Fellow of the American
College of Surgeons.
Qualifications
BNeuroSci, BA, MD, FACS
69
Cochlear Limited Annual Report 2022
Remuneration report
Letter from the Chair of the People & Culture
Committee (P&CC)
Dear Shareholders
On behalf of the Cochlear Board, I am pleased to present the FY22 Remuneration report where we outline our remuneration
strategy, summarise the performance outcomes for FY22 and detail the associated remuneration outcomes for key
management personnel.
Last year, the Board conducted a comprehensive review of executive remuneration with the outcome highlighting gaps in our
long-term incentive (LTI) structure and fixed pay for select executives. We made changes to ensure executive pay was aligned
to the market: we increased maximum LTI to 125% of base salary for the Chief Executive Officer & President and 90% of base
salary for executive direct reports; and aligned fixed pay to market. The Board believes these changes have aligned the
executives more effectively with the long-term growth objectives of the organisation and will ensure executive remuneration
continues to be balanced, fair and equitable, and closely aligned with the interests of our shareholders.
FY22 performance and reward outcomes
The Board is satisfied that the reward outcomes under the short-term incentive (STI) plan for FY22 reflect the Company’s
performance. Overall sales revenue grew by 10%, exceeding revenue targets for the financial year. We also completed
initiatives across several key strategic priorities: retaining our market share and strengthening our market position across the
globe; growing the hearing implant market; and building an even stronger organisation as we grow. Strong performance in the
year has resulted in the awarding of incentives above target to the CEO & President and executives under the FY22 STI plan.
Relative total shareholder return (TSR) against the ASX 100 was below median (at the 42nd percentile) and basic earnings per
share (EPS) represented a (2.7)% compound annual growth rate over the last three years, which resulted in no vesting under
the FY20-22 LTI plan. Further detail on this year’s remuneration outcomes is provided in this report.
Our executive remuneration framework
The Board is committed to ensuring our executive remuneration framework and the associated reward outcomes align with
our business objectives, performance, and shareholder expectations. Competition for talent in many of the markets in which
Cochlear operates has increased in the last year. Cochlear has responded to this through targeted remuneration increases and
by introducing changes to our reward offering to achieve greater alignment and consistency of how we reward employees
across the business. The Board has also reviewed our STI performance scorecard for FY23 and it incorporates Environmental,
Social and Governance metrics which will include targets for reduction of carbon emissions.
The Board has also reviewed the exercise period for options awarded under the LTI plan as a direct result of some executives
being prevented from exercising vested options due to possessing inside information in a trading window. This approach is also
more market aligned and provides a longer timeframe for executives to exercise and realise value from vested LTI,
strengthening the alignment of executives’ interests to those of shareholders.
Glen Boreham, AM
Chair, People & Culture Committee
Cochlear Limited Annual Report 2022
70
Contents
This report covers:
1. Key management personnel;
2. Executive KMP remuneration received in FY22 (unaudited);
3. Our remuneration strategy and framework;
4. Executive KMP remuneration and link to performance;
5. Executive KMP statutory remuneration disclosure;
6. Executive service agreements;
7. Remuneration governance;
8. Executive KMP equity disclosures; and
9. Non-Executive Director fees.
The information provided in this Remuneration report (except for section 2 and section 8.3) has been audited as required by
section 308(3C) of the Corporations Act 2001 (Cth).
1. Key management personnel
This report covers key management personnel (KMP) who have authority for planning, directing and controlling the activities
of Cochlear and comprise Non-Executive Directors (NEDs) and executive KMP as outlined in the table below.
Name
Position
Term as KMP
Non-Executive Directors
Alison Deans
Chair
Yasmin Allen
Non-Executive Director
Glen Boreham, AM
Non- Executive Director
Sir Michael Daniell, KNZM Non- Executive Director
Appointed as Chair effective 21 August 2021
(Previously Non-Executive Director for the period from 1 July
2021 to 20 August 2021)
Full year
Full year
Full year
Michael del Prado
Non- Executive Director
Part year appointed 1 January 2022
Andrew Denver
Non-Executive Director
Christine McLoughlin, AM Non-Executive Director
Bruce Robinson, AC
Non-Executive Director
Former Non-Executive Directors
Full year
Full year
Full year
Rick Holliday-Smith
Former Chairman
Part year retired 20 August 2021
Abbas Hussain
Executive KMP
Dig Howitt
Lisa Aubert
Anthony Bishop
Richard Brook
Jan Janssen
Stu Sayers
Former Executive KMP
Former Non-Executive Director
Part year until 20 July 2021
CEO & President (CEO&P)
Full year
President, North America
Part year appointed 1 April 2022
President, Asia Pacific & Latin America1
Full year
President, EMEA
Chief Technology Officer
Chief Financial Officer (CFO)
Full year
Full year
Full year
Tony Manna
Former President, North America
Part year retired 31 March 2022
1 Effective 1 July 2021, the Cochlear Latin American organisation reports to Anthony Bishop, President Asia Pacific & Latin America.
Cochlear Limited Annual Report 2022
71
Karen Penrose was appointed to the Cochlear Board on 1 July 2022. There are no other changes to KMP after the reporting
date and before the date the Directors’ report was authorised for issue.
2. Executive KMP remuneration received in FY22
(unaudited)
The table below presents the remuneration paid to, received by, or vested to each executive KMP during the year. Fixed
remuneration and cash STI relate to amounts earned during the year and vested deferred STI and vested LTI represent equity
vesting from prior years.
The figures presented below are different to the statutory disclosures in section 5 which are prepared in accordance with the
accounting standards and therefore include the accounting value for all unvested deferred STI and LTI awards expensed in the
year. The table below has been provided voluntarily to ensure shareholders are able to clearly understand the remuneration
outcomes and actual ‘take-home pay’ of executive KMP for FY22.
Amounts $
Executive KMP
D Howitt
L Aubert5
A Bishop
R Brook
J Janssen
S Sayers6
Year
Fixed
remuneration1
Cash STI2
Vested
deferred STI3
Vested LTI4
End of
service
Total
FY22
FY21
FY22
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
1,952,875
1,851,043
223,131
683,491
580,655
1,014,978
947,798
972,990
885,655
871,068
406,325
1,362,427
1,730,148
100,351
398,662
395,175
537,123
519,413
465,143
635,708
443,685
220,630
636,243
355,828
–
140,582
92,532
207,250
139,850
243,241
140,270
–
–
412,062
1,447,993
–
55,823
110,355
71,260
318,182
85,202
354,151
–
–
–
–
–
–
–
–
–
–
–
–
–
4,363,607
5,385,012
323,482
1,278,558
1,178,717
1,830,611
1,925,243
1,766,576
2,015,784
1,314,753
626,955
Former Executive KMP
T Manna7
FY22
FY21
1,881,151
1,856,189
1 Fixed remuneration earned in the year (base salary, superannuation and non-monetary benefits which may include insurances and car
allowances). Richard Brook’s fixed remuneration for FY22 and FY21 excludes employer contributions for social security, accident and
sickness and reflects actual ‘take-home pay’. These amounts are included with the non-monetary benefits in the statutory table in section
5.
799,596
836,301
203,144
135,644
528,290
619,509
51,427
264,735
298,694
–
2 Cash STI earned and relating to performance during the financial year. For example, FY22 is reported as STI payments which are accrued
at year end, and received in September 2022, after the reporting year end.
3 Vested deferred STI is the value of the deferred STI from prior years that vested in August of the reported financial year (calculated as the
number of rights that vested multiplied by the share price on the vesting date). For example, FY22 is reported as the FY19 deferred STI
grant which vested in August 2021.
4 Vested LTI is the value of performance rights and options that vested in August of the reported financial year (rights are calculated as the
number of rights that vested multiplied by the share price on the vesting date and options are calculated as the number of options
multiplied by the share price on the date of exercise less the exercise price). For example, FY22 is reported as the FY19 LTI grant which
vested in August 2021 (25.04% of awards vested due to performance).
5 Remuneration for Lisa Aubert relates only to the period that she was KMP from 1 April 2022.
6 Remuneration for Stu Sayers relates only to the period that he was KMP from 1 January 2021.
7 Tony Manna retired from Cochlear on 31 March 2022. At the end of his service, he received a payment of $298,694 which relates to
statutory entitlements and contractual benefits agreed. Refer to section 6.1 for further detail. In FY22, an ex-gratia cash payment was made
to Tony Manna equivalent to the estimated net value of the benefit lost from the expiry of vested options, which were unable to be
exercised in accordance with the Trading Policy. A payment of $30,171 was paid to Tony Manna in May 2022 and is included in vested LTI.
Cochlear Limited Annual Report 2022
72
3. Our remuneration strategy and framework
Cochlear’s executive remuneration strategy is designed to attract, motivate, and retain a highly qualified and experienced
group of executives employed across diverse geographies. The following diagram links each of the executive team
remuneration components to Cochlear’s mission and strategy.
Cochlear’s mission and strategy
To help people hear and be heard
We deliver this through our corporate strategy and organisational capability …
Retain
market
leadership
Grow the
hearing
implant
market
Deliver
consistent
revenue and
earnings
growth
Build a
stronger
organisation
… which are reflected in performance measures across Cochlear’s incentive plans …
Net profit after tax (NPAT)
Sales revenue
Achievement of business priorities
and growth initiatives
Relative total shareholder return (TSR)
Compound annual growth rate (CAGR)
in basic earnings per share (EPS)
… with actual outcomes directly driving executive remuneration.
Fixed
remuneration
Short-term
incentive
Long-term
incentive
Total
remuneration
3.1 Remuneration mix
The remuneration mix for executive KMP is weighted towards at-risk performance-based remuneration to ensure a strong
focus on short, medium and long-term performance (69% for the CEO&P and 62% for other executive KMP). A portion of
executive remuneration is delivered in equity (48% for the CEO&P and 43% for other executive KMP) to align our executives
with shareholder interests.
38%
31%
34%
38%
10%
21%
CEO&P
9%
19%
Other executive KMP
Cochlear Limited Annual Report 2022
73
3.2 Fixed remuneration
Fixed remuneration comprises base salary, superannuation and non-monetary benefits which may include insurances and car
allowances. It is set at a level to attract and retain executive talent with the appropriate capabilities to deliver Cochlear’s
objectives.
Fixed remuneration is generally positioned at the median of the relevant market and is reviewed annually to ensure alignment
with local market benchmarks, and it is reflective of the executive’s expertise and performance in the role. Market benchmarks
are typically set with reference to market capitalisation and include organisations within Cochlear’s industry sector and/or
similar in global operations and complexity as determined by the P&CC each year.
3.3 Short-term incentive
Purpose
To align and reward executives for the achievement of Cochlear group and regional (for regional executives) performance
targets set by the Board at the beginning of the performance period.
Performance
measures
Description
STI is dependent on meeting financial and strategic performance measures:
Performance
measure and
weighting
Performance
Gateway
Sales revenue
(60%)
•
•
•
Group Performance Gateway (minimum NPAT threshold) to drive global alignment.
Sales revenue growth is critical to short and longer-term shareholder returns.
Financial targets are set by the Board, having regard to prior year performance, global market
conditions, competitive environment, future prospects and Board approved budgets. The targets
incorporate a significant amount of stretch to ensure executives are engaged and incentivised to
appropriately deliver results. The specific targets are not disclosed to the market due to their
commercial sensitivity.
Strategic measures recognise that in addition to short-term financial results, a number of strategic
initiatives are required to enable sustained growth over time.
Each executive’s contribution against performance objectives is assessed at an individual level at
the end of the performance period. This assessment determines the level at which awards are
made.
Strategic
measures (40%)
Individual
contribution
•
•
Validation of performance against the measures set for:
•
•
the CEO&P involves a review by the Board based on financial inputs from the CFO, and approved by the P&CC and
Board each year; and
other executive KMP involves a review by the CEO&P based on inputs from the CFO and approved by the P&CC.
Any anomalies or discretionary elements are validated and approved by the Board.
Refer to section 4 for further detail on measures for FY22.
Opportunity CEO&P: target opportunity is 100% of base salary, and maximum is up to 180% of base salary.
Delivery
Cessation of
employment
Other executive KMP: target opportunity is 75% of base salary, and maximum is up to 135% of base salary.
Two-thirds of the award is paid in cash annually, with one-third deferred into service rights for a period of two years (subject
to a service condition) to reinforce alignment to longer-term shareholder interests and for retention purposes. No dividends
are attached to service rights.
The number of rights to be allocated is calculated using the ‘gross contract value’, which refers to a Black-Scholes-Merton
pricing model without discounting for service or performance hurdles. The model uses Cochlear’s share price following the
announcement of full year results in August each year.
Prior to STI payment date: if an executive ceases employment with Cochlear prior to any cash being paid, or service rights
being granted, the executive will forfeit any awards to be paid for the performance period, unless the Board determines
otherwise.
Post STI payment date: if an executive is dismissed for serious misconduct or resigns from their position after service rights
have been granted, but prior to the relevant vesting date, any unvested rights will generally be forfeited, unless the Board
determines otherwise.
Cochlear Limited Annual Report 2022
74
3.4 Long-term incentive
Purpose
Award vehicle
Opportunity
Allocation
method
Performance
period
Exercise period
(for options)
Performance
measures and
hurdles
To align the remuneration opportunity for the executive team with shareholder value and provide a stimulus for the
retention of executives within the Company.
LTI is delivered as 50% options and 50% performance rights.
CEO&P: maximum opportunity is 125% of base salary.
Other executive KMP: maximum opportunity is 90% of base salary.
In FY22, we made changes to executive reward to ensure executive pay was aligned to the market: increasing maximum
LTI to 125% of base salary for the CEO&P (previously 100%) and 90% of base salary for executive direct reports
(previously 50%). The Board believes that these changes will align executives even more effectively with the long-term
objectives of the organisation.
The LTI opportunity is calculated using the ‘gross contract value’, which refers to a Black-Scholes-Merton pricing model
without discounting for service or performance hurdles.
Gross contract value discounts for dividends not paid, share price volatility and the risk free rate of return. There is no
discount for the likelihood of service or performance conditions. The model uses Cochlear’s five-day volume-weighted
average share price following the announcement of full year results in August each year.
Performance is measured over a four-year performance period.
There is no retesting of performance hurdles under the LTI plan.
Post vesting, options expire seven months after the vesting date if they have not been exercised.
The Board reviewed the exercise period for options awarded under the LTI plan as a direct result of some executives
being prevented from exercising vested options due to possessing inside information in a trading window. For FY23 and
future LTI awards, the exercise period for vested options will be 25 months which is more market aligned and provides
a longer timeframe for executives to exercise and realise value from vested LTI, strengthening the alignment of
executives’ interests to those of shareholders. The Board will also have discretion to extend the exercise period for
vested options by a further 12 months (up to 37 months) if an option holder is in possession of inside information in a
trading window and is unable to exercise their vested options before expiry.
Awards are subject to:
•
50% weighting on relative TSR against the constituents of the ASX 100 index as at the start of the performance
period; and
50% weighting on compound annual growth rate (CAGR) in basic EPS.
•
The proportion of awards that vest for performance is:
Relative TSR
Basic EPS
Performance
Less than 50th percentile
At the 50th percentile
50th percentile to 75th
percentile
Above 75th percentile
% of instruments that
vest
0%
Performance (CAGR)
Less than 7.5%
40%
7.5%
% of instruments that
vest
0%
50%
40% to 100% (pro-rata)
7.5% to 12.5%
50% to 100% (pro-rata)
100%
Above 12.5%
100%
Dividends
Cessation of
employment
These measures have been selected to incentivise the executive team towards long-term sustainable growth of the
business and are generally accepted proxies for the creation of shareholder value.
No dividends are attached to options or performance rights.
If an executive ceases employment with Cochlear before the end of the performance period, unvested LTI awards will
generally be forfeited. In exceptional circumstances (including, but not limited to, redundancy and retirement), the
Board may, in its discretion, determine that all or a portion of the award will vest in line with the original performance
criteria and vesting date.
Cochlear Limited Annual Report 2022
75
4. Executive KMP remuneration and link to
performance
4.1 FY22 STI outcomes
STI is based on meeting a Group Performance Gateway of NPAT, and performance against financial measures (60%) and
strategic measures (40%). Final allocations to executive KMP are also based on individual performance as assessed by the Board
(for the CEO&P) and CEO&P (for other executives).
When reviewing financial performance, the Board excludes revaluation gains and losses from non-core investments (the
innovation fund) and the impact of one off and non-recurring items from the calculation of STI. For FY22, underlying NPAT was
above the Group Performance Gateway and sales revenue grew 10%. In addition to financial measures, the Board also
considered progress against strategic measures which are critical to the achievement of Cochlear’s longer-term goals.
Validation of performance against the measures set for:
•
•
the CEO&P involves an independent review and endorsement by the CFO, reviewed and approved by the P&CC and Board;
and
other executive KMP involves a review by the CEO&P based on inputs from the CFO with a final review undertaken by the
P&CC.
Any anomalies or discretionary elements are validated and approved by the Board.
The table below provides a summary, and achievement against each, of the financial measures and strategic measures of the
STI plan. Measures are agreed with the P&CC at the commencement of each financial year and are aligned to the delivery of
initiatives that support Cochlear’s strategic priorities.
Business priority
Commentary on performance
Achievement
s
e
r
u
s
a
e
m
c
i
g
e
t
a
r
t
S
)
%
0
4
(
Retain
market
leadership
Grow the
hearing
implant
market
• Maintain market leadership through
growing levels of investment in R&D
(targeted at 12% of sales revenue)
• Innovation focus on hearing implants,
sound processing technology, connectivity
and clinical and surgical support
• Introduce new products that provide
improved hearing outcomes, functionality,
connectivity and aesthetic benefits
• World-class customer experience
• Grow connectivity and engagement with
recipients
• Introduce connected care solutions and
skills training tools for recipients
• Introduce sound processor upgrades that
provide functional and aesthetic benefits
• Develop technology solutions that provide
greater convenience and confidence to
professional customers
• Strong market position has been
retained or improved in major
markets through a very strong
product and service portfolio and
very good customer service
• Invested over $200m in R&D, and
achieved good progress in
developing new products
• Achieved milestones on the
commercial roll out of Connected
Care solutions being the first
company to offer app-based Remote
Care solutions to both acoustic and
cochlear implant recipients
• Cochlear Family membership grew by
20% to 260,000, with a 60% join rate
for new Cochlear™ Nucleus® implant
recipients
• Improve the awareness of cochlear and
• Direct-to-consumer leads and
surgeries exceeded target, driving
growth of the business
• Achieved milestones on referral
programs and Standard of Care
• OSIA roll out on schedule
acoustic implants
• Broaden reimbursement and improve the
indications for cochlear and acoustic
implants
• Support the development of consistent
practice guidelines to strengthen the
referral pathway for adults
• Build on the clinical evidence that supports
the superior outcomes of cochlear implants
over hearing aids for people with severe or
higher hearing loss
• Collaborate with research institutions
studying the links between hearing loss and
healthy ageing
Cochlear Limited Annual Report 2022
76
Build a
stronger
organisation
• Strengthen and nurture the organisational
culture
• Learning and development to facilitate
innovation
• Talent attraction and retention
• Competitive, inclusive compensation and
benefits to attract, motivate and retain
talent
• Succession planning
• Embracing diversity in all forms
• Improve quality, efficiency and agility
• Complete major programs
s
e
r
u
s
a
e
m
l
a
i
c
n
a
n
F
i
)
%
0
6
(
Deliver
consistent
revenue
and
earnings
growth
• Optimise growth investment
• Target an 18% net profit margin over the
long term
• Maintain a strong balance sheet
• Improve efficiency and agility
• Maintain high levels of corporate
governance
• Completed initiatives on our cultural
priorities to improve how we work
together across the organisation to
build a more integrated global
organisation
• Employee engagement maintained at
80%
• Introduced changes to our reward
offering to achieve greater alignment
and consistency of reward across the
business
• Women in senior and executive
management roles increased to 41%,
exceeding our 40% target
• Formalised our commitment to
recognition and reconciliation
through our first Reconciliation
Action Plan
• Deployed a range of training and
leadership development programs
• Delivered record sales revenue, with
revenue growth of 10%
• Revenue growth has been supported
by strong performance in Acoustics
from the Baha 6 launch and
continued growth in OSIA
• Agreement to acquire Oticon
Medical, Demant’s hearing implant
business for ~A$170m
= Below expectations
= Met expectations
= Exceeded expectations
Key performance targets were exceeded for FY22 resulting in an average actual STI of 110.5% of target and 61.4% of
maximum for executive KMP. The following STI payments were made as outlined in the table below.
Two-thirds of the actual STI will be delivered in cash in September 2022, and one-third will be deferred into service
rights and subject to service conditions until August 2024.
STI target as a
% of base salary
STI maximum as a
% of base salary
Actual STI as a
% of target
Actual STI as a
% of maximum
STI forfeited as a
% of maximum
Actual STI ($)
Executive KMP
D Howitt
L Aubert1
A Bishop
R Brook
J Janssen
S Sayers
100%
75%
75%
75%
75%
75%
180%
135%
135%
135%
135%
135%
107.6%
102.5%
122.7%
130.7%
100.0%
107.6%
59.8%
57.0%
68.1%
72.6%
55.6%
59.8%
40.2%
43.0%
2,043,640
150,527
31.9%
597,993
27.4%
805,684
44.4%
697,715
40.2%
665,528
Former Executive KMP
T Manna2
1 The STI payment presented in the table for Lisa Aubert relates to the time in KMP role from 1 April 2022 to 30 June 2022.
2 The STI payment presented in the table for Tony Manna relates to the time in KMP role from 1 July 2021 to 31 March 2022. The STI payment for Tony
102.5%
43.0%
57.0%
135%
75%
528,290
Manna will be delivered entirely in cash in September 2022.
Cochlear Limited Annual Report 2022
77
4.2 FY20-22 LTI vesting outcomes
For the FY20 LTI plan, a transitional arrangement was implemented to recognise that increasing the performance period from
three to four years would result in a gap year of LTI vesting in FY22 for executives. The transitional arrangement applied to
executives excluding the CEO&P. The FY20 LTI measures performance against relative TSR (50%) and basic EPS growth (50%)
over a three-year and four-year performance period.
Presented below is the performance for the first tranche of the FY20 LTI grant subject to a three-year performance period to
30 June 2022. The second tranche of the FY20 LTI grant will be presented in next year’s report.
The graphs below illustrate Cochlear’s relative TSR and basic EPS performance against targets over the past five years. The
capital raising in March 2020 and the impact of COVID on hospitals and healthcare systems around the world has significantly
impacted the achievement of LTI performance hurdles.
For FY22, Cochlear’s TSR performance was 3.6%, which was
ranked at the 42nd percentile of the ASX 100 comparator group.
This resulted in performance below target, and as a result, 0% of
the TSR portion of the LTI vested.
Cochlear’s basic EPS1 in FY22 was 421.1 cents, which is a (2.7)%
CAGR over the three-year performance period. This resulted in
performance below target2 and as a result, 0% of the EPS portion
of the LTI vested.
R
S
T
r
a
e
y
-
3
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
Cochlear TSR performance against targets
157.0%
76.3%
30.6%
26.1%
FY18
FY19
FY20
FY21
3.6%
FY22
R
G
A
C
S
P
E
r
a
e
y
-
3
25%
20%
15%
10%
5%
-
(5%)
(10%)
(15%)
Cochlear EPS performance against targets
18.6%
11.7%
FY18
FY19
FY20
FY21
(5.6%)
FY22
(2.7%)
(12.9%)
Cochlear TSR performance
Median TSR (target)
75th percentile TSR (stretch)
Cochlear EPS performance
Target
Stretch
For the FY20-22 LTI, 0% vests based on performance over the three-year period
from 1 July 2019 to 30 June 2022.
1 For the purpose of the FY20-22 LTI, EPS is determined based on underlying NPAT which excludes non-cash after tax gain/loss from the
revaluation of innovation fund investments and the impact of one off and non-recurring items.
2 EPS targets were revised in FY20 to ensure targets remained aligned to the Company’s growth targets and current market conditions.
Refer to Cochlear’s 2019 Annual Report for further detail.
Cochlear Limited Annual Report 2022
78
4.3 Financial performance history (FY18 to FY22)
Sales revenue ($million)2
Earnings/(loss) before interest and tax (EBIT) ($million)
Underlying EBIT ($million)
Reported EPS
Net profit/(loss) after tax (NPAT) ($million)
Basic earnings/(loss) per share (EPS) (cents) – reported
EPS growth (3-year CAGR)
Underlying EPS
Underlying NPAT ($million)3
EPS (cents)3
EPS growth (3-year CAGR)4
Share price and dividends
Total dividend per share ($)
Share price as at 30 June ($)
FY18
FY19
1,351.4
1,446.1
348.4
350.6
245.8
427.3
18.6%
248.0
427.3
18.6%
370.1
359.3
276.7
460.9
13.2%
263.8
457.2
11.7%
3.00
200.17
3.30
206.84
FY20
1,352.3
(262.2)
206.9
(238.3)
(399.6)
(200.8%)
149.1
250.0
(12.9%)
1.60
188.93
FY211
FY22
1,493.3
1,641.1
370.2
326.3
323.8
492.6
4.9%
234.0
356.0
(5.6%)
2.55
251.67
400.0
382.7
289.1
439.6
(2.9%)
277.0
421.1
(2.7%)
3.00
198.70
Relative total shareholder return (TSR) (3 years)
TSR percentile ranking5
1 Except for EPS growth (3-year CAGR), FY21 has been restated for the accounting policy change in relation to cloud computing.
2 Excludes foreign exchange gain/(loss) on hedged sales.
3 Underlying NPAT and EPS for FY19 to FY21 has been restated for the accounting policy change in relation to cloud computing as they
157.0%
97th
76.3%
81st
30.6%
72nd
26.1%
54th
3.6%
42nd
relate to LTI awards vesting in current and future years. Refer to Note 7.6 to the financial statements for further detail.
4 EPS growth for FY18 to FY21 is as reported in prior Remuneration Reports, as it relates to LTI awards that have already vested in prior years.
5 TSR percentile ranking is shown over three financial years to 30 June. For LTI, performance is compared to the TSR of the constituents of
the ASX 100 as at the start of the relevant performance period.
For further explanation of details on Cochlear performance, see the Operational review and Financial review section on pages
54 to 59 of this Annual Report.
Cochlear Limited Annual Report 2022
79
5. Executive KMP statutory remuneration
disclosure
The table below presents the total remuneration for executive KMP in accordance with the accounting standards.
Amounts $ Year
Short-term benefits
Post-
employment
Salary
Cash STI
Non-
monetary
benefits1
Super-
annuation
contributions
Other
long-term
benefits
Long
service
leave
Share-based payments
End of
service
Total
Deferred
STI2
LTI
performance
rights3
LTI
options3
% of
performance
related
remuneration
Executive KMP
D Howitt
FY22 1,927,769
1,362,427
1,827,811 1,730,148
FY21
L Aubert4 FY22
1,538
1,538
23,568
50,872
515,383
595,748
493,294
21,694
(3,577)
472,519
293,673
518,191
–
–
4,970,599
4,861,997
196,307
100,351
16,845
9,979
–
60,597
–
–
A Bishop
FY22
659,000
398,662
FY21
558,038
395,175
923
923
23,568
10,490
132,251
122,782
101,346
21,694
5,605
106,554
57,734
64,375
R Brook
FY22
818,678
537,123 155,331
136,502
FY21
755,888
519,413 146,392
123,202
–
–
175,692
146,558
160,559
132,497
80,754
105,122
J Janssen FY22
947,884
465,143
FY21
862,423
635,708
S Sayers5 FY22
846,577
443,685
FY21
395,020
220,630
1,538
1,538
923
458
23,568
12,897
183,460
185,570
152,856
21,694
(18,030)
176,357
90,036
117,930
23,568
10,847
8,219
9,133
148,066
131,525
109,960
56,846
18,348
24,128
Former Executive KMP
–
–
–
–
–
–
–
–
–
384,079
1,449,022
1,210,098
2,116,382
1,877,329
1,972,916
1,887,656
1,712,523
735,410
T Manna6 FY22
734,346
528,290
53,094
FY21
764,830
619,509
52,057
12,156
19,414
–
–
200,493
162,052
207,308
200,214 298,694
2,234,595
75,093
126,835
–
1,819,790
B Cubis
FY21
158,486
–
233
6,108
746
47,473
21,611
32,030 327,132
593,819
Total
FY22 6,130,561
3,835,681 230,192
252,909
82,478
1,415,942
1,403,492
1,190,167 298,694 14,840,116
FY21
5,322,496 4,120,583 203,139
224,653
(6,123)
1,168,359
637,249
988,611 327,132 12,986,099
59.69%
62.00%
41.90%
52.11%
51.55%
47.53%
45.38%
50.03%
54.04%
48.66%
38.25%
50.85%
54.04%
17.03%
52.87%
53.25%
1 Non-monetary benefits include insurances for all KMP and car and housing allowances for overseas-based KMP which are market-based
payments. For Richard Brook, the amount also includes compulsory social security contributions of approximately $96,000 for FY22 and
$78,000 for FY21.
2 Deferred STI is granted in service rights and deferred for a further two years. The cost of the plan is expensed across three years. The FY22
amount represents the portion of the FY21 and FY22 deferred STI expensed in FY22. The FY21 amount represents the portion of the FY19
and FY21 deferred STI expensed in FY21. There was no expense for FY20 deferred STI as no awards were made in the year.
3 LTI granted in performance rights and options are expensed evenly over the period from grant date to vesting date. The value is calculated
at the date of grant using the Black-Scholes-Merton pricing model discounted for vesting probabilities of non-market performance criteria.
The amount expensed each reporting period includes adjustments to the life-to-date expense of grants based on the reassessed estimate
of achieving non-market performance criteria and final vesting amounts for the non-market performance criteria of performance rights
and options. The value disclosed above is the portion of the value of the performance rights and options recognised as an expense in the
financial year. The ability to exercise the performance rights and options is conditional on Cochlear achieving certain performance hurdles.
Further details of performance rights and options granted during the financial year are set out in this report.
4 Remuneration for Lisa Aubert only relates to the period that she was KMP from 1 April 2022.
5 Remuneration for Stu Sayers only relates to the period that he was KMP from 1 January 2021.
6 Tony Manna retired on 31 March 2022. At the end of his service, he received a payment of $298,694 which relates to statutory entitlements
and contractual benefits agreed. Share-based payment values presented include an expense of $101,805 for LTI performance rights and
$121,323 for LTI options that would normally have been amortised over future years for awards that remain subject to vesting hurdles and
timeframes, and LTI may not be paid out if conditions are not met. Refer to section 6.1 for further detail. In FY22, an ex-gratia cash payment
was made to Tony Manna equivalent to the estimated net value of the benefit lost from the expiry of vested options, which were unable
to be exercised in accordance with the Trading Policy. A payment of $30,171 was paid to Tony Manna in May 2022 and is disclosed in LTI
options in the table above.
Cochlear Limited Annual Report 2022
80
6. Executive service agreements
Cochlear does not enter into (limited) service contracts for executive KMP. The terms of employment for executive KMP meet
local employment law requirements. Key provisions are similar but do, on occasion, vary to suit different needs.
The following sets out details of the employment agreements relating to executive KMP.
Length of contract
Permanent contract until notice is given by either party.
Notice periods
Post-employment
restraints
Other arrangements
CEO&P: 12 months’ written notice by either party.
Other executive KMP: between 60 days to six months’ written notice by either party (exact period
specified in each contract).
All executive KMP are subject to post-employment restraints for up to 12 months.
Richard Brook will receive a maximum of CHF 30,000 for repatriation costs in the case of
termination or resignation.
6.1 End of service for former executives
Tony Manna retired from Cochlear on 31 March 2022. At the end of his service, he received:
•
•
payment of $176,097 as part of a contractual agreement; and
payment of $122,597 relating to accrued but unused vacation leave relating to service provided.
The Board applied its discretion to allow some prior equity grants to remain on-foot subject to the original terms of those
awards (both time and performance hurdles). The awards are detailed in section 8 and are eligible for vesting in August 2022,
August 2023, and August 2024.
The Board applied its discretion to allow a pro-rata STI to be awarded for FY22 in cash, payable in September 2022, based on
both company and individual performance.
Cochlear Limited Annual Report 2022
81
7. Remuneration governance
7.1 Governance framework for remuneration at Cochlear
The Board is responsible for all areas of Cochlear’s strategy and policy related to its people. Consistent with this responsibility,
the Board has established the P&CC which comprises solely of independent NEDs.
Management
People & Culture Committee
Board
• Makes recommendations to the
P&CC with respect to individual
remuneration arrangements for
executive KMP
• Implements policies and
practices relating to talent
management, remuneration,
organisational culture, diversity
and inclusion, work, health and
safety and leadership
development
• The P&CC is empowered to source any internal
resources and obtain external independent
professional advice it considers necessary to
enable it to review management proposals and
make decisions on behalf of the Board on:
− Remuneration policy, composition, quantum
and performance targets for executive KMP
− Remuneration policy in respect of NEDs
− Organisational culture, diversity and inclusion,
talent management and leadership
development strategies and practices
− Work, health and safety metrics and initiatives
− Design features of employee and executive STI
and LTI awards
• Reviews, applies judgement
and, as appropriate,
approves recommendations
from the P&CC
7.2 Advice from external advisors
To inform decisions, the P&CC sought advice and (at times) recommendations from the CEO&P and other management
throughout the year. During FY22, the P&CC appointed Guerdon Associates (Guerdon) as its external remuneration advisor.
The P&CC engaged Guerdon to provide information used as an input to the annual review of Executive KMP and NED
remuneration.
No remuneration recommendations (as defined by the Corporations Act 2001 (Cth)) were provided by Guerdon or any other
advisor during the year.
7.3 Share ownership requirements
Executive KMP are required to retain vested equity until they hold and maintain a holding of Cochlear shares equivalent to
their annual salary in the previous year. Until this requirement is met, Executive KMP must retain shares derived from
participation in incentive plans), except sales to meet the cost of exercising any options and sales to meet tax on participation
in the plan. The Board considers the minimum shareholding guidelines to be best practice to strengthen the alignment of
executives’ interests to those of shareholders. The table in section 8.2 details the current holdings of executive KMP.
7.4 Clawback Policy and discretion
All participants of the deferred STI and LTI plans are subject to the Clawback Policy, available in the ‘Investors Centre’ section
of the Company’s website. The policy enables the Board to claw back remuneration outcomes in the event of a material non-
compliance with any financial reporting requirement, misconduct, or following inappropriate behaviour post-employment in
cases where the Board has exercised its discretion to allow retention of equity following termination of employment. The policy
is designed to further align the interests of participants with the long-term interests of Cochlear and shareholders, and to
ensure that excessive risk taking is not rewarded.
The Board retains discretion to adjust remuneration outcomes upwards or downwards to ensure incentives are not provided
where it would be inappropriate or would provide unintended outcomes. The exercise of appropriate discretion may be used
where a formulaic outcome does not align with the overall shareholder experience or reflect overall business performance and
intended outcomes; or leads to retention risk for key talent. The Board balances judgement on remuneration outcomes with
consideration to all stakeholders.
Cochlear Limited Annual Report 2022
82
8. Executive KMP equity disclosures
Executive KMP participate in the deferred STI and LTI plans which offer equity under the Cochlear Executive Incentive Plan
(CEIP). The purpose of the CEIP is to encourage executives to hold Cochlear shares and to align their interests to shareholders’
interests.
Under the LTI plan, vesting of options or performance rights only occurs if Cochlear achieves challenging and market
competitive hurdles related to relative TSR and EPS growth. Under the deferred STI plan, grants are based on performance in
the first year, and are then deferred for a further two years.
8.1 Equity granted as remuneration
The table below presents the number of options and performance rights granted to executive KMP as well as the number of
instruments that vested or were forfeited during the year.
Equity granted in FY22 under the CEIP has been approved by shareholders for the CEO&P in accordance with ASX Listing Rule
10.14.
No options or rights vest if the conditions are not satisfied; hence, the minimum value is nil. The maximum value of the grants
has been determined as the fair value of awards at grant date that is yet to be expensed.
Plan
Grant date
Options
Performance rights
Number
Maximum
value to be
expensed ($)1
Number Maximum value
to be expensed
($)1
Executive KMP
D Howitt
R Brook
A Bishop
L Aubert2
FY19 LTI
FY19 deferred STI
FY20 LTI
FY21 LTI
FY21 deferred STI
FY22 LTI
Total
–
Total
FY19 LTI
FY19 deferred STI
FY20 LTI
FY20 LTI
FY21 LTI
FY21 deferred STI
FY22 LTI
Total
FY19 LTI
FY19 deferred STI
FY20 LTI
FY20 LTI
FY21 LTI
FY21 deferred STI
FY22 LTI
Total
FY19 LTI
FY19 deferred STI
FY20 LTI
FY20 LTI
FY21 LTI
FY21 deferred STI
FY22 LTI
Total
FY21 deferred STI
FY22 LTI
Total
Former Executive KMP
T Manna
S Sayers3
J Janssen
FY19 LTI
FY19 deferred STI
FY20 LTI
FY20 LTI
FY21 LTI
FY21 deferred STI
FY22 LTI
Total
17-Oct-18
17-Sep-19
23-Oct-19
21-Oct-20
30-Sep-21
20-Oct-21
–
17-Oct-18
17-Sep-19
23-Oct-19
23-Oct-19
21-Oct-20
30-Sep-21
17-Sep-21
17-Oct-18
17-Sep-19
23-Oct-19
23-Oct-19
21-Oct-20
30-Sep-21
17-Sep-21
17-Oct-18
17-Sep-19
23-Oct-19
23-Oct-19
21-Oct-20
30-Sep-21
17-Sep-21
30-Sep-21
17-Sep-21
17-Oct-18
17-Sep-19
23-Oct-19
23-Oct-19
21-Oct-20
30-Sep-21
17-Sep-21
35,907
–
24,041
21,217
–
21,808
102,973
–
–
1,598
–
2,014
2,745
3,230
–
5,371
14,958
4,565
–
2,679
3,652
4,911
–
6,422
22,229
5,223
–
3,237
4,413
5,197
–
7,685
25,755
–
7,636
7,636
7,530
–
3,055
4,165
5,045
–
6,725
26,520
–
–
107,409
431,973
–
817,056
1,356,438
–
–
–
–
–
12,264
65,762
–
201,229
279,255
–
–
–
16,316
99,987
–
240,606
356,909
–
–
–
19,716
105,810
–
287,925
413,451
–
286,089
286,089
–
–
–
–
–
–
–
–
1,685
2,634
4,432
4,782
3,851
5,341
22,725
–
–
700
582
332
506
728
879
1,315
5,042
857
858
442
673
1,106
1,151
1,572
6,659
981
1,007
534
813
1,171
1,415
1,882
7,803
990
1,870
2,860
353
841
504
767
1,137
1,339
1,647
6,588
–
–
73,685
374,538
288,312
697,021
1,433,555
–
–
–
–
–
8,413
57,019
65,808
171,612
302,852
–
–
–
11,189
86,625
86,172
205,152
389,137
–
–
–
13,517
91,716
105,936
245,608
456,777
74,118
244,042
318,160
–
–
–
–
–
–
–
–
Vesting
date
Vested Forfeited
25.0%
100.0%
75.0%
0.0%
23-Aug-21
23-Aug-21
16-Aug-23
21-Aug-24
16-Aug-23
20-Aug-25
–
–
–
25.0%
100.0%
75.0%
0.0%
25.0%
100.0%
75.0%
0.0%
25.0%
100.0%
75.0%
0.0%
25.0%
100.0%
75.0%
0.0%
23-Aug-21
23-Aug-21
22-Aug-22
16-Aug-23
21-Aug-24
16-Aug-23
20-Aug-25
23-Aug-21
23-Aug-21
22-Aug-22
16-Aug-23
21-Aug-24
16-Aug-23
20-Aug-25
23-Aug-21
23-Aug-21
22-Aug-22
16-Aug-23
21-Aug-24
16-Aug-23
20-Aug-25
16-Aug-23
20-Aug-25
18-Aug-21
18-Aug-21
22-Aug-22
16-Aug-23
21-Aug-24
16-Aug-23
20-Aug-25
1 The options granted in FY22 have an exercise price of $232.52, and an expiry date of 20 March 2026. Fair values (IFRS-2) of FY22 options
and performance rights under the LTI plan as at the date of grant are as follows: options (EPS growth: $54.45; relative TSR: $45.46) and
Cochlear Limited Annual Report 2022
83
performance rights (EPS growth: $222.32; relative TSR: $125.69). This valuation is for accounting purposes only and forms the basis of the
expense in future years. Further detail on the allocation methodology is provided in section 3.4.
2 In FY22, Lisa Aubert did not receive any equity grants as a KMP.
3 LTI reported for Stu Sayers relates to his KMP role only and includes a pro-rated LTI to reflect his appointment to the CFO role during FY21.
His FY21 deferred STI grant relates to his executive role for the period from 1 July 2020 to 31 December 2020, and his KMP role from 1
January 2021 to 30 June 2021.
8.2 Executive KMP equity holdings and minimum shareholding
This section details the movement in equity holdings during the financial year.
Shares held during the year
During the year, the FY19 deferred STI plan and FY19 LTI plan vested in August 2021, and executives’ options/rights converted
into shares under these plans.
Balance
1 July 2021
Received on exercise of
options/rights1
Purchases and sales
Balance
30 June 2022
Executive KMP
D Howitt
L Aubert2
A Bishop
R Brook
J Janssen
S Sayers
Former Executive KMP
T Manna
1 For options exercised, the amount paid per option was the exercise price of $202.84. For Lisa Aubert and Stu Sayers, shares received on
(8,991)
(257)
(582)
(3,581)
(1,252)
(420)
48,786
121
3,074
8,000
8,093
2,842
12,046
326
1,157
2,215
2,559
687
45,731
52
2,499
9,366
6,786
2,575
4,729
(269)
N/A
929
exercise of options/rights relates to roles prior to appointment as KMP.
2 The opening balance for Lisa Aubert reflects the balance of shares held on commencement in KMP role on 1 April 2022. Movements in
shares relate to roles prior to appointment as KMP.
Rights held during the year
Rights are acquired by executive KMP under the deferred STI and LTI plans. During the year:
• Granted: FY22 LTI awards were granted in September/October 2021; and
• Vested: 100% of the FY19 deferred STI award and 25.04% of the FY19 LTI award vested in August 2021.
Balance
1 July 2021
Deferred STI service rights1
Granted
Vested
Forfeited
LTI performance rights1
Vested
Granted
Forfeited
Executive KMP
D Howitt
L Aubert2
A Bishop
R Brook
J Janssen
S Sayers
Former Executive KMP
13,533
3,851
(2,634)
326
2,848
3,936
4,506
2,026
586
879
1,151
1,415
990
(326)
(582)
(858)
(1,007)
(579)
–
–
–
–
–
–
5,341
–
1,315
1,572
1,882
1,870
(421)
–
(175)
(214)
(245)
(108)
(1,264)
–
(525)
(643)
(736)
(324)
T Manna
1 For Lisa Aubert and Stu Sayers, granted and vested awards also relate to roles prior to appointment as KMP.
2 The opening balance for Lisa Aubert reflects the balance of shares held on commencement in KMP role on 1 April 2022.
(1,912)
1,647
3,602
1,339
(841)
(88)
–
Balance
30 June 2022
18,406
586
3,760
4,944
5,815
3,875
N/A
Cochlear Limited Annual Report 2022
84
Options held during the year
Options over ordinary shares are acquired by executive KMP under the LTI plan. During the year, FY22 LTI awards were granted
in September/October 2021 and 25.04% of the FY19 LTI award vested in August 2021.
All options held at the end of the year are unvested.
Balance
1 July 2021
LTI options
Granted
Vested and
exercised1
Vested and
lapsed
Forfeited
Balance
30 June 2022
Executive KMP
D Howitt
L Aubert
A Bishop
R Brook
J Janssen
S Sayers2
Former Executive KMP
81,165
–
9,587
15,807
18,070
7,489
21,808
–
5,371
6,422
7,685
7,636
(8,991)
–
(400)
(1,143)
(1,307)
–
–
–
–
–
–
(576)
(26,916)
–
(1,198)
(3,422)
(3,916)
(1,727)
67,066
–
13,360
17,664
20,532
12,822
T Manna
1 The value of exercised options at the date of vesting is $38.71 (closing share price at the vesting date 23 August 2021 of $241.55 less the
(12,370)
(1,885)
19,795
6,725
N/A
–
exercise price of $202.84).
2 For Stu Sayers, options movements also relate to his role prior to appointment as KMP.
Executive minimum shareholding
As at 30 June 2022, the Board is satisfied that the executive KMP are compliant with the Share Ownership Policy. The table
below presents a summary of executive KMP holdings and compliance with minimum shareholding requirements.
Executive KMP
D Howitt
L Aubert3
A Bishop
R Brook
J Janssen
Ordinary shares held
Policy value of Cochlear shares at year
end ($)1
% of base salary2
48,786
121
3,074
8,000
8,093
10,799,757
26,786
680,491
1,770,960
1,791,547
568%
3%
105%
215%
193%
S Sayers
1 In line with the Share Ownership Policy, the value has been calculated as the average daily share price over the previous 12 months
629,134
2,842
76%
($221.37), as at closing on the ASX up to 30 June 2022, times the number of shares.
2 The % of base salary is calculated as the value of shares divided by the contractual base salary as at 30 June 2022.
3 Lisa Aubert was appointed to the Executive team effective 1 April 2022.
Cochlear Limited Annual Report 2022
85
8.3 Potential dilution if options vest and ordinary shares issued
(unaudited)
The Board encourages employee ownership of Cochlear shares. To restrict dilution of shareholders’ interests, the total
employee interests in unvested equity cannot exceed 5% of share capital.
At the date of this report, the number of ordinary shares that would be issued if all options were vested (having met the service
and performance conditions) and exercised and assuming ordinary shares were issued, is as follows.
Grant date
Number of options
Exercise price
per share ($)
Exercise period
Issued Forfeited/
lapsed1
–
24,231
At report
date
24,231
217.28 Aug-22 to Mar-23
57,074
(5,272)
51,802
217.28 Aug-23 to Mar-24
55,729
(998)
54,731
206.06 Aug-24 to Mar-25
80,240
(6,725)
73,515
232.52 Aug-25 to Mar-26
Current net value of
outstanding options as
at 30 June 2022 ($)2
–
–
–
–
FY20 LTI 23-Oct-19
FY20 LTI 23-Oct-19
FY21 LTI 21-Oct-20
FY22 LTI
17-Sep-21 (Executive KMP)
20-Oct-21 (CEO&P)
Total
1 Forfeited/lapsed options from unvested grants relate to plan participants who have departed Cochlear.
2 Represents the number of options as at report date multiplied by the value of an option as at 30 June 2022 (exercise price less the closing
(12,995)
217,274
204,279
–
share price as at 30 June 2022 of $198.70).
Total unvested equity currently accounts for approximately 0.45% of the total number of issued shares, as set out below.
Number of equivalent shares at 30 June 2022
Instrument
Unvested LTI options
Unvested LTI rights
Unvested deferred STI rights
Service rights under the APAC Employee Equity Plan1
Total
As % of total issued shares
Number of issued shares
1 Refer to Note 4.3 to the financial statements for further information on the APAC Employee Equity Plan.
204,279
43,873
38,900
9,176
296,228
0.45%
65,775,339
8.4 Transactions and loans with KMP
No transactions or loans involving directors or executive KMP, their close family members or entities they control or have
significant influence over, were made during the year.
Cochlear Limited Annual Report 2022
86
9. Non-Executive Director fees
NEDs are paid from an aggregate annual fee pool for FY22 of $3,000,000 (approved at the 2017 Annual General Meeting). Total
remuneration paid during the year was $2,370,608 which is within the fee pool limit (represented 79% of the fee pool).
NEDs do not receive any performance-related remuneration, options or performance rights.
9.1 Fee policy and changes during the year
Board fees must recognise the effort required to fulfil the responsibilities of a director. Reflecting the increasing governance
requirements and the work of the Board, the Board considered it appropriate to increase annual Chair fees by 3% and base
Member fees by 4%, effective 1 July 2021. Committee fees remain unchanged. This decision was made with reference to
external remuneration benchmarking of companies of a similar market capitalisation to that of Cochlear.
The table below outlines the policy base and committee fees for FY21 and FY22.
Amounts $1
Cochlear Board
Committees2
Audit & Risk
People & Culture
Technology & Innovation
Medical Science
FY21
FY22
Chair
518,547
50,000
40,000
40,000
30,000
Member
169,923
25,000
20,000
20,000
15,000
Chair
534,103
50,000
40,000
40,000
30,000
Member
176,720
25,000
20,000
20,000
15,000
Nomination
1 Superannuation contributions have been made in accordance with Australian superannuation legislation at a rate of 10% up to the
No fee
No fee
No fee
No fee
Australian Government’s prescribed maximum contributions limit. Fees are presented exclusive of superannuation.
2 Committee fees are not paid to the Chairman of the Board.
NEDs are entitled to reimbursement for costs directly related to Cochlear business including reasonable travel, accommodation
and other expenses incurred attending meetings of the Board, committees or shareholders, or while engaged on company
business.
It is recognised that as an Australian headquartered business, for some overseas-based Non-Executive Directors substantial
additional travel may be required to attend meetings or other Board-related matters in Australia. Effective February 2022, a
travel allowance of $10,000 per return trip is in place for internationally based Non-Executive Directors who travel to and from
Australia to attend Board and/or committee meetings or other Board-related matters (when air travel exceeds 10 hours). The
allowance is paid on a per return trip basis and is in addition to the reimbursement of travel costs. In FY22, one NED based in
the United States received a travel allowance of $10,000 to reflect one trip to Australia to attend Board meetings.
Cochlear Limited Annual Report 2022
87
9.2 NED statutory remuneration
The table below presents the total remuneration for NEDs.
Amounts $
Year
Short-term benefits
Fees
Travel allowance
Post-employment
benefits
Superannuation
Non-Executive Directors
A Deans1 (Chair)
Y Allen
G Boreham, AM
M Daniell, KNZM
M del Prado2
A Denver
C McLoughlin, AM3
B Robinson, AC
Former Non-Executive Directors
R Holliday-Smith4
A Hussain5
D O’Dwyer6
Total
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY22
FY21
FY21
FY22
FY21
495,341
253,551
266,720
258,523
261,720
253,550
246,547
203,819
104,231
236,720
228,685
235,797
137,641
246,720
238,631
76,007
515,755
11,034
203,819
68,623
2,180,837
2,362,597
–
–
–
–
–
–
–
–
10,000
–
–
–
–
–
–
–
–
–
–
–
10,000
–
23,568
21,694
23,568
21,694
23,568
21,694
22,946
20,216
10,423
22,710
21,694
22,979
13,076
23,171
21,694
5,892
21,694
946
20,216
7,309
179,771
190,981
Total
518,909
275,245
290,288
280,217
285,288
275,244
269,493
224,035
124,654
259,430
250,379
258,776
150,717
269,891
260,325
81,899
537,449
11,980
224,035
75,932
2,370,608
2,553,578
1 Alison Deans was appointed as Chair effective 21 August 2021.
2 Michael del Prado was appointed to the Board on 1 January 2022. Michael del Prado is a tax resident of the US and a non-resident of
Australia for income tax purposes and is exempt from Australian superannuation guarantee obligations. An equivalent amount of
$10,423 was paid over the period from 1 January 2022 to 30 June 2022 as fees in lieu of superannuation guarantee payments which
would have been received.
3 Christine McLoughlin was appointed to the Board on 1 November 2020. Effective 1 October 2021, Christine McLoughlin has opted out of
receiving superannuation guarantee payments in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth). An
equivalent amount of $17,863 was paid over the period from 1 October 2021 to 30 June 2022 as fees.
4 Rick Holliday-Smith retired from the Board on 20 August 2021.
5 Abbas Hussain resigned from the Board on 20 July 2021.
6 Donal O’Dwyer retired from the Board on 20 October 2020.
Cochlear Limited Annual Report 2022
88
9.3 Minimum shareholding requirement for NEDs
NEDs are requested to hold shares equivalent to the fees (including both Board and committee fees) received in the previous
12 months. The share ownership requirement must be satisfied within three years of appointment to the Board.
As at 30 June 2022, all NEDs with the exception of one are compliant with the Share Ownership Policy which allows three years
to build their shareholdings. The table below presents Cochlear Limited shareholdings for each NED.
Balance
Purchases
Sales
1 July 2021
Balance
30 June 2022
Policy value of
shares as at
30 June 2022 ($)1
% of fees
Non-Executive Directors
A Deans
Y Allen
G Boreham, AM
M Daniell, KNZM
M del Prado2
A Denver
C McLoughlin, AM
B Robinson, AC3
4,000
3,714
3,014
1,214
–
4,214
1,000
1,083
Former Non-Executive Directors
R Holliday-Smith
10,214
–
–
–
–
–
–
650
–
–
–
–
–
–
–
–
–
–
–
4,000
3,714
3,014
1,214
–
4,214
1,650
1,083
N/A
885,480
822,168
667,209
268,743
–
932,853
365,261
239,744
N/A
166%
308%
255%
105%
0%
394%
151%
97%
N/A
A Hussain
1 In line with the Share Ownership Policy, available in the ‘Investors Centre’ section of the Company’s website, the value of Cochlear Limited
ordinary shares is calculated using the average daily share price over the previous 12 months ($221.37), as at closing on the ASX up to 30
June 2022, times the number of shares.
N/A
N/A
1,226
–
N/A
–
2 Michael del Prado was appointed to the Board on 1 January 2022 and in accordance with the policy has until 1 January 2025 to build his
shareholding.
3 Bruce Robinson fell below the minimum shareholding requirement as calculated as at 30 June 2022. He is actively working towards meeting
the policy requirement by December 2022.
Cochlear Limited Annual Report 2022
89
Directors’ report
The directors present their report, together with the Consolidated Financial report of the Consolidated Entity (Cochlear), being
Cochlear Limited (the Company) and its controlled entities, for the year ended 30 June 2022, and the Auditor’s report thereon.
Directors
The directors of the Company at any time during or since the end of the financial year were A Deans (Chair),
YA Allen, G Boreham, AM, Sir M Daniell, KNZM, M del Prado, A Denver, R Holliday-Smith, D Howitt, A Hussain, C McLoughlin,
AM, K Penrose and Prof B Robinson, AC.
Information on the current directors is presented in this Annual Report. This information includes the qualifications, experience
and special responsibilities of each director. It also gives details of the directors’ other directorships.
Company Secretary
The Company Secretarial function is responsible for ensuring that the Company complies with its statutory duties and maintains
proper documentation, registers and records. It also provides advice to directors and officers about corporate governance and
gives practical effect to any decisions made by the Board.
Mr R Jarman was the Company Secretary during and since the end of the financial year. He has qualifications in law and science
from The University of New South Wales and is an admitted solicitor in New South Wales. Mr Jarman joined Cochlear in 2008
as the inaugural Group General Counsel. He has over 35 years’ experience in corporate and commercial law, litigation and
dispute resolution, legal compliance and corporate governance across medical device, steel, mining and consumer goods
industries.
Directors’ meetings
The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each
of the directors1 of the Company during the financial year were:
Board of
Directors
Audit & Risk
Committee
People & Culture
Committee
Medical Science
Committee
Nomination
Committee
Technology &
Innovation
Committee
Held Attended Held Attended Held Attended Held Attended
Held Attended
Held Attended
A Deans2
YA Allen
G Boreham, AM
Sir M Daniell, KNZM
M del Prado3
A Denver
R Holliday-Smith4
D Howitt
A Hussain5
C McLoughlin, AM
11
11
11
11
5
11
2
11
1
11
11
11
11
11
5
11
2
11
1
11
1
4
4
3
–
4
1
–
–
4
1
4
4
3
–
4
1
–
–
4
1
4
4
–
–
–
1
–
–
4
1
4
4
–
–
–
1
–
–
4
–
–
–
2
–
2
–
2
1
–
11
11
Prof B Robinson, AC
–
1 K Penrose was appointed to the Board on 1 July 2022 and did not attend meetings during the financial year.
2 A Deans was appointed as Chair effective 21 August 2021.
3 M del Prado was appointed to the Board on 1 January 2022.
4 R Holliday-Smith retired from the Board on 20 August 2021.
5 A Hussain retired from the Board on 20 July 2021.
4
4
2
–
–
–
–
2
–
2
–
2
1
–
2
6
6
6
6
2
6
2
–
1
6
6
6
6
6
6
2
6
2
–
1
6
6
1
4
4
4
1
4
–
4
–
3
4
1
4
4
4
1
4
–
4
–
3
3
Cochlear Limited Annual Report 2022
90
Principal activities
Information on the principal activities, operations and financial position of Cochlear Limited and its business strategies and
prospects is set out in the Operational review and Financial review on pages 54 to 59 of this Annual Report.
Dividends
Dividends declared and paid by the Company to members since the end of the previous financial year were:
Dollars per share
Total amount
$m
Franked
Date of payment
Dividends recognised in the current financial year by the Company are:
Interim 2022 ordinary
Final 2021 ordinary
Total amount
1.55
1.40
2.95
102.0
92.0
194.0
0% Franked
21 April 2022
0% Franked
18 October 2021
Since the end of the financial year, the directors declared the following dividend:
Final 2022 ordinary
Total amount
1.45
1.45
95.4
95.4
40% Franked
17 October 2022
The financial effect of the 2022 final dividend will be recognised in the subsequent financial year as it was declared after 30
June 2022.
Environmental regulations
Cochlear’s operations are subject to environmental regulations under the Commonwealth of Australia and State/Territory
legislation. The Board believes that Cochlear has adequate systems in place to manage its environmental obligations and is not
aware of any breach of those environmental requirements as they apply to Cochlear.
Non-audit services
During the year, KPMG, the Company’s auditor, performed certain other services in addition to its statutory duties. The Board
has considered the non-audit services provided during the year by the auditor, and in accordance with written advice provided
by resolution of the Audit & Risk Committee, is satisfied that the provision of those non-audit services during the year by the
auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for
the following reasons:
•
•
all non-audit services were subject to the corporate governance procedures adopted by the Company and have been
reviewed by the Audit & Risk Committee to ensure that they do not impact the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work,
acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly
sharing risks and rewards.
Cochlear Limited Annual Report 2022
91
Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services
during the year are set out below:
Audit services
Audit and review of financial reports
Total audit services
Non-audit services
Taxation compliance and advisory services
Other
Total non-audit services
Consolidated
2022
$
2021
$
2,068,476
2,068,476
977,589
68,824
2,030,461
2,030,461
1,370,782
52,942
1,046,413
1,423,724
State of affairs
There were no significant changes to the state of affairs of Cochlear during the financial year other than that referred to in the
financial statements or notes thereto.
Remuneration report
Information on Cochlear’s remuneration framework and the outcomes for the financial year ended 30 June 2022 for the
Cochlear Limited Board, the CEO & President and other key management personnel, and changes for the financial year ending
30 June 2023, is included in the Remuneration report on pages 70 to 89 of this Annual Report.
Indemnification of officers
Under the terms of Article 10 of the Company’s Constitution, and to the extent permitted by law, the Company has indemnified
the directors of the Company named in this Directors’ report, the Company Secretary, Mr R Jarman, and other persons
concerned in or taking part in the management of the Consolidated Entity. The indemnity applies when persons are acting in
their capacity as officers of the Company in respect of:
•
•
liability to third parties (other than the Company or related bodies corporate), if the relevant officer has acted in good
faith; and
costs and expenses of successfully defending legal proceedings in which relief under the Corporations Act 2001 is granted
to the relevant officer.
Insurance premiums
During the financial year, the Company paid a premium for a Directors’ and Officers’ Liability Insurance policy. The insurance
provides cover for the directors named in this Directors’ report, the Company Secretary, and officers and former directors and
officers of the Company. The insurance also provides cover for present and former directors and officers of other companies
in the Consolidated Entity. The directors have not included in this report details of the nature of the liabilities covered and the
amount of the premium paid in respect of the Directors’ and Officers’ Liability and Supplementary Legal Expenses Insurance
policies, as such disclosure is prohibited under the terms of the contract.
Cochlear Limited Annual Report 2022
92
Events subsequent to the reporting date
Other than the matter noted below, there has not arisen in the interval between the reporting date and the date of this
Financial report, any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the
Company, to significantly affect the operations of Cochlear, the results of those operations, or the state of affairs of Cochlear
in future financial years:
Dividends
For dividends declared after 30 June 2022, refer above.
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 94 and forms part of the Directors’ report for the financial year
ended 30 June 2022.
Rounding off
The Company is of a kind referred to in Australian Securities and Investments Commission (ASIC) (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 dated 24 March 2016 and in accordance with that Instrument, amounts in
the Directors’ report and Financial report have been rounded off to the nearest one hundred thousand dollars unless otherwise
stated.
Dated at Sydney this 18th day of August 2022.
Signed in accordance with a resolution of the directors:
Director
Director
Cochlear Limited Annual Report 2022
93
Auditor’s independence declaration
Lead auditor’s independence declaration under section 307C of the Corporations Act 2001
To: the directors of Cochlear Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2022 there
have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Julian McPherson, Partner
Sydney, 18 August 2022
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
Cochlear Limited Annual Report 2022 94
Income statement
Revenue
Cost of sales
Gross profit
Selling, marketing and general expenses
Research and development expenses
Administration expenses
Other income
Other expenses
Patent litigation expense
Share of losses on equity accounted investments
Results from operating activities
Finance income – interest
Finance expense – interest
Net finance expense
Profit before income tax
Income tax expense
Net profit
Basic earnings per share (cents)
Diluted earnings per share (cents)
2022
$m
1,648.3
(411.0)
1,237.3
(498.7)
(210.7)
(159.0)
31.1
–
–
–
400.0
2.4
(8.6)
(6.2)
393.8
(104.7)
289.1
439.6
439.6
2021
(Restated)1
$m
1,497.6
(410.2)
1,087.4
(444.1)
(195.0)
(116.1)
86.5
(40.4)
(6.4)
(1.7)
370.2
3.6
(12.0)
(8.4)
361.8
(38.0)
323.8
492.6
492.6
Note
2.2
2.3
2.4
2.3
2.3
5.5
3.1
2.5
2.5
1 Comparative information throughout these financial statements has been restated for International Financial Reporting
Standards Interpretation Committee (IFRIC) decision Configuration or Customisation Costs in a Cloud Computing Arrangement.
Refer to Note 7.6 for further details.
The notes on pages 100 to 135 are an integral part of these consolidated financial statements.
Cochlear Limited Annual Report 2022 95
Statement of comprehensive
income
Net profit
Other comprehensive income/(loss)
Items that will not be reclassified subsequently to the income statement:
Defined benefit plan actuarial gain/(loss)
Financial investments measured at fair value through other comprehensive
income, net of tax
Total items that will not be reclassified subsequently to the income statement
Items that are or may be reclassified subsequently to the income statement:
Foreign currency translation differences
Effective portion of changes in fair value of cash flow hedges, net of tax
Net change in fair value of cash flow hedges transferred to the income statement, net
of tax
Total items that are or may be reclassified subsequently to the income statement
Total other comprehensive (loss)/income, net of tax
Total comprehensive income
2022
$m
289.1
2021
(Restated)1
$m
323.8
5.1
(83.8)
(78.7)
(6.2)
(16.9)
(5.0)
(28.1)
(106.8)
182.3
(0.1)
40.7
40.6
(14.1)
11.2
(3.0)
(5.9)
34.7
358.5
1 Comparative information throughout these financial statements has been restated for IFRIC decision Configuration or
Customisation Costs in a Cloud Computing Arrangement. Refer to Note 7.6 for further details.
The notes on pages 100 to 135 are an integral part of these consolidated financial statements.
Cochlear Limited Annual Report 2022
96
Balance sheet
Assets
Cash and cash equivalents
Trade and other receivables
Forward exchange contracts
Inventories
Current tax assets
Prepayments
Total current assets
Forward exchange contracts
Property, plant and equipment
Intangible assets
Investments
Other financial assets
Deferred tax assets
Right of use asset
Total non-current assets
Total assets
Liabilities
Trade and other payables
Forward exchange contracts
Loans and borrowings
Current tax liabilities
Employee benefit liabilities
Provisions
Deferred revenue
Lease liability
Total current liabilities
Trade and other payables
Forward exchange contracts
Loans and borrowings
Employee benefit liabilities
Provisions
Deferred tax liabilities
Deferred revenue
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
Note
2.7(a)
6.4(b)
5.1
3.2
5.2
5.3
5.5
5.5
3.2
5.8
6.3
3.2
4.2
5.6
6.4(c)
6.3
4.2
5.6
3.2
6.4(c)
2022
$m
2021
(Restated)1
$m
629.3
348.5
8.4
270.2
41.9
28.7
1,327.0
2.4
260.2
392.5
119.1
68.8
116.1
179.0
1,138.1
2,465.1
232.4
22.3
42.6
15.2
101.6
22.7
54.7
36.1
527.6
0.3
6.5
–
6.4
33.2
22.4
7.8
175.2
251.8
779.4
1,685.7
1,276.6
(46.2)
455.3
1,685.7
609.6
296.3
17.6
216.1
69.2
21.2
1,230.0
3.3
239.5
385.5
199.5
27.3
152.0
189.0
1,196.1
2,426.1
202.9
4.7
–
12.9
87.9
19.4
42.8
31.9
402.5
0.7
3.2
45.0
12.1
31.0
50.6
4.0
187.4
334.0
736.5
1,689.6
1,276.6
57.9
355.1
1,689.6
1 Comparative information throughout these financial statements has been restated for IFRIC decision Configuration or
Customisation Costs in a Cloud Computing Arrangement. Refer to Note 7.6 for further details.
The notes on pages 100 to 135 are an integral part of these consolidated financial statements.
Cochlear Limited Annual Report 2022
97
Statement of changes in equity
$m
2021
Balance at 1 July 2020 - Reported
Adjustment due to cloud computing arrangements1
Balance at 1 July 2020 - Restated
Total comprehensive income/(loss)
Net profit
Other comprehensive income/(loss)
Defined benefit plan actuarial loss
Financial investments measured at fair value through
other comprehensive income, net of tax
Foreign currency translation differences
Effective portion of changes in fair value of cash flow
hedges, net of tax
Net change in fair value of cash flow hedges transferred
to the income statement, net of tax
Total other comprehensive income/(loss)
Total comprehensive income/(loss)
Transactions with owners, recorded directly in equity
Share options exercised
Performance rights vested
Share-based payment transactions
Deferred tax recognised in equity
Dividends to shareholders
Balance at 30 June 2021 - Restated
2022
Balance at 1 July 2021 - Reported
Adjustment due to cloud computing arrangements1
Balance at 1 July 2021 - Restated
Total comprehensive income/(loss)
Net profit
Other comprehensive income/(loss)
Defined benefit plan actuarial gain
Financial investments measured at fair value through
other comprehensive income, net of tax
Foreign currency translation differences
Effective portion of changes in fair value of cash flow
hedges, net of tax
Net change in fair value of cash flow hedges transferred
to the income statement, net of tax
Total other comprehensive income/(loss)
Total comprehensive income/(loss)
Transactions with owners, recorded directly in equity
Performance rights vested
Share-based payment transactions
Deferred tax recognised in equity
Dividends to shareholders
Balance at 30 June 2022
Issued
capital
Translation
reserve
Hedging
reserve
Fair
value
reserve
Share-based
payment
reserve
Retained
earnings
Total
equity
1,272.4
–
1,272.4
(43.3)
–
(43.3)
0.9
–
0.9
(2.9)
–
(2.9)
58.0
–
58.0
116.4
(9.4)
107.0
1,401.5
(9.4)
1,392.1
–
–
–
–
–
–
–
–
4.2
–
–
–
–
1,276.6
1,276.6
–
1,276.6
–
–
–
–
–
–
–
–
–
–
–
(14.1)
–
–
–
–
–
–
11.2
(3.0)
–
–
40.7
–
–
–
8.2
8.2
40.7
40.7
(14.1)
(14.1)
–
–
–
–
–
(57.4)
(57.4)
–
(57.4)
–
–
–
(6.2)
–
–
–
–
–
9.1
9.1
–
9.1
–
–
–
–
–
–
–
–
–
37.8
37.8
–
37.8
–
–
(83.8)
–
–
–
–
–
(16.9)
(5.0)
(6.2)
(6.2)
(21.9) (83.8)
(83.8)
(21.9)
–
–
–
–
–
–
–
–
(1.2)
(0.7)
8.1
4.2
–
68.4
68.4
–
68.4
–
–
–
–
–
–
–
–
323.8
323.8
(0.1)
–
–
–
–
(0.1)
323.7
–
–
–
–
(75.6)
355.1
367.2
(12.1)
355.1
(0.1)
40.7
(14.1)
11.2
(3.0)
34.7
358.5
3.0
(0.7)
8.1
4.2
(75.6)
1,689.6
1,701.7
(12.1)
1,689.6
289.1
289.1
5.1
5.1
–
–
–
–
(83.8)
(6.2)
(16.9)
(5.0)
5.1
294.2
(106.8)
182.3
–
–
–
–
1,276.6
–
–
–
–
(63.6)
–
–
–
–
(12.8)
–
–
–
–
(46.0)
(1.1)
10.8
(1.9)
–
76.2
–
–
–
(194.0)
455.3
(1.1)
10.8
(1.9)
(194.0)
1,685.7
1 Comparative information throughout these financial statements has been restated for IFRIC decision Configuration or
Customisation Costs in a Cloud Computing Arrangement. Refer to Note 7.6 for further details.
The notes on pages 100 to 135 are an integral part of these consolidated financial statements.
Cochlear Limited Annual Report 2022 98
Statement of cash flows
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Grant and other income received
Government assistance in respect of COVID received
Government assistance in respect of COVID repaid
Interest received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Acquisition of leasehold improvements, plant and equipment and land and
buildings
Acquisition of intangible assets
Acquisition of investments and other financial assets
Proceeds from term deposits
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Repayments of borrowings
Proceeds from borrowings
Payments of lease liability principal
(Outlay)/proceeds from exercise of share options and performance rights
Dividends paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, net of overdrafts at 1 July
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents, net of overdrafts at 30 June
Note
2.4
2.4
2.3
3.1
2.7(b)
5.2
5.3
5.5
2.6
2022
$m
2021
(Restated)1
$m
1,611.8
1,436.0
(1,215.0)
(1,156.1)
12.0
–
–
2.4
(8.6)
(26.1)
376.5
(44.5)
(32.7)
(61.7)
–
(138.9)
–
–
(25.6)
(1.1)
(194.0)
(220.7)
16.9
609.6
2.8
629.3
8.3
24.6
(24.6)
3.6
(12.0)
(14.4)
265.4
(41.2)
(25.5)
(18.4)
365.0
279.9
(403.1)
1.7
(20.5)
2.4
(75.6)
(495.1)
50.2
565.0
(5.6)
609.6
1 Comparative information throughout these financial statements has been restated for IFRIC decision Configuration or
Customisation Costs in a Cloud Computing Arrangement. Refer to Note 7.6 for further details.
The notes on pages 100 to 135 are an integral part of these consolidated financial statements.
Cochlear Limited Annual Report 2022
99
Notes to the financial
statements
1. Basis of preparation
This section sets out the Company’s accounting policies that relate to the financial statements as a whole. Where an accounting
policy is specific to one note, the policy is described in the note to which it relates.
1.1 Reporting entity
Cochlear Limited (the Company) is a company domiciled in Australia. The consolidated financial statements of the Company as
at and for the year ended 30 June 2022 comprise the Company and its controlled entities (together referred to as Cochlear or
the Consolidated Entity). Cochlear is a for-profit entity and operates in the implantable hearing device industry.
1.2 Basis of preparation
(a) Statement of compliance
The Financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASBs) adopted by the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated
financial statements comply with International Financial Reporting Standards and Interpretations adopted by the International
Accounting Standards Board.
The Board approved the consolidated financial statements on 18 August 2022.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for derivative financial
instruments and financial investments measured at fair value. The fair value measurement method of derivative instruments
and financial investments measured at fair value through other comprehensive income is discussed further in Note 6.4(d).
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars (AUD), which is the Company’s functional currency.
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
dated 24 March 2016 and, in accordance with that Instrument, all financial information presented in AUD has been rounded
to the nearest one hundred thousand dollars unless otherwise stated.
(d) Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of entities at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date
are translated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at historical cost are translated using the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated
to the functional currency at the foreign exchange rates ruling at the date the fair value was determined.
Foreign exchange differences arising on translation are recognised in the Income statement within other income and other
expenses.
Cochlear Limited Annual Report 2022
100
Financial statements of foreign operations
The assets and liabilities of foreign operations are translated to the Company’s functional currency at foreign exchange rates
ruling at the reporting date. The revenues and expenses of foreign operations are translated to the Company’s functional
currency at rates approximating the foreign exchange rates ruling at the dates of transactions.
Foreign currency differences arising from translation of controlled entities are recognised in the foreign currency translation
reserve (translation reserve) in equity. When a foreign operation is disposed of, in part or in full, the relevant amount of its
translation reserve is transferred to the Income statement and reported as part of the gain or loss on disposal.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the
settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in
a foreign operation and are recognised in other comprehensive income and presented in the translation reserve.
(e) Use of judgements and estimates
The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the financial year in which the estimate is revised and in any future years affected.
Management discussed with the Audit & Risk Committee the development, selection and disclosure of Cochlear’s critical
accounting policies and estimates and the application of these policies and estimates.
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts
recognised in the consolidated financial statements is included in the following notes:
Note 4.3 – Share-based payments – measurement of fair value using the Black-Scholes-Merton pricing model;
Note 5.3 – Intangible assets – key assumptions in impairment testing of intangible assets and goodwill;
Note 5.6 – Provisions – key assumptions about the likelihood and magnitude of an outflow of economic benefits in relation to
the warranty and product recall provisions;
Note 5.7 – Contingent liabilities – key assumptions about the likelihood and magnitude of an outflow of economic benefits in
relation to patent infringement claims;
Note 5.8 – Leases – lease terms and whether Cochlear is reasonably certain to exercise extension options; and
Note 6.4 – Financial risk management – measurement of expected credit loss allowance for trade receivables; measurement
of the fair value of financial assets.
(f) Basis of consolidation
Controlled entities
The Consolidated Entity controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. The financial statements of controlled
entities are included in the consolidated financial statements from the date that control commences until the date that control
ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Special purpose entities
Cochlear has established special purpose entities (SPEs) for investment purposes. A SPE is consolidated if Cochlear concludes
that it controls the SPE. SPEs controlled by Cochlear were established under terms that impose strict limitations on decision-
making powers of the SPE’s management.
Cochlear Limited Annual Report 2022
101
(g) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST. Where the amount of GST incurred is not recoverable
from the taxation authority, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to,
the relevant taxation authority is included as a current asset or liability in the Balance sheet.
Cash flows are included in the Statement of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the relevant taxation authority are classified as
operating cash flows.
(h) Comparability
Comparative information is reclassified where appropriate to enhance comparability or to comply with new or revised
accounting standards. Refer to Note 7.6 for further details.
2. Performance for the year
2.1 Operating segments
Cochlear’s three reportable segments, determined on a geographical basis, are the strategic business units of Cochlear.
Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated
on a reasonable basis. Unallocated items comprise corporate and other net expenses and corporate and manufacturing assets
and liabilities.
Performance is measured based on segment earnings before interest and income tax (EBIT) as included in the internal
management reports that are reviewed by Cochlear’s CEO&P, who is also the chief operating decision maker.
Information about reportable segments
Americas
EMEA1
Asia Pacific
Total
Reportable segment revenue
Reportable segment EBIT
Reportable segment assets
Reportable segment liabilities
Other material items
2022
$m
779.7
414.4
350.8
172.7
2021
$m
724.8
383.8
301.9
151.8
Depreciation and amortisation
11.2
11.2
Write-down in value of inventories
Acquisition of non-current assets
1 Europe, Middle East and Africa.
0.7
2.3
0.8
0.9
2022
$m
578.5
274.4
281.2
93.3
6.8
1.1
2.4
2021
$m
517.7
227.6
275.8
91.9
6.5
1.8
2.9
2022
$m
2021
$m
2022
$m
2021
$m
282.9
250.8
1,641.1
1,493.3
92.0
74.2
228.9
138.1
57.0
42.9
780.8
860.9
323.0
685.6
715.8
286.6
5.8
0.3
3.9
5.4
0.7
0.9
23.8
23.1
2.1
8.6
3.3
4.7
Reconciliations of reportable segment revenues, profit or loss, assets and liabilities and other material items
Revenues
Cochlear
implants
2022
2021
$m
935.2
898.6
Services
(sound
processor
upgrades and
other)
$m
503.9
438.5
Total
cochlear
implants
$m
1,439.1
1,337.1
Acoustics
Reportable
segment
revenue
Foreign
exchange
gain on
hedged sales
Consolidated
revenue
$m
202.0
156.2
$m
1,641.1
1,493.3
$m
7.2
4.3
$m
1,648.3
1,497.6
Cochlear Limited Annual Report 2022
102
Profit or loss
2022
2021 (Restated)1
Assets and liabilities
2022
2021 (Restated)1
Reportable
segment EBIT
Corporate
and other
net expenses
Foreign
exchange gain
on hedged sales
Net finance
expense
Consolidated
profit before
income tax
$m
780.8
685.6
$m
(388.0)
(319.7)
$m
7.2
4.3
$m
(6.2)
(8.4)
$m
393.8
361.8
Reportable
segment
assets
$m
860.9
715.8
Corporate and
manufacturing
assets
$m
1,604.2
1,710.3
Consolidated
total assets
$m
2,465.1
2,426.1
Reportable
segment
liabilities
$m
323.0
286.6
Corporate and
manufacturing
liabilities
$m
456.4
449.9
Consolidated
total
liabilities
$m
779.4
736.5
Other material items
Reportable segment total
Corporate and
manufacturing total
Consolidated total
2022
$m
2021
2022
$m
$m
2021
(Restated)1
$m
2022
$m
2021
(Restated)1
$m
23.8
23.1
49.2
Depreciation and
amortisation
Write-down in value of
inventories
Acquisition of non-current
assets
–
Patent litigation expense
Equity accounted losses
–
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
6.4
1.7
138.9
130.3
13.1
73.0
68.4
11.0
53.3
–
–
–
–
–
–
4.7
3.3
8.2
8.6
2.1
76.4
11.5
73.1
6.4
1.7
2.2 Revenue
Revenue from the sale of cochlear and acoustic implants and associated sound processors and accessories to customers is
based on the contracted sales price. Revenue is recognised at the point in time when control passes to the customer with the
exact timing dependent on the agreed sales terms for each contract. Revenue from product sales is also deferred based on the
historical rates of product returns.
Revenues from the rendering of services, including ongoing customer support and software licensing, are recognised over time
as the services are provided to customers. Where payments are received in advance, the agreed transaction price is initially
deferred and progressively recognised over the life of the agreement as the service is provided. The value of unfulfilled
performance obligations under these contracts is reflected in the Consolidated Entity’s deferred revenue balance.
Customers include implant recipients, medical practitioners and governments. Contracts are short-term with the exception of
software licences which are recognised over multiple years. The accounting policy for foreign exchange gains/losses arising
from hedges of forecast sales transactions is set out in Note 6.4(a).
Sale of goods before hedging
Foreign exchange gain on hedged sales
Revenue from sale of goods
Rendering of services
Total revenue
2022
$m
1,608.5
7.2
1,615.7
32.6
1,648.3
2021
$m
1,462.7
4.3
1,467.0
30.6
1,497.6
Cochlear Limited Annual Report 2022
103
2.3 Expenses
(a) Cost of sales
Carrying amount of inventories recognised as an expense
Write-down in value of inventories
Other
Total cost of sales
(b) Other expenses
Repayment of government assistance in respect of COVID1
Net foreign exchange loss
Total other expenses
(c) Patent litigation expense
Withholding tax expense
Foreign exchange gain
Total patent litigation expense
1 Voluntary repayment of government assistance. Refer to Note 2.4 for further details.
Patent litigation expense
2022
$m
392.8
13.1
5.1
411.0
–
–
–
–
–
–
2021
$m
391.4
11.5
7.3
410.2
24.6
15.8
40.4
29.6
(23.2)
6.4
The patent litigation expense related to the long-running patent dispute with Alfred E. Mann Foundation for Scientific Research
and Advanced Bionics LLC (collectively referred to as AMF and AB).
In the prior year, $29.6 million was recognised for withholding tax payable on the settlement amounts paid to AMF and AB
following receipt of a private ruling from the Australian Taxation Office (ATO) in December 2020. The foreign exchange gain of
$23.2 million represented the revaluation of Balance sheet items related to the patent litigation. This included the United
States Dollar (USD) 268 million loan facility for patent litigation at 30 June 2020 which has since been fully repaid. As this matter
has now been resolved, there are no provisions remaining in relation to this dispute.
2.4 Other income
Other income, including government grants, is recognised on a systematic basis over the years necessary to match it with the
related costs for which it is intended to compensate. If the costs have already been incurred, the amount is recognised in the
year the entitlement is confirmed. Foreign exchange gains/losses are recognised in accordance with the accounting policy at
Note 1.2(d).
Grant received or due and receivable
Release of contingent consideration
Government assistance in respect of COVID1
Fair value change in investments measured at fair value through profit or loss
Net foreign exchange gain
Other income
Total other income
2022
$m
2.7
1.7
–
17.3
0.1
9.3
31.1
2021
$m
2.1
1.6
24.6
52.0
–
6.2
86.5
1 Government assistance received in the financial year ended 30 June 2021 was voluntarily repaid towards the end of the prior period as
trading conditions improved. As the payment is voluntary, the repayment has been included as an expense in Note 2.3(b).
Changes to the contingent consideration value recognised for the Sycle, LLC business acquisition were considered at 30 June
2022. Based on performance hurdles expected to be met, $1.7 million (2021: $1.6 million) has been released to the Income
statement and $0.4 million remains as contingent consideration (2021: $3.0 million).
Cochlear Limited Annual Report 2022
104
2.5 Earnings per share
Cochlear presents basic and diluted earnings per share (EPS) for its ordinary shares.
Basic earnings per share
The calculation of basic EPS has been based on the following net profit attributable to equity holders of the parent entity and
weighted average number of ordinary shares of the Company:
Net profit attributable to equity holders of the parent entity
Weighted average number of ordinary shares (basic):
Issued ordinary shares at 1 July (number)
Effect of options, performance shares and performance rights exercised (number)
Effect of shares issued under Employee Share Plan (number)
Weighted average number of ordinary shares (basic) at 30 June
Basic earnings per share (cents)
Diluted earnings per share
2022
2021
$289,104,000
(Restated)1
$323,800,000
65,744,078
26,291
70
65,770,439
439.6
65,687,402
45,869
–
65,733,271
492.6
The calculation of diluted EPS has been based on the following net profit attributable to equity holders of the parent entity and
weighted average number of shares outstanding after adjustments for the effects of all dilutive potential ordinary shares:
Net profit attributable to equity holders of the parent entity
Weighted average number of ordinary shares (diluted):
Weighted average number of shares (basic) (number)
Effect of options, performance shares and performance rights unvested (number)
Weighted average number of ordinary shares (diluted) at 30 June
Diluted earnings per share (cents)
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
65,770,439
207
65,770,646
439.6
$289,104,000
65,733,271
1,071
65,734,342
492.6
2022
2021
(Restated)1
$323,800,000
2.6 Dividends
A liability for dividends payable is recognised in the financial year in which the dividends are declared.
Dollars per share
Total amount $m
Franked
Date of payment
Dividends recognised in the current financial year by the Company are:
2022
Interim 2022 ordinary
Final 2021 ordinary
Total amount
2021
Interim 2021 ordinary
Total amount
1.55
1.40
2.95
1.15
1.15
102.0
92.0
194.0
75.6
75.6
0% Franked
0% Franked
21 April 2022
18 October 2021
0% Franked
20 April 2021
Dollars per share
Total amount $m
Franked
Date of payment
Subsequent event
Since the end of the financial year, the directors declared the following dividend:
Final 2022 ordinary
Total amount
1.45
1.45
95.4
95.4
40% Franked
17 October 2022
The financial effect of the 2022 final dividend will be recognised in the subsequent financial year as it was declared after 30
June 2022.
Cochlear Limited Annual Report 2022
105
Dividend franking account
Total franking account balance at 30%
2022
$m
–
2021
$m
–
The above amount represents the balance of the franking account as at 30 June, after taking into account adjustments for:
•
•
•
franking credits that will arise from the payment of income tax payable for the current year;
franking credits that will arise from the receipt of dividends recognised as receivables at the year end; and
franking credits that the Company may be prevented from distributing in subsequent financial years.
It is expected that future income tax payments made during 2022/23 will generate franking credits that could be distributed
to shareholders.
The ability to utilise the franking account credits is dependent upon the ability to declare dividends.
2.7 Notes to the statement of cash flows
(a) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank
overdrafts that are repayable on demand and form an integral part of Cochlear’s cash management are included as a
component of cash and cash equivalents for the purpose of the Statement of cash flows. The operating cash account received
an average interest rate of 0.39% (2021: 0.58%) per annum.
(b) Reconciliation of net profit to net cash provided by operating activities
2022
$m
289.1
0.6
Net profit
Add item classified as investing activities:
Loss on disposal of property, plant and equipment
Add/(less) non-cash items:
Depreciation and amortisation
Release of contingent consideration
Fair value change in investments measured at fair value through profit or loss
Equity settled share-based payment transactions
Share of losses on equity accounted investments
Net cash provided by operating activities before changes in assets and liabilities
Changes in assets and liabilities:
Change in trade and other receivables
Change in inventories
Change in prepayments
Change in deferred tax assets/liabilities
Change in trade and other payables
Change in current tax assets/liabilities
Change in employee benefit liabilities
Change in provisions
Change in deferred revenue
Effect of movements in foreign exchange
Net cash provided by operating activities
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
(52.2)
(54.1)
(7.5)
45.0
29.1
29.6
8.0
5.5
15.7
2.9
376.5
73.0
(1.7)
(17.3)
10.8
–
354.5
2021
(Restated)1
$m
323.8
0.2
76.4
(1.6)
(52.0)
8.1
1.7
356.6
(60.8)
7.7
(3.6)
35.6
31.8
5.9
33.2
(107.0)
(2.5)
(31.5)
265.4
Cochlear Limited Annual Report 2022
106
3. Income taxes
The Company and its wholly-owned Australian resident entities are part of a tax consolidated group. As a consequence, all
members of the tax consolidated group are taxed as a single entity. The head entity within the tax consolidated group is
Cochlear Limited.
3.1 Income tax expense
Income tax expense includes current and deferred tax. Current and deferred tax is recognised in the Income statement except
to the extent that it relates to items recognised directly in other comprehensive income or equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax
payable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Income tax expense recognised in the Income statement
2022
$m
2021
(Restated)1
$m
Current income tax expense
Current year
Adjustment for prior years
Total current income tax expense
Deferred income tax expense
Origination and reversal of temporary differences
Net utilisation/(recognition) of tax losses
Current year deferred income tax expense
Adjustment for prior years
Total deferred income tax expense
50.4
6.7
57.1
(14.3)
61.2
46.9
0.7
47.6
Total income tax expense recognised in the Income statement
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
104.7
84.6
(61.3)
23.3
48.2
(34.4)
13.8
0.9
14.7
38.0
Consolidated Entity – Numerical reconciliation between profit before income tax and income tax expense
Profit before income tax
Tax at the Australian tax rate of 30% (2021: 30%)
(Less)/add adjustments for:
Research and development allowances
Net non-deductible/(non-assessable) items
Effect of tax rates in foreign jurisdictions
Patent litigation adjustment for prior year2
Other adjustment for prior years
2022
$m
393.8
118.1
(16.5)
0.3
(4.6)
97.3
–
7.4
2021
(Restated)1
$m
361.8
108.5
(10.1)
3.2
(3.2)
98.4
(63.5)
3.1
Income tax expense on profit before income tax
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
2 Cochlear Limited prior year adjustment relating to patent litigation following the receipt of a private ruling from the ATO in December 2020.
104.7
38.0
Cochlear Limited Annual Report 2022
107
Income tax recognised in Statement of changes in equity
Income tax on:
Fair value (losses)/gains on investments
Cash flow hedges
Share-based payments
Total income tax recognised in Statement of changes in equity
Note
3.2
3.2
2022
$m
(34.1)
(9.4)
1.9
(41.6)
2021
$m
17.4
3.5
(4.2)
16.7
Consolidated Entity – Numerical reconciliation between income tax expense and cash taxes paid
2022
2021
Income tax expense on profit before income tax
Timing differences recognised in deferred tax
Net (utilisation)/benefit of tax losses recognised in deferred tax
Current year tax instalments receivable next year
Prior year tax instalments received this year
$m
104.7
14.3
(61.2)
21.1
(52.8)
Cash taxes paid per statement of cash flows
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
26.1
(Restated)1
$m
38.0
(48.2)
34.4
43.3
(53.1)
14.4
Cochlear Limited’s Australian tax consolidated group – Numerical reconciliation between profit before income
tax and income tax expense
Profit before income tax (excluding dividends from wholly-owned foreign subsidiaries)
Add: Dividends from wholly-owned foreign subsidiaries
Profit before income tax
Tax at the Australian tax rate of 30% (2021: 30%)
(Less)/add adjustments for:
Research and development allowances
Net non-deductible items
Controlled foreign company income
Exempt foreign sourced dividends from wholly-owned subsidiaries
Patent litigation prior year adjustment2
Adjustment for prior years
2022
2021
(Restated)1
$m
253.7
45.8
299.5
89.8
(8.5)
4.4
2.8
(13.7)
74.8
(63.5)
5.1
$m
336.9
95.5
432.4
129.7
(15.8)
2.8
2.3
(28.7)
90.3
–
0.7
Income tax expense on profit before income tax
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
2 Cochlear Limited prior year adjustment relating to patent litigation following the receipt of a private ruling from the ATO in December 2020.
91.0
16.4
Cochlear Limited Annual Report 2022
108
3.2 Current and deferred tax assets and liabilities
Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities for financial
reporting and taxation purposes.
The measurement of deferred tax mirrors the tax consequences that the Consolidated Entity expects to recover or settle from
the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which it
can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced if it is no longer probable that the
related tax benefit will be realised.
Recognised deferred tax assets and liabilities
Deferred tax assets
Deferred tax liabilities
Deferred tax assets
Reconciliation of deferred tax assets and liabilities
2022
$m
116.1
(22.4)
93.7
2021
(Restated)1
$m
152.0
(50.6)
101.4
Opening
balance
(Restated)1
Recognised
in the
Income
statement
Recognised in
other
comprehensive
income
Recognised
in equity
Closing
balance
Property, plant and equipment
Intangible assets
Inventories
Provisions
Deferred revenue
Forward exchange contracts
Tax losses and offsets carried forward
Other
0.7
3.6
39.0
28.8
4.8
(3.9)
61.2
(32.8)
0.8
3.6
14.6
4.6
0.6
–
(61.2)
(9.9)
–
–
–
–
–
9.4
–
34.1
–
–
–
–
–
–
–
(4.3)
Deferred tax assets/(liabilities)
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
(46.9)
101.4
(4.3)
43.5
1.5
7.2
53.6
33.4
5.4
5.5
–
(12.9)
93.7
Unrecognised deferred tax liabilities
At 30 June 2022, a deferred tax liability of $49.4 million (2021: $48.1 million) relating to investments in subsidiaries has not
been recognised because the Company controls whether the asset will be recovered or the liability will be incurred and it is
satisfied that it will not be incurred in the foreseeable future.
Carried forward tax losses
Total tax losses brought forward
Total losses recognised
Total losses utilised against current taxable income
Total losses carried forward to be utilised in future years
Cochlear Limited Annual Report 2022
2022
$m
61.2
–
(61.2)
–
2021
$m
26.8
63.9
(29.5)
61.2
109
Current tax assets and liabilities
The current tax assets for the Consolidated Entity of $41.9 million (2021: $69.2 million) represent the amount of income taxes
recoverable in respect of current and prior years and arise from the payment of tax in excess of the amounts due to the relevant
taxation authority. The current tax liabilities for the Consolidated Entity of $15.2 million (2021: $12.9 million) represent the
amount of income taxes payable in respect of current and prior financial years.
4. Employee benefits
4.1 Employee expenses
Wages and salaries
Contributions to superannuation plans
Increase/(decrease) in leave liabilities
Equity settled share-based payment transactions
Total employee expenses
4.2 Employee benefit liabilities
Wages, salaries and annual leave
2022
$m
463.6
37.4
5.0
10.8
516.8
2021
$m
410.6
30.5
(0.4)
8.1
448.8
Liabilities for employee benefits for wages, salaries and annual leave are recognised in other payables and provisions if Cochlear
has a present obligation to pay an amount as a result of past services provided by the employee. The liability is calculated on
remuneration rates as at the reporting date including related on-costs, such as workers’ compensation insurance and payroll
tax.
Long service leave
The provision for long service leave is the present value of the estimated future cash outflows as a result of services provided
by the employee up to the reporting date.
The provision is calculated using expected future increases in remuneration rates, including related on-costs, and expected
settlement dates based on turnover history, and is discounted using the corporate bond rates which most closely match the
terms to maturity of the related liabilities.
Defined benefit plans
The Consolidated Entity has defined benefit plans that cover, in aggregate, 84 employees in two countries (2021: 84
employees). Cochlear contributed cash of $1.5 million (2021: $1.4 million) to defined benefit plans in the year ended 30 June
2022 and expects to contribute $1.7 million in the year ending 30 June 2023.
The defined benefit obligations are calculated annually by a qualified actuary using the projected unit credit method.
Remeasurements of the net defined benefit liability (excluding interest) are recognised immediately in other comprehensive
income.
The Company determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by
applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the opening net
defined benefit liability/(asset), adjusted for any changes in the net defined benefit liability/(asset) during the period resulting
from contributions and benefit payments. Net interest expense related to defined benefit plans is recognised in the Income
statement.
Cochlear Limited Annual Report 2022
110
Current
Provision for long service leave
Provision for annual leave
Provision for short-term incentives and sales commissions
Total current employee benefit liabilities
Non-current
Provision for long service leave
Defined benefit plan
Total non-current employee benefit liabilities
Total employee benefit liabilities
2022
$m
14.7
40.1
46.8
101.6
6.3
0.1
6.4
108.0
2021
$m
13.5
36.6
37.8
87.9
6.1
6.0
12.1
100.0
4.3 Share-based payments
From 1 July 2013, the Company grants options and performance rights to certain employees under the Cochlear Executive
Incentive Plan (CEIP).
The fair value of options and performance rights granted is recognised as an employee expense, with a corresponding increase
in equity. The expense is adjusted by the actual number of options, and rights, that are expected to vest except where forfeiture
is due to market-related conditions.
The fair value is measured using the Black-Scholes-Merton pricing model at the date the options, or performance rights are
granted, taking into account market-based criteria and the terms and conditions attached to the instruments. The options, or
performance rights, are expensed over the vesting period after which the employees become unconditionally entitled to them.
When the Company grants options over its shares to employees of controlled entities, the fair value at grant date is recognised
as an increase in the investment in subsidiaries, with a corresponding increase in equity over the vesting period of the grant in
the Company’s accounts. At 30 June 2022, the unissued ordinary shares of the Company under option and rights and the terms
and conditions of the grants and issues are as follows:
Grant date
October 20191,2
October 20191,2
September 20203
October 20201,2
September 20214
October 20211,2
October 20213
Exercise price of
options
Number of
options
Number of
performance rights
Contractual life
$217.28
$217.28
N/A
$206.06
N/A
$232.52
N/A
24,231
51,802
–
54,731
–
73,515
–
3,994
9,546
4,665
12,332
38,900
18,001
3,281
4 years
5 years
2 years
5 years
2 years
5 years
2 years
Total
1 Options and performance rights offered under long-term incentives.
2 From FY20, LTI award is subject to a four-year performance period and as a transition for the FY20 LTI plan, two grants were offered
including three-year and four-year performance period. No transitional arrangements were provided to the CEO&P. The CEO&P’s FY20 LTI
grant had a four-year performance period only.
3 Services rights offered under the CEIP.
4 Performance rights offered under deferred short-term incentives.
204,279
90,719
Grants are split between deferred short-term incentives (STI) and long-term incentives (LTI).
Under the CEIP, certain employees receive a portion of their STI achievement in the form of performance rights. The number
of performance rights under the deferred STI grants is calculated at the end of each year and then held for two years until
vesting.
Cochlear Limited Annual Report 2022
111
Grants under LTI are in two equal tranches assigned to compound annual growth rate (CAGR) in EPS and ranking of total
shareholder return (TSR) against the Australian Securities Exchange (ASX) 100 index. The conditions for minimum vesting are
four years of service and:
•
•
50% weighting on CAGR in EPS with a minimum CAGR in EPS of 7.5% assigned to 50% of grant; or
50% weighting on relative TSR with the Consolidated Entity’s TSR at the 50th percentile against the ASX 100 over four years
assigned to 40% of grant.
The grant date fair value of options and performance rights was measured based on the Black-Scholes-Merton pricing model.
Gross contract value discounts for dividends not paid, share price volatility and the risk free rate of return. There is no discount
for the likelihood of service or performance conditions. The model uses Cochlear’s five-day volume-weighted average price
following the announcement of full year results in August each year. The inputs used in the measurement of the fair values at
the grant date are the following:
20 October 2021
(4 years)
30 September 2021
21 October 2020
(4 years)
TSR-based
conditions
EPS
performance-
based
conditions
Deferred
STI service-
based
conditions
Rights
service-
based
conditions
TSR-based
conditions
EPS
performance-
based
conditions
18
September
2020
Rights
service-based
conditions
$45.46
$54.45
N/A
N/A
$38.88
$42.56
N/A
$125.69
$222.32
$224.60
$224.60
$124.47
$188.83
$195.20
$226.85
$226.85
$226.85
$226.85
$201.75
$201.75
$201.75
$232.52
$232.52
N/A
N/A
$206.06
$206.06
N/A
30.87%
30.87%
38.06%
38.06%
30.77%
30.77%
39.13%
Fair value of
options at grant
date
Fair value of
performance rights
at grant date
Share price at
valuation date
Option exercise
price
Expected volatility1
Option/right life
(years)
Expected dividend
4 - 5
0.51%
4 - 5
2
2
4 - 5
0.51%
0.51%
0.51%
1.66%
Risk free interest
rate2
1 Measure captures the characteristics of fluctuations in the share price.
2 Based on government bonds.
0.30%
0.30%
0.30%
0.30%
0.30%
4 - 5
1.66%
0.30%
2
1.66%
0.30%
The numbers and weighted average exercise prices of options are as follows:
Outstanding at 1 July
Forfeited
Exercised
Granted
Outstanding at 30 June
Exercisable at 30 June
Weighted
average exercise
price
2022
$209.03
$205.88
$202.84
$232.52
$219.76
$217.28
Number of
options
2022
208,331
(70,634)
(13,658)
80,240
204,279
24,231
Weighted
average exercise
price
2021
$188.12
$159.34
$154.73
$206.06
$209.03
$202.84
Number of
options
2021
261,426
(60,401)
(48,423)
55,729
208,331
75,745
Cochlear Limited Annual Report 2022
112
13,658 options were exercised in 2022 (2021: 48,423 options were exercised). The weighted average market share price on
the ASX at date of exercise was $237.25 (2021: $207.72). The weighted average remaining contractual life of options
outstanding at the end of the year is three years (2021: two years).
ShareWave Employee Share Plan
In 2021, Cochlear launched ShareWave, replacing all existing employee share purchase plans. Under the plan, eligible
employees can become a Cochlear Limited shareholder by purchasing shares at the current market value through after-tax
salary deductions, with Cochlear Limited providing a matching benefit at no extra cost to the employees at the end of the
contribution period, subject to vesting conditions. A maximum value of $1,000 or $1,500 applies to ShareWave, depending on
the eligibility of the participating employee.
APAC Employee Equity Plan
The APAC Employee Equity Plan, established in 2016, provided approximately $1,000 of service rights annually per eligible
employee in selected Asian countries. Service rights were subject to a three-year service condition. Upon vesting, each service
right converted to one share. For the year ended 30 June 2022, the Company issued nil shares under the plan (2021: 1,068
shares). The plan ceased in effect following the launch of ShareWave.
4.4 Key management personnel
The following were key management personnel (KMP) of Cochlear at any time during the financial year and unless otherwise
indicated were KMP for the entire financial year:
Non-Executive directors
A Deans (Chair), YA Allen, G Boreham, AM, Sir M Daniell, KNZM, M del Prado1, A Denver, C McLoughlin, AM, Prof B Robinson,
AC, R Holliday-Smith2 and A Hussain3.
Executive KMP
D Howitt, L Aubert4, A Bishop, R Brook, J Janssen and S Sayers.
Former Executive KMP
T Manna5.
1 Appointed on 1 January 2022.
2 Retired on 20 August 2021.
3 Retired on 20 July 2021.
4 Commenced as a KMP on 1 April 2022.
5 Ceased as a KMP on 31 March 2022.
Key management personnel disclosures
The KMP compensation is included in employee expenses as follows:
Short-term
employee benefits
$
12,387,271
Post-employment
benefits
$
432,680
Other long-term
benefits
$
82,478
Share-based
payments
$
4,009,601
End of service
payment
$
298,694
Total
$
17,210,724
12,008,815
415,634
(6,123)
2,794,219
327,132
15,539,677
2022
2021
Information regarding individual KMP remuneration and some equity instruments disclosures as permitted by section 300A of
the Corporations Act (Cth) 2001 is provided in the Remuneration report of this Annual Report on pages 70 to 89.
The KMP have not received any loans from Cochlear and there have been no other related party transactions with any of
Cochlear’s KMP.
Cochlear Limited Annual Report 2022
113
5. Operating assets and liabilities
5.1 Inventories
Inventories are measured at the lower of cost and net realisable value.
Cost is based on the first-in-first-out principle including expenditure incurred in acquiring the inventories and bringing them to
their existing condition and location. In the case of manufactured inventories and work in progress, cost includes an appropriate
share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and
selling, marketing and distribution expenses.
Raw
materials
$m
99.9
87.4
Work in
progress
$m
25.2
32.9
Finished
goods
$m
145.1
95.8
Total
inventories
$m
270.2
216.1
2022
2021
5.2 Property, plant and equipment
Owned assets
The value of property, plant and equipment is measured as the cost of the asset, minus accumulated depreciation and
impairment losses (see Note 5.3). The cost of the asset is the consideration provided plus incidental costs directly attributable
to the acquisition.
The value of internally-constructed assets includes the cost of material and direct labour and any other costs directly
attributable to bringing the asset to a working condition for its intended use.
Subsequent costs in relation to replacing a part of property, plant and equipment are capitalised in the carrying amount of the
item if it is probable that future economic benefits will flow to Cochlear and its cost can be measured reliably. All other costs
are recognised in the Income statement as incurred.
Depreciation
Depreciation is calculated to expense the cost of items of property, plant and equipment less their estimated residual values
on a straight-line basis over their estimated useful lives. The estimated useful lives in the current and comparative years are as
follows: leasehold improvements between one to 15 years, plant and equipment between three to 14 years and buildings
between 10 to 30 years.
Depreciation is recognised in the Income statement from the date of acquisition or, in respect of internally-constructed assets,
from the time an asset is completed and held ready for use.
Depreciation rates and methods, useful lives and residual values are reviewed at each Balance sheet date. When changes are
made, adjustments are reflected prospectively in current and future financial years only.
Cochlear Limited Annual Report 2022
114
Leasehold
improvements
Plant and equipment
Land and
buildings
Total
At cost
Accumulated depreciation
Net book value
2022
$m
70.9
(38.3)
32.6
Reconciliations of the carrying amounts are:
Opening balance
34.0
Additions
Disposals
Depreciation
Effect of movements in
foreign exchange
Net book value
3.4
–
(6.2)
1.4
32.6
2021
$m
66.1
(32.1)
34.0
38.9
2.5
–
(5.4)
(2.0)
34.0
2022
$m
347.4
2021
$m
308.3
(192.7)
(174.8)
154.7
133.5
2022
$m
75.5
(2.6)
72.9
133.5
41.1
(0.6)
(22.5)
124.5
72.0
33.9
(0.2)
–
–
(23.2)
(1.1)
3.2
(1.5)
2.0
2021
$m
73.1
(1.1)
72.0
67.1
4.8
–
(0.8)
0.9
2022
$m
493.8
2021
$m
447.5
(233.6)
(208.0)
260.2
239.5
239.5
44.5
(0.6)
(29.8)
230.5
41.2
(0.2)
(29.4)
6.6
(2.6)
154.7
133.5
72.9
72.0
260.2
239.5
5.3 Intangible assets
Goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill represents the difference between
the cost of the acquisition and the fair value of the net identifiable assets acquired.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is tested annually for impairment.
IT system costs
IT system costs are recognised as an intangible asset where Cochlear controls future economic benefits as a result of the costs
incurred, and are stated at cost less accumulated amortisation. Costs include expenditure directly related to the development
and implementation (hardware and software costs) of IT systems including direct labour.
Other intangible assets
Other intangible assets, comprising acquired technology, patents and licences, customer relationships, capitalised
development expenditure and intellectual property, are acquired individually or through business combinations and are stated
at cost less accumulated amortisation and impairment losses (see below).
Amortisation
Amortisation is calculated to expense the cost of intangible assets less their estimated residual values on a straight-line basis
over their estimated useful lives. The estimated useful lives for the current and comparative years are as follows: IT system
costs between two to seven years, acquired technology, patents and licences between four to 15 years, customer relationships
up to 31 years and capitalised development expenditure between four to 10 years.
Amortisation is recognised in the Income statement from the date the assets are available for use unless their lives are
indefinite.
Goodwill and intangible assets with an indefinite useful life are systematically tested for impairment annually.
Cochlear Limited Annual Report 2022
115
Intangible assets with
indefinite useful life
Goodwill
2022
At cost
Accumulated amortisation and
impairment losses
Net book value
Reconciliations of the carrying amounts are:
Opening balance
Additions
Amortisation
Effect of movements in foreign
exchange
Net book value
2021
At cost
Accumulated amortisation and
impairment losses
Net book value
Reconciliations of the carrying amounts are:
Opening balance
Additions
Amortisation
Effect of movements in foreign
exchange
$m
257.1
–
257.1
267.3
–
–
(10.2)
257.1
267.3
–
267.3
270.9
–
–
(3.6)
Intangible assets with finite useful life
IT system
costs
(Restated)1
$m
113.5
(80.5)
33.0
37.1
5.2
(8.5)
(0.8)
33.0
109.5
(72.4)
37.1
44.7
–
(7.6)
–
Acquired
technology,
patents and
licences
$m
163.5
(84.3)
79.2
58.5
24.1
(3.0)
(0.4)
79.2
140.3
(81.8)
58.5
53.6
13.0
(8.1)
–
Other
intangible
assets
$m
50.5
(27.3)
23.2
22.6
3.4
(3.8)
1.0
23.2
52.7
(30.1)
22.6
27.7
0.5
(3.8)
(1.8)
Net book value
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
267.3
58.5
37.1
22.6
Intangible
assets
Total
$m
584.6
(192.1)
392.5
385.5
32.7
(15.3)
(10.4)
392.5
569.8
(184.3)
385.5
396.9
13.5
(19.5)
(5.4)
385.5
Impairment
Cochlear annually tests goodwill and other intangible assets with indefinite useful life for impairment. Other non-financial
assets, other than inventories (see Note 5.1) and deferred tax assets (see Note 3.2), are tested if there is any indication of
impairment or if there is any indication that an impairment loss recognised in a prior period may no longer exist or may have
decreased.
Assets are impaired if their carrying value exceeds their recoverable amount. The asset’s recoverable amount is estimated
based on its value in use.
An asset that does not generate independent cash flows and its individual value in use cannot be estimated is tested for
impairment as part of a cash-generating unit (CGU).
An impairment loss is recognised in the Income statement when the carrying amount of an asset or CGU exceeds its recoverable
amount. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. An impairment
loss in respect of goodwill is not reversed.
Cochlear Limited Annual Report 2022
116
Impairment tests for CGUs
Cochlear allocates goodwill and other intangible assets to CGUs based on the expected benefits that each CGU will receive
from use of those assets.
The aggregate carrying amounts of goodwill allocated to each CGU are:
2022
2021
Americas
EMEA
Asia Pacific
$m
178.1
183.4
$m
69.5
73.9
$m
9.5
10.0
Total
$m
257.1
267.3
The recoverable amount of each CGU is based on value-in-use calculations. Those calculations use five-year cash flow
projections based on actual operating results and an EBIT growth rate, considered modest compared to historical growth rates
in the CGUs.
Cash flows for year six onwards are extrapolated using a terminal growth rate of 3.0% (2021: 3.0%) per annum which is
consistent with long-term growth rates. The pre-tax discount rate for each CGU is as follows: Americas 7.0% (2021: 6.8%),
EMEA 7.1% (2021: 6.9%) and Asia Pacific 7.5% (2021: 7.4%).
The key assumptions and the approach to determining their value in the current year are:
Assumption
Discount rate
EBIT growth rate
Approach
Based on weighted average cost of capital reflecting current market assessments of the
time value of money and risks specific to the CGU.
Based on a five-year cash flow projection taking into account historical growth rates and
product lifecycle.
Terminal value growth rate
Based on long-term growth rates.
The recoverable amount of each CGU including unallocated corporate assets is in excess of the carrying amount and therefore
no impairment expense was recognised. The above represents the best estimate of the directors. Sensitivity analysis has been
undertaken to stress test cash flow forecasts, discount rates and terminal value growth rate assumptions. Based on the range
and depth of sensitivities applied no reasonable change in assumptions would result in an impairment.
5.4 Business combinations
On 27 April 2022, Cochlear announced an agreement had been reached to acquire Oticon Medical for DKK850 million
(approximately AUD170 million) from Demant. The acquisition is expected to close in the second half of calendar year
2022, subject to competition approvals in jurisdictions where the transaction meets relevant notification thresholds.
Should the acquisition proceed, it will be funded through existing cash balances.
5.5 Investments, equity-accounted investments and other financial assets
Cochlear has a number of strategic investments that may, over the longer term, enhance or leverage Cochlear’s intellectual
property. These include investments in Nyxoah S.A., Saluda Medical and Epiminder. As these investments are held for strategic
purposes, Cochlear elects to fair value investments through other comprehensive income, when possible, in accordance with
accounting standards.
Cochlear’s investments are valued individually using quoted prices or unobservable market inputs. Unobservable inputs are
those not readily available in an active market. These inputs are generally derived from other observable inputs that match the
risk profile of the financial instruments and validated against current market assumptions and historical transactions where
available. Refer to Note 6.4(d) for further details on the valuation of financial assets.
Equity investments at fair value through other comprehensive income are ordinary shares. Investments measured at fair value
through profit or loss are interests in entities that do not meet the definition of equity, such as instruments convertible into
ordinary shares.
Cochlear Limited Annual Report 2022
117
Balance at 1 July 2021
Additions
Fair value (loss)/gain in investments measured at fair value through profit or loss
Fair value loss through other comprehensive income (before tax)
Balance at 30 June 2022
Investments
$m
199.5
40.8
(3.3)
(117.9)
119.1
Other financial
assets
$m
27.3
20.9
20.6
–
68.8
At 30 June 2022, $88.2 million (2021: $50.0 million) of Investments and Other financial assets are measured at fair value
through profit or loss and designated as Level 3 financial assets (refer to Note 6.4(d)). The remaining $99.7 million (2021: $176.8
million) are measured at fair value through other comprehensive income, with $68.5 million (2021: $160.4 million) designated
as Level 1 and $31.2 million (2021: $16.4 million) designated as Level 3.
A pre-tax fair value loss of ($121.8 million) was recorded in other comprehensive income in relation to Level 1 assets, with net
gains of $17.3 million and $3.9 million recorded in the Income statement and other comprehensive income respectively in
relation to Level 3 assets.
Investment in Nyxoah S.A. (Nyxoah)
In July 2021, Cochlear invested an additional $29.9 million in Nyxoah through its US initial public offering which saw Nyxoah
achieve a secondary listing on the Nasdaq exchange. At 30 June 2022, the total fair value of this investment is $68.2 million
(2021: $158.8 million) based on the listed share price, resulting in a loss of $120.5 million before tax recognised through other
comprehensive income.
5.6 Provisions
A provision is recognised in the Balance sheet when:
•
•
•
Cochlear has a present obligation (legal or constructive) as a result of a past event;
a reliable estimate can be made of the amount of the obligation; and
it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risk specific to the liability.
2022
Warranties
Opening balance
Provision made
Provision used
Effect of movements in foreign exchange
Total provisions
Represented by:
Current
Non-current
Total provisions
Warranties
$m
34.3
14.0
(11.4)
0.6
37.5
14.8
22.7
37.5
Legal and
insurance
$m
5.0
4.4
Product
recall
$m
8.0
–
Make good
lease costs
$m
3.1
1.0
(2.4)
–
7.0
6.7
0.3
7.0
(0.6)
–
7.4
1.2
6.2
7.4
–
(0.1)
4.0
–
4.0
4.0
Total
$m
50.4
19.4
(14.4)
0.5
55.9
22.7
33.2
55.9
A provision for warranty claims is recognised in relation to sales made prior to the reporting date, based on historical claim
rates and respective product populations. Warranty periods on hardware products extend for three to 10 years.
Legal and insurance
Cochlear is involved in litigation in the ordinary course of business, including claims made by Cochlear and against Cochlear for
patent infringement. Where Cochlear is able to make a reliable estimate of the estimated future costs related to these
proceedings, including legal fees, a provision is recognised.
Cochlear Limited Annual Report 2022
118
Cochlear self-insures certain risks associated with operating in its line of business. Claims are recognised when an incident
occurs that may give rise to a claim. They are measured at the cost that Cochlear expects to incur in defending or settling the
claims, discounted using a rate that reflects current market assessments of the time value of money and the risks specific to
the liability.
Product recall
On 11 September 2011, the Company initiated a worldwide voluntary recall of its unimplanted Nucleus CI500 cochlear implant
range. Management has made judgements, estimates and assumptions related to probable costs arising from the recall which
affect the reported amounts of assets, liabilities, income and expenses. Actual outcomes may differ from these estimates as
further information is identified.
No additional provisions have been made or released to the Income statement for the year ended 30 June 2022.
Make good lease costs
Cochlear has several operating leases over its offices that require the premises to be returned to the lessor in their original
condition. The operating lease payments do not include an element for the repairs and overhauls.
5.7 Contingent liabilities
Contingent liabilities are disclosed where a provision is not recognised due to the uncertainty regarding the outcome of future
events and/or inability to reliably measure such liabilities. The details of contingent liabilities are set out below. The directors
are of the opinion that provisions are either adequate or are not required in respect of these matters, as it is either not probable
that a future sacrifice of economic benefits will be required, or the amount is not capable of reliable measurement.
Patent infringement claims
Cochlear operates in an industry that has substantial intellectual property and patents protecting that intellectual property.
From time to time, Cochlear is involved in confidential discussions with patent owners including competitors regarding
threatened litigation for alleged infringement of patent rights. If confidential discussions are taking place, the discussions are
not expected to result in a significant adverse outcome for Cochlear.
Patent infringement claims – University of Pittsburgh
In September 2021, the University of Pittsburgh (the “University”) filed a complaint for patent infringement against Cochlear
in the United States District Court for the Western District of Texas, Waco division. The asserted patent is US Patent No.
8,421,274, which is related to a wireless energy transfer system. It was filed at the US Patent Office in 2009 and will expire in
2030. The complaint initially alleged that Cochlear’s Nucleus 6 and Nucleus 7 cochlear implant systems infringe and names
Cochlear Limited and USA subsidiaries Cochlear Americas Corporation and Cochlear Clinical Services, LLC as defendants.
In December 2021, the Cochlear defendants filed their answer and counterclaims denying the University’s complaint. In
February 2022, the University amended its infringement claims, focusing its case on the headpiece coils of the Nucleus 5,
Nucleus 6, and Nucleus 7 sound processors. The implanted components (i.e., the CI612 implant) are no longer accused of
infringement in this case.
The directors maintain the view that the University’s patent is invalidated by Cochlear’s own prior art patents and products.
Cochlear’s defences in this suit include non-infringement and invalidity based upon Cochlear’s prior art patents (US Patent Nos.
7,260,435 and 7,623,827), which were filed and published well before the filing date of the University’s patent. Cochlear’s
invalidity defences also rely upon its legacy products (ESPrit 3G and Freedom sound processors), which practised these prior
art patents well before the filing date of the University’s asserted patent.
Product liability claims
Cochlear is currently, and/or is likely from time to time to be, involved in claims and lawsuits incidental to the ordinary course
of business, including claims for damages relating to its products and services.
In addition, Cochlear has received legal claims and lawsuits in various countries including the United States by recipients who
have had Cochlear implant CI500 series devices stop functioning for the reason that led to the September 2011 voluntary recall
of unimplanted CI500 series devices.
Cochlear Limited Annual Report 2022
119
Cochlear carries product liability insurance and has made claims under the policies. The insurers have agreed to indemnify
Cochlear in accordance with the terms and conditions of the policies including deductibles and exclusions. In the opinion of
the directors, the details of the product liability insurance policies are commercially sensitive and any disclosure of these details
may be prejudicial to the interests of Cochlear.
Regulatory actions
Cochlear operates in multiple overseas jurisdictions and is currently, and/or is likely from time to time to be, subject to tax,
customs and regulatory reviews, audits and investigations. Individual significant confidential investigation(s) by an authority
are not disclosed, as disclosure may prejudice Cochlear.
5.8 Leases
Cochlear leases a number of assets including land and buildings, office equipment and motor vehicles. Cochlear’s lease
agreements often include a standard lease term with an extension option at the end. Lease agreements may include annual
rent increases based on either a fixed percentage or benchmarked against an inflation index. Land and building leases may also
include periodic market rent reviews which reset the rent to the market rent at the time of the review.
At inception of a contract, Cochlear assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Where the contract contains a lease, a lease liability is recognised at lease commencement date. The liability is initially
measured at the present value of future lease payments, discounted using Cochlear’s incremental borrowing rate.
The lease liability is subsequently remeasured when there is a modification in future lease payments arising from a change in
an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or changes
in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is
reasonably certain not to be exercised. The right of use asset is initially measured at cost and subsequently adjusted for certain
remeasurements of the lease liability.
Over the life of the lease, the lease liability will be increased by interest costs and will be reduced as lease payments are made.
The right of use asset is amortised on a straight-line basis over its useful life.
Cochlear has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include
renewal options. The assessment of whether Cochlear is reasonably certain to exercise such options impacts the lease term,
which significantly affects the amount of lease liabilities and right of use assets recognised.
Cochlear has elected not to recognise a right of use asset and a corresponding lease liability for leases with a term of less than
12 months or for leases of low-value assets. Cochlear recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.
The right of use asset depreciation is recognised in cost of sales, selling, marketing and general expenses, research and
development expenses and administration expenses in the Income statement depending on the function of associated
activities; while interest expense incurred on the lease liability is recognised in finance expense – interest in the Income
statement. For the year ended 30 June 2022, lease interest was $6.6 million (2021: $6.6 million). For the purpose of
presentation of the Statement of cash flows, the lease payments are separated into principal payments (financing activities)
and interest payments (operating activities). Total cash outflows related to leases was $32.2 million for the year ended 30 June
2022 (2021: $27.1 million).
The following table shows movements in the right of use asset during the year:
Balance at 1 July 2021
Additions
Remeasurement
Depreciation expense
Effect of movements in foreign exchange
Balance at 30 June 2022
Cochlear Limited Annual Report 2022
Land and
buildings
Other
assets
$m
177.8
8.0
4.7
(23.8)
2.9
169.6
$m
11.2
2.5
(0.1)
(4.1)
(0.1)
9.4
Total
$m
189.0
10.5
4.6
(27.9)
2.8
179.0
120
6. Capital and financial structure
6.1 Capital management
Cochlear’s capital management objectives are to safeguard its ability to continue as a going concern, provide returns to
shareholders, provide benefits to other stakeholders and maintain an optimal capital structure to reduce the cost of capital.
The Board aims to maintain and develop a capital base appropriate to Cochlear’s objectives and monitors a number of
qualitative metrics as follows:
•
•
•
•
gearing ratio – defined as total borrowings as a proportion of total equity;
dividend payout ratio – defined as dividends as a proportion of net profit after tax excluding one-off and non-recurring
items (underlying net profit) for a given period;
growth in EPS – defined as the CAGR in EPS over a three-year period; and
TSR – defined as the percentage growth in share price over a three-year period plus the cumulative three-year dividend
return calculated against the opening share price in the same three-year period.
Senior management tracks, manages and reports against these capital management metrics periodically as part of broader
corporate governance responsibilities. The Board undertakes periodic reviews to assess whether the metrics continue to be
appropriate and whether the capital management structure is appropriate to meet Cochlear’s medium and long-term strategic
requirements.
In order to maintain or adjust the capital structure, Cochlear may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
Neither the Company nor any of its subsidiaries is subject to externally imposed capital requirements. There were no significant
changes in Cochlear’s approach to capital management during the year.
6.2 Capital and reserves
Share capital
The Company does not have authorised capital or par value in respect of its issued shares.
On issue 1 July – fully paid
Issued under Employee Share Plan
Issued from exercise of APAC Equity Plan
Issued from the exercise of options
Issued from the exercise of performance rights
On issue 30 June – fully paid
Total number of issued shares
2022
65,744,078
236
1,075
–
29,950
2021
65,687,402
–
1,068
26,689
28,919
65,775,339
65,744,078
During the 2022 financial year, Cochlear purchased 16,766 shares (2021: 24,990 shares) on-market to satisfy exercise of options
and performance rights and issued 236 shares to employees under the Employee Share Plan (2021: 0 shares).
Ordinary shares are classified as equity and incremental costs directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of any income tax benefit.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at shareholders’ meetings.
Translation reserve
The translation reserve records the foreign currency differences arising from the translation of the financial statements of
foreign operations as well as from the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary,
where their functional currency is different to the presentation currency of the reporting entity. See Note 1.2(d) for further
details.
Cochlear Limited Annual Report 2022
121
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments related to underlying transactions that have not yet occurred.
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of investments revalued through other
comprehensive income until the assets are derecognised or impaired.
Share-based payment reserve
The share-based payment reserve comprises the cost of shares, options, performance shares and performance rights granted
to eligible executives under the CEIP, as detailed in Note 4.3 less any payments made to meet Cochlear’s obligations through
the acquisition of shares on-market, together with any deferred tax asset/liability on such payments.
6.3 Total borrowings, net cash and finance costs
Loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequently, loans and
borrowings are stated at amortised cost, with any difference between amortised cost and redemption value being recognised
in the Income statement over the period of the borrowings on an effective interest rate basis.
Debt establishment costs are capitalised and an amount of $1.0 million (2021: $0.7 million) in relation to unamortised loan
establishment fees has been recognised in prepayments. They are recorded initially at cost and are amortised over the period
of the loan.
Cash
Cash and cash equivalents
Total cash
Less: Total borrowings
Current
Non-current
Total borrowings
Net cash
Gearing ratio
Total borrowings
2022
$m
629.3
629.3
(42.6)
–
(42.6)
586.7
2022
$m
42.6
Total equity
Gearing ratio2
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
2 Gearing ratio = Total borrowings/Total equity.
1,685.7
2.5%
2021
$m
609.6
609.6
–
(45.0)
(45.0)
564.6
2021
(Restated)1
$m
45.0
1,689.6
2.7%
Cochlear Limited Annual Report 2022
122
Financing arrangements
2022
Utilised at reporting date1
Not utilised at reporting date
Total facilities
2021
Utilised at reporting date1
Not utilised at reporting date
Multi-option bank facilities
Unsecured
bank loan
Bank
guarantees2
Other credit facilities
Unsecured
bank loan
Bank
guarantees2
Unsecured
bank
overdrafts
$m
42.6
300.0
342.6
45.7
300.0
$m
6.0
9.0
15.0
5.5
9.5
$m
–
2.9
2.9
–
2.7
$m
–
4.8
4.8
–
5.4
5.4
$m
6.4
2.9
9.3
6.2
3.4
9.6
Total facilities
1 Excludes the amount of $1.0 million (2021: $0.7 million) in relation to unamortised loan establishment fees.
2 Bank guarantees include standby letters of credit.
345.7
15.0
2.7
Multi-option bank facilities – Unsecured bank loan
During the year ended 30 June 2022, Cochlear restructured its bank loan facilities as follows:
Facility type
Committed debt
including guarantees
<1 year
term
$m
1 - 2 year
term
$m
2 - 3 year
term
$m
3 - 4 year
term
$m
4 - 5 year
term
$m
5 - 6 year
term
$m
Total
facilities
$m
42.6
115.0
–
–
100.0
100.0
357.6
All facilities are unsecured and have interlocking guarantees provided by certain controlled entities. Interest on the facilities is
variable and charged at prevailing market rates.
Other credit facilities
Unsecured bank overdrafts
Certain unsecured bank overdrafts are payable on demand and are subject to annual review. Interest on unsecured bank
overdrafts is variable and is charged at prevailing market rates.
Unsecured bank loan
Cochlear has a Japanese yen (JPY) 450.0 million loan facility and a Swedish kroner (SEK) 300.0 million loan facility. The facilities
are unsecured bank loans. Interest on unsecured bank loans is variable and is charged at prevailing market rates.
Bank guarantees/Standby letters of credit
As at 30 June 2022, Cochlear had additional contingent liability facilities denominated in USD, Euros (EUR), Sterling (GBP),
Indian rupees and New Zealand dollars totalling AUD 9.3 million (2021: AUD 9.6 million).
Finance costs
Interest income is recognised as it accrues in the Income statement. Borrowing costs are recognised as they accrue in the
Income statement as a finance expense.
Cochlear Limited Annual Report 2022
123
6.4 Financial risk management
The activities of Cochlear are exposed to a variety of risks, including market risk (comprising currency and interest rate risk),
credit risk and liquidity risk. Cochlear’s overall risk management program considers the unpredictability of financial markets
and seeks to appropriately manage the potential adverse effects on financial performance.
The Board has overall responsibility for the establishment and oversight of the Risk Management Framework. Under instruction
of the Board, management has established a Risk Management Committee which is responsible for identifying, assessing and
appropriately managing risk throughout Cochlear. Key risks are reported to the Audit & Risk Committee on a regular basis.
The Audit & Risk Committee oversees how management monitors compliance with Cochlear’s Risk Management Framework,
policies and procedures and is assisted by Group Risk and Assurance which undertakes reviews of key management controls
and procedures.
(a) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect
Cochlear’s net profit or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures by buying and selling forward
exchange contracts and incurring financial liabilities, within acceptable parameters, while optimising the return, all in
accordance with the treasury risk policy.
Currency risk
Cochlear is exposed to currencies other than the respective functional currencies of the controlled entities, primarily AUD,
Swiss francs (CHF), Chinese yuan (CNY), EUR, GBP, JPY, SEK and USD.
Over 90% of Cochlear’s revenues and over 50% of costs are denominated in currencies other than AUD. Currency risk is hedged
in accordance with the treasury risk policy. Risk resulting from the translation of assets and liabilities of foreign operations into
Cochlear’s reporting currency is not hedged.
Cochlear’s exposure to foreign currency risk in relation to non-derivative financial instruments at 30 June 2022 was as follows,
based upon notional amounts:
Amounts local currency/millions
CHF
CNY
EUR
GBP
JPY
SEK
USD
2022
Trade receivables
Unsecured bank loan
Trade payables
Balance sheet exposure
2021
Trade receivables
Unsecured bank loan
Trade payables
Balance sheet exposure
0.5
–
(1.3)
(0.8)
0.3
–
(1.4)
(1.1)
18.3
–
(57.4)
(39.1)
6.4
–
(47.4)
(41.0)
49.4
–
(23.1)
26.3
45.1
–
(17.3)
27.8
3.1
1,126.4
5.9
101.7
–
(5.8)
(2.7)
2.2
–
(4.5)
(2.3)
–
(300.0)
–
(79.1)
(108.2)
(25.1)
1,047.3
(402.3)
76.6
922.2
5.5
–
(300.0)
97.0
–
(54.2)
(46.6)
(23.4)
868.0
(341.1)
73.6
Cochlear Limited Annual Report 2022
124
Derivative assets and liabilities
In order to reduce the impact of short-term fluctuations on Cochlear’s earnings, Cochlear enters into forward exchange
contracts to hedge anticipated sales and purchases in CHF, EUR, GBP, JPY, SEK and USD. The amounts of forward cover taken
are in accordance with approved policy and internal forecasts.
In the year ended 30 June 2022, Cochlear designated the majority of forward exchange contracts as cash flow hedges. These
are hedges of forecast future transactions to manage the currency risk arising from exchange rate fluctuations. The hedged
items were highly probable foreign currency transactions.
At the start of a hedge relationship, Cochlear designates and documents the relationship between the hedging instrument and
hedged item. This includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how Cochlear will assess the effectiveness of the hedging relationship. Cochlear regularly assesses whether
the hedging instruments are expected to be highly effective in offsetting the changes in the cash flows of the respective hedged
items.
Forward exchange contracts are recognised initially at fair value. Subsequently, forward exchange contracts are measured at
fair value. Changes in the fair value are recognised directly in equity to the extent that the hedge is effective. The ineffective
part of any hedging instrument is recognised immediately in the Income statement.
If the forward exchange contract no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised,
then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there
until the forecast transaction occurs or until cash flows arising from the transaction are received.
For cash flow hedges, the associated cumulative gain or loss is removed from equity and recognised in the Income statement
in the same period the hedged forecast transaction affects the Income statement and on the same line item as that hedged
forecast transaction.
In the year ended 30 June 2022, all cash flow hedges were effective at the reporting date.
The following table sets out the gross value to be received or paid under remaining forward exchange contracts and the
weighted average contracted exchange rates of outstanding contracts:
Weighted
average rate
< 1 year
$m
1 - 2 years
$m
2022
Buy CHF
Sell EUR
Sell GBP
Sell JPY
Buy SEK
Sell USD
Total
2021
Buy CHF
Sell EUR
Sell GBP
Sell JPY
Buy SEK
Sell USD
Total
0.664
0.627
0.548
82.331
6.629
0.732
0.678
0.617
0.544
76.901
6.414
0.741
(21.8)
131.9
20.1
18.4
(40.0)
258.6
367.2
(18.6)
146.3
21.3
18.2
(32.7)
264.5
399.0
–
61.1
9.1
8.5
–
159.6
238.3
–
95.9
9.0
9.2
–
171.4
285.5
Cochlear Limited Annual Report 2022
125
Currency risk – Sensitivity analysis
An analysis based on a 10% strengthening of foreign currencies would have increased Cochlear’s profit for the year ended 30
June 2022 after tax by approximately AUD 9.5 million (2021: increased profit by AUD 11.4 million) and decreased Cochlear’s
equity by AUD 58.8 million (2021: decrease by AUD 40.4 million). A 10% weakening of the foreign currencies would have
decreased Cochlear’s profit for the year ended 30 June 2022 after tax by approximately AUD 9.9 million (2021: decreased profit
by AUD 10.3 million) and increased equity by AUD 25.2 million (2021: increase by AUD 49.9 million).
This analysis assumes that all other variables remain constant and ignores any impact from the translation of foreign
operations.
The following significant exchange rates applied to Cochlear during the year:
AUD 1 =
CHF
CNY
EUR
GBP
JPY
SEK
USD
Interest rate risk
Average rate
2022
0.674
4.685
0.643
0.546
85.242
6.696
0.724
Reporting date spot rate
2021
0.679
4.940
0.625
0.553
2022
0.657
4.607
0.658
0.567
79.464
94.010
6.421
0.745
7.037
0.688
2021
0.692
4.856
0.631
0.542
83.025
6.561
0.752
Cochlear is exposed to interest rate risks in Australia, Japan and Sweden. See Note 6.4(c) for effective interest rates, repayment
and repricing analysis of outstanding debt.
At the reporting date, the interest rate profile of Cochlear’s interest-bearing financial instruments is financial assets of
$629.3 million (2021: $609.6 million) and financial liabilities of $42.6 million (2021: $45.0 million).
Interest rate risk – Sensitivity analysis
For the year ended 30 June 2022, it is estimated that a general increase of one percent in interest rates would have reduced
Cochlear’s profit after income tax and equity by approximately $0.5 million (2021: reduced profit by $0.3 million). A one percent
general decrease in interest rates would have had the equal but opposite effect on Cochlear’s loss and equity.
(b) Credit risk
Credit risk is the risk of financial loss to Cochlear if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. Cochlear is exposed to credit risk from its operating activities (primarily from trade and other
receivables) and from financing activities, including deposits with financial institutions and foreign exchange contracts. The
carrying amounts of these financial assets at year end represent Cochlear’s maximum exposure to credit risk.
Credit risk management – Trade and other receivables
Customer credit risk is managed at a regional level, subject to Board approved policies and procedures. The ageing profile of
total receivables balances, individually significant debtors by geographic region, high risk customers and collection activities
are reported to management and the Board on a monthly basis. Where high risk customers are identified, regional
management is responsible for placing restrictions on future trading, including suspending future shipments and administering
dispatches on a prepayment basis.
Cochlear’s exposure to credit risk is influenced mainly by the political and geographical location and characteristics of individual
customers. Cochlear does not have a significant concentration of credit risk with a single customer.
Cochlear Limited Annual Report 2022
126
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
2022
2021
Americas
EMEA
Asia Pacific
$m
109.5
88.4
$m
129.4
125.9
$m
69.5
47.8
Total
$m
308.4
262.1
Depending on the region, Cochlear’s credit terms are generally 30 days; however, there are certain jurisdictions where it is
customary practice for customers to make payment beyond 270 days. Although Cochlear discloses the balance as overdue, it
is not indicative of a higher than normal credit risk as payments are typically received by Cochlear within the extended
timeframes.
Cochlear has established an allowance for impairment that represents its estimate of the expected credit losses in respect of
trade receivables. The expected credit losses are assessed by reference to historical collection trends and timing of recoveries
of each customer type within a region.
Trade and other receivables are stated at amortised cost less impairment losses. The ageing of Cochlear’s trade receivables at
the reporting date was:
Trade receivables
Not past due
Past due 1 - 60 days
Past due 61 - 180 days
Past due 181 - 360 days
Past due 361 days and over
Allowance for impairment losses
Trade receivables net of allowance for impairment losses
Other receivables – current
Trade and other receivables
2022
$m
246.8
36.8
15.8
19.9
6.1
325.4
(17.0)
308.4
40.1
348.5
2021
$m
220.7
29.9
14.0
6.3
9.0
279.9
(17.8)
262.1
34.2
296.3
Credit risk management – Cash deposits, term deposits and forward exchange contracts
The majority of Cochlear’s cash deposits, term deposits and all forward exchange contracts are only executed with leading
financial institutions whose credit rating is at least ‘A’ on the Standard & Poor’s rating index.
(c) Liquidity risk
Liquidity risk is the risk that Cochlear will not be able to meet its financial obligations as they fall due. Cochlear manages liquidity
risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due.
Cochlear Limited Annual Report 2022
127
Non-derivative liabilities
Contractual maturities of non-derivative financial liabilities, including estimated interest payments and excluding the impact
of netting agreements, are as follows:
2022
SEK floating rate loan
Trade and other payables
Lease liability
Total
2021
SEK floating rate loan
Trade and other payables
Lease liability
Total
Effective
interest rate
Per annum
Carrying
amount
$m
Contractual
cash flows
$m
< 1
year
$m
1 - 2
years
$m
2 - 5
years
$m
More than
5 years
$m
1.66%
–
–
0.66%
–
–
42.6
232.7
211.3
486.6
45.7
203.6
219.3
468.6
43.1
232.7
247.6
523.4
46.2
203.6
260.3
510.1
43.1
232.4
35.4
310.9
0.3
202.9
31.9
235.1
–
0.3
31.8
32.1
45.9
0.7
29.1
75.7
–
–
69.7
69.7
–
–
72.6
72.6
–
–
110.7
110.7
–
–
126.7
126.7
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly
different amounts.
Derivative assets and liabilities
The following table indicates the periods in which the cash flows associated with Cochlear’s derivatives are expected to occur:
2022
Assets
Liabilities
Total
2021
Assets
Liabilities
Total
Carrying
amount
$m
Contractual
cash flows
$m
10.8
(28.8)
(18.0)
20.9
(7.9)
13.0
10.8
(29.8)
(19.0)
20.9
(7.9)
13.0
< 1 year
$m
8.4
(22.8)
(14.4)
17.6
(4.7)
12.9
1 - 2
years
$m
2.4
(7.0)
(4.6)
3.3
(3.2)
0.1
The expected impact on the Income statement is not considered to be significantly different to the cash flow impact above.
(d) Fair value
The carrying amounts and estimated fair values of Cochlear’s financial assets and liabilities are materially the same. The fair
value of forward exchange contracts is based upon the listed market price, if available. If a listed market price is not available,
the fair value is estimated by discounting the difference between the contractual forward price and the current forward price
for the residual maturity of the contract using benchmark bill futures and swap rates. These fair values are provided by
independent third parties.
Valuation of financial assets and liabilities
For financial assets and liabilities measured and carried at fair value, Cochlear uses the following levels to categorise the
valuation methods used:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
All of Cochlear’s forward exchange contracts were valued using observable market inputs (Level 2) and there were no transfers
between levels during the year.
Cochlear Limited Annual Report 2022
128
7. Other notes
7.1 Auditors’ remuneration
Audit services
Auditors of the Company – KPMG:
– audit and review of financial reports
Total audit services
Non-audit services
Auditors of the Company – KPMG:
– taxation compliance and advisory services
– other
Total non-audit services
7.2 Commitments
Capital expenditure commitments
2022
$
2021
$
2,068,476
2,068,476
2,030,461
2,030,461
977,589
68,824
1,370,782
52,942
1,046,413
1,423,724
As at 30 June 2022, Cochlear entered into contracts to purchase property, plant and equipment for $22.1 million (2021:
$20.4 million).
7.3 Controlled entities
Subsidiaries conduct business transactions with various controlled entities. Such transactions include purchases and sales of
certain products, dividends, interest and loans.
Interest held
2021
2022
%
%
Country of
incorporation/
formation
Company
Cochlear Limited
Controlled entities
Cochlear AG
Cochlear Americas
Cochlear Austria GmbH
Cochlear Benelux NV
Cochlear Bone Anchored Solutions AB
Cochlear Boulder LLC
Cochlear Brasil Ltda
Cochlear Canada Inc
Cochlear Clinical Services LLC
Cochlear Colombia SAS
Cochlear Deutschland GmbH & Co KG
Cochlear Employee Share Trust
Cochlear Europe Finance GmbH
Cochlear Europe Limited
Cochlear Finance Pty Limited
Cochlear France SAS
Cochlear German Holdings Pty Limited
Cochlear Incentive Plan Pty Ltd
Cochlear Investments Pty Ltd
Cochlear Investments (No. 2) Pty Ltd
Cochlear Italia SRL
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Australia
Switzerland
USA
Austria
Belgium
Sweden
USA
Brazil
Canada
USA
Colombia
Germany
Australia
Germany
UK
Australia
France
Australia
Australia
Australia
Australia
Italy
Cochlear Limited Annual Report 2022
129
Cochlear Korea Limited
Cochlear Labs Pty Limited
Cochlear Latinoamerica S.A.
Cochlear Malaysia Sdn. Bhd.
Cochlear Manufacturing Corporation
Cochlear Medical Device (Beijing) Co., Ltd
Cochlear Medical Device (Chengdu) Co Ltd
Cochlear Medical Device Company India Private Limited
Cochlear Mexico SA de CV
Cochlear Middle East FZ-LLC
Cochlear Nordic AB
Cochlear Norway AS
Cochlear NZ Limited
Cochlear Research and Development Limited
Cochlear Russia LLC
Cochlear Shared Services S.A.
Cochlear Sweden Holdings AB
Cochlear Taiwan Limited
Cochlear Tibbi Cihazlar ve Saglik Hizmetleri Limited Sirketi
Cochlear Verwaltungs GmbH
Cochlear (HK) Limited
Cochlear (Thailand) Limited
Cochlear (UK) Limited
Medical Insurance Pte Limited
Nihon Cochlear Co Limited
Sichuan Keli ShuangChuang Technology Co Ltd
Sycle, LLC
Sycle.Net Technologies (Canada) Ltd
(i) Dormant.
(i)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
51
100
100
Korea
Australia
Panama
Malaysia
USA
China
China
India
Mexico
UAE
Sweden
Norway
New Zealand
UK
Russia
Panama
Sweden
Taiwan
Turkey
Germany
Hong Kong
Thailand
UK
Singapore
Japan
China
USA
Canada
Cochlear Limited Annual Report 2022
130
7.4 Parent entity disclosure
At, and throughout the financial year ended, 30 June 2022, the parent company of Cochlear was Cochlear Limited.
Result of the parent entity
Net profit
Other comprehensive (loss)/income
Total comprehensive income
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Share capital
Hedging reserve
Share-based payment reserve
Profit reserve
Accumulated losses
2022
$m
329.1
(22.2)
306.9
1,367.2
2,034.1
356.5
496.7
1,276.6
(12.8)
76.2
308.0
(110.6)
Total equity
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
1,537.4
Dividends will be paid from the profit reserve of Cochlear Limited, as the parent of the Consolidated Entity.
2021
(Restated)1
$m
245.8
8.3
254.1
1,192.6
1,891.1
282.8
474.7
1,276.6
9.1
68.4
172.9
(110.6)
1,416.4
Dividend income from subsidiaries is recognised by the parent entity when the dividends are declared by the subsidiary.
Parent entity contingencies
The details of all contingent liabilities in respect of Cochlear Limited are disclosed in Note 5.7.
Parent entity capital commitments for acquisition of plant and equipment
As at 30 June 2022, the parent entity entered into contracts to purchase plant and equipment for $16.8 million (2021:
$16.0 million).
7.5 Deed of Cross Guarantee
Cochlear Limited (the holding entity) together with the wholly-owned subsidiaries set out below (together referred to as the
Closed Group) entered into a Deed of Cross Guarantee (the Deed) on 17 April 2019. As a result, pursuant to ASIC Corporations
(Wholly-owned Companies) Instrument 2016/785, the wholly-owned subsidiaries set out below are relieved from the
Corporations Act 2001 requirement to prepare and lodge an audited financial report and directors’ report. Under the Deed,
Cochlear Limited has guaranteed to pay any outstanding liabilities upon the winding up of any wholly-owned subsidiary that is
party to the Deed. Wholly-owned subsidiaries that are party to the Deed have also been given a similar guarantee in the event
that Cochlear Limited or another party to the Deed is wound up.
The subsidiaries party to the Deed are:
Cochlear Finance Pty Limited;
Cochlear German Holdings Pty Limited;
Cochlear Investments Pty Ltd;
Cochlear Investments (No. 2) Pty Ltd; and
Cochlear Labs Pty Limited.
Cochlear Limited Annual Report 2022
131
Set out below is the Income statement, Statement of comprehensive income, a summary of movements in retained
earnings/(accumulated losses) and Balance sheet of the entities party to the Deed for the year ended 30 June 2022 and 30
June 2021:
Income statement
Revenue
Cost of sales
Gross profit
Selling, marketing and general expenses
Research and development expenses
Administration expenses
Other income
Other expenses
Patent litigation expense
Share of losses on equity accounted investments
Results from operating activities
Finance income – interest
Finance expense – interest
Net finance expense
Profit before income tax
Income tax expense
Net profit
Statement of comprehensive income
Financial investments measured at fair value through other comprehensive
income, net of tax
Foreign currency translation differences
Effective portion of changes in fair value of cash flow hedges, net of tax
Net change in fair value of cash flow hedges transferred to the Income statement,
net of tax
Total comprehensive income
Retained earnings/(accumulated losses) at beginning of year
Net profit
Dividends recognised
2022
$m
1,169.3
(405.8)
763.5
(69.1)
(133.6)
(156.6)
118.8
(86.4)
–
–
436.6
3.1
(7.0)
(3.9)
432.7
(91.0)
341.7
(83.8)
(0.1)
(16.9)
(5.0)
235.9
116.2
341.7
(194.0)
Retained earnings at end of year
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
263.9
2021
(Restated)1
$m
959.7
(351.1)
608.6
(65.3)
(129.8)
(110.5)
105.5
(95.0)
(6.4)
(1.7)
305.4
4.3
(10.1)
(5.8)
299.6
(16.4)
283.2
40.7
(0.1)
11.2
(3.0)
332.0
(91.4)
283.2
(75.6)
116.2
Cochlear Limited Annual Report 2022
132
2022
$m
542.7
614.5
8.0
150.3
34.0
18.4
1,367.9
2.4
122.3
436.0
119.0
68.8
118.8
102.6
44.8
104.9
1,119.6
2,487.5
Balance sheet
Assets
Cash and cash equivalents
Trade and other receivables
Forward exchange contracts
Inventories
Current tax assets
Prepayments
Total current assets
Forward exchange contracts
Loans and borrowings – internal
Investments in subsidiaries
Investments
Other financial assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Right of use asset
Total non-current assets
Total assets
Liabilities
Trade and other payables
Forward exchange contracts
Loans and borrowings – external
Loans and borrowings – internal
Current tax liabilities
Employee benefit liabilities
Provisions
Deferred revenue
Lease liability
Total current liabilities
Forward exchange contracts
Loans and borrowings – external
Loans and borrowings – internal
Employee benefit liabilities
Provisions
Deferred tax liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
1 Comparative information has been restated for IFRIC decision on cloud computing costs. Refer to Note 7.6 for details.
177.8
22.3
42.6
150.1
4.3
54.6
19.1
24.9
15.5
511.2
6.5
–
264.6
3.8
20.7
21.5
109.8
426.9
938.1
1,549.4
1,276.6
8.9
263.9
1,549.4
2021
(Restated)1
$m
514.2
441.9
17.6
141.0
65.1
13.4
1,193.2
3.3
121.3
432.2
199.5
27.3
111.7
91.2
89.5
113.5
1,189.5
2,382.7
201.7
4.6
–
86.8
2.8
45.1
14.4
5.2
14.8
375.4
3.2
45.0
265.1
4.0
21.2
50.2
118.7
507.4
882.8
1,499.9
1,276.6
107.1
116.2
1,499.9
Cochlear Limited Annual Report 2022
133
7.6 Changes in accounting policies
In April 2021, the International Financial Reporting Standards Interpretations Committee issued an agenda decision,
Configuration or Customisation Costs in a Cloud Computing Arrangement. The decision discussed whether configuration or
customisation expenditure relating to cloud computing arrangements can be recognised as an intangible asset and if not, over
what time period the expenditure is expensed.
Cochlear’s accounting policy has historically been to capitalise all configuration and customisation costs related to cloud
computing arrangements as intangible assets. The adoption of this agenda decision has resulted in a change in accounting
policy to expense in Income statement configuration and customisation costs in cloud computing arrangements. A portion of
previously capitalised intangible assets has been reclassified to an expense in the Income statement, impacting both the
current and prior periods presented.
Following the adoption of the new policy, Cochlear has expensed $21.6 million in configuration and customisation expenditure
for the year ended 30 June 2022. These costs have been classified as Administration expenses in the Income statement and
$21.6 million in related payments classified as Cash paid to suppliers and employees in the Statement of cash flows.
The change in accounting policy has been retrospectively applied and comparative information in the primary statements and
notes have been restated, including as follows:
As at 30 June 2021
As at 1 July 2020
Reported Adjustment
$m
$m
Restated
$m
Reported Adjustment
$m
$m
Restated
$m
402.8
146.8
1,208.2
2,438.2
1,701.7
367.2
1,701.7
(17.3)
5.2
(12.1)
(12.1)
(12.1)
(12.1)
(12.1)
385.5
152.0
1,196.1
2,426.1
1,689.6
355.1
1,689.6
410.3
147.1
1,098.2
2,575.7
1,401.5
116.4
1,401.5
(13.4)
4.0
(9.4)
(9.4)
(9.4)
(9.4)
(9.4)
396.9
151.1
1,088.8
2,566.3
1,392.1
107.0
1,392.1
Balance sheet - Extract
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Net assets
Retained earnings
Total Equity
Income statement - Extract
Administration expenses
Results from operating activities
Profit before income tax
Income tax expense
Net profit
Basic earnings per share (cents)
Diluted earnings per share (cents)
Statement of cash flows - Extract
Cash paid to suppliers and employees
Net cash provided by operating activities
Acquisition of IT system costs
Net cash provided by investing activities
2021
Adjustment
$m
(3.9)
(3.9)
(3.9)
1.2
(2.7)
(4.1)
(4.1)
2021
Adjustment
$m
(5.9)
Reported
$m
(112.2)
374.1
365.7
(39.2)
326.5
496.7
496.7
Reported
$m
(1,150.2)
271.3
(5.9)
274.0
(5.9)
5.9
5.9
Restated
$m
(116.1)
370.2
361.8
(38.0)
323.8
492.6
492.6
Restated
$m
(1,156.1)
265.4
–
279.9
There have been no other changes to accounting policies materially impacting Cochlear in the current financial year.
Cochlear Limited Annual Report 2022
134
7.7 New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for financial years beginning on or
after 1 July 2021 and have not been applied in preparing these consolidated financial statements. These new standards are not
expected to have an effect on the consolidated financial statements of Cochlear.
7.8 Events subsequent to the reporting date
Other than the matter noted below, there has not arisen in the interval between the reporting date and the date of this
Financial report, any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the
Company, to significantly affect the operations of Cochlear, the results of those operations, or the state of affairs of Cochlear
in future financial years:
Dividends
For dividends declared after 30 June 2022, see Note 2.6.
Cochlear Limited Annual Report 2022
135
Directors’ declaration
1.
In the opinion of the directors of Cochlear Limited (the Company):
a)
the consolidated financial statements and notes and the Remuneration report are in accordance with the Corporations
Act 2001, including:
i)
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2022 and of its performance
for the financial year ended on that date; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable; and
c) at the date of this declaration, there are reasonable grounds to believe that the Company and each of the Closed
Group entities identified in Note 7.5 will be able to meet any liabilities to which they are or may become subject to,
because of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785.
2. The directors have been given the declarations required by section 295A of the Corporations Act 2001 from the Chief
Executive Officer & President and Chief Financial Officer for the financial year ended 30 June 2022.
3. The directors draw attention to Note 1.2(a) to the consolidated financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
Dated at Sydney this 18th day of August 2022.
Director
Director
Cochlear Limited Annual Report 2022
136
Independent auditor’s report to the shareholders of Cochlear Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Cochlear
Limited (the Company).
The Financial Report comprises:
• Balance sheet as at 30 June 2022;
In our opinion, the accompanying Financial Report of the
Company is in accordance with the Corporations Act
2001, including:
•
• giving a true and fair view of the Consolidated
Entity’s financial position as at 30 June 2022 and of
its financial performance for the year ended on that
date; and
• complying with Australian Accounting Standards and
the Corporations Regulations 2001.
Income statement, Statement of comprehensive income,
Statement of changes in equity, and Statement of cash flows
for the year then ended;
• Notes including a summary of significant accounting policies;
and
• Directors’ Declaration.
The Consolidated Entity consists of the Company and the
entities it controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report.
We are independent of the Consolidated Entity in accordance with the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our
other ethical responsibilities in accordance with the Code.
Key Audit Matters
The key audit matters we identified are:
• Recoverability of trade receivables; and
• Warranty provision.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Recoverability of trade receivables $308.4 million
Refer to Note 6.4(b) Financial risk management, credit risk
The key audit matter
Recoverability of trade receivables was considered a key
audit matter due to:
• The varying characteristics of customers which include
governments, government-supported universities,
clinics and major hospital chains;
How the matter was addressed in our audit
Our procedures included:
• With the assistance of our IT specialists, testing key
controls within the credit control process including:
- management review and approval of new
customer credit limits within the Consolidated
Entity’s credit limit policies;
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
Cochlear Limited Annual Report 2022
137
Independent auditor’s report to the shareholders of Cochlear Limited
• The different geographical locations of customers and
the political and economic environments they are
subject to, which may affect the timely recovery of
certain receivables;
• Trade receivables past due at the reporting date which
have certain risk characteristics relevant to the
assessment of recoverability;
• The inherent subjectivity involved in the Consolidated
Entity making forward-looking judgements in relation
to the recovery of credit risk exposures; and
• The Consolidated Entity’s adoption of AASB 9 Financial
Instruments requiring the use of an expected credit loss
model.
These conditions gave rise to additional audit effort,
including:
• Greater involvement by our senior team members to
gather evidence across the various customer profiles
and their trade receivables; and
• To challenge the forward-looking judgements made by
the Consolidated Entity.
We involved IT specialists to supplement our senior team
members in assessing this key audit matter.
-
the system configuration of credit limits; and
- management’s review of trade receivables ageing
and trade receivables past due;
• Assessing the Consolidated Entity’s expected credit loss
model in significant geographies against the
requirements of the accounting standards;
• Challenging the Consolidated Entity’s view of credit risk
and recoverability in certain locations by selecting a
sample of significant overdue customer balances with
indicators of credit deterioration. We:
-
-
-
-
noted the historical patterns for long outstanding
trade receivables in those locations for those
customer types, to form an understanding of the
normal pattern of recovery and compared this to
the age of the customer balances sampled;
assessed cash received subsequent to year-end
from the Consolidated Entity’s bank statements for
its effect in reducing amounts outstanding at year-
end;
evaluated other evidence including customer
correspondence; and
questioned the Consolidated Entity’s knowledge of
future conditions which may impact expected
customer receipts based on consistency of the
results of the procedures performed above.
• Assessing the Consolidated Entity’s disclosures of the
quantitative and qualitative considerations in relation
to trade receivables credit risk, by comparing these
disclosures to our understanding of the matter and the
requirements of the accounting standards.
Warranty provision $37.5 million
Refer to Note 5.6 Provisions
The key audit matter
The warranty provision was considered a key audit matter
due to:
• The estimation uncertainty inherent in the key
assumptions applied by the Consolidated Entity to
determine the warranty provision;
• The Consolidated Entity’s evolving product portfolio,
through the introduction of new generations, where
each product’s design and quality attributes can impact
the key assumptions;
• The inherent unpredictability of future failures resulting
in claims under warranty; and
How the matter was addressed in our audit
Our procedures included:
• Obtaining an understanding of the evolving product
portfolio, each product’s warrantable period and
history of claim rates, and the different attributes
which impact the key assumptions used in the
Consolidated Entity’s warranty provision;
•
Testing the sensitivity of the warranty provision by
varying key assumptions, within a reasonably possible
range, to focus our further procedures;
• Challenging the Consolidated Entity’s ability to reliably
estimate the key assumptions by comparing previous
estimates to actual outcomes;
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
Cochlear Limited Annual Report 2022
138
Independent auditor’s report to the shareholders of Cochlear Limited
• The calculation is largely manually developed and
therefore is at greater risk of error.
The key assumptions used in the Consolidated Entity’s
determination of the warranty provision are:
• The forecast claim rates of the multiple products in the
portfolio;
• Assessing the integrity of the model for the warranty
provision. This included checking the accuracy of the
formulas within the model;
• Comparing the forecast claim rates of a sample of
products to the historical warranty claims for that
product or the historical warranty claims of previous
generations of similar products;
• The ratio of repairing to replacing failed products;
• Comparing the forecast proportion of claims that can
• The forecast repair cost; and
• The forecast replacement cost which is based on
standard forecasts of manufacturing costs.
Challenging these key assumptions required greater
involvement by our senior team members.
be repaired and associated repair costs to historical
performance of the Global Repair Centre;
• Comparing the forecast replacement cost to standard
manufacturing costs at the end of the period and
actual manufacturing costs during the period to
identify variances and their impact on the warranty
provision;
•
Enquiring of management responsible for product
design and quality attributes and the Global Repair
Centre to challenge the forward-looking assumptions
used in the model; and
• Assessing the disclosures of the quantitative and
qualitative considerations in relation to the warranty
provision, by comparing these disclosures to our
understanding of the matter and the requirements of
the accounting standards.
Other Information
Other Information is financial and non-financial information in Cochlear Limited’s annual reporting which is provided in
addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit
opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related
assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we
consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the
work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have
nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001;
•
implementing necessary internal controls to enable the preparation of a Financial Report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error; and
• assessing the Consolidated Entity’s and Company’s ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
Cochlear Limited Annual Report 2022
139
Independent auditor’s report to the shareholders of Cochlear Limited
and using the going concern basis of accounting unless they either intend to liquidate the Consolidated Entity or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement,
whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of Cochlear Limited for the year ended 30 June 2022, complies with Section 300A of
the Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included in pages 70 to 89 of the Directors’ report for the year ended 30 June
2022.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
KPMG
Julian McPherson, Partner
Sydney, 18 August 2022
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the
independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
Cochlear Limited Annual Report 2022
140
Notes
Cochlear Limited Annual Report 2022
141
References
FY22 highlights
1. Cochlear estimates based on the published economic model findings of Neve et al 2021. Dollar amount relates to all
recipients implanted with one or more cochlear implants in FY22 across the developed markets.
2. Hearing Screening: considerations for implementation. https://www.who.int/publications/i/item/9789240032767
3. The relationship between Malala Fund and Cochlear Foundation is described as a "partnership" for convenience and
does not constitute a legal partnership, joint venture, agency, employment or any other relationship by which either
party may become liable for the acts or omissions of the other.
Letter to shareholders
1. Cochlear estimates based on the published economic model findings of Neve et al 2021. Dollar amount relates to all
recipients implanted with one or more cochlear implants in FY22 across the developed markets.
2. Hearing Screening: considerations for implementation. https://www.who.int/publications/i/item/9789240032767
3. Weaver, J. "Single-Sided Deafness: Causes, and Solutions, Take Many Forms." Hearing Journal 68.3 (2015): 20-24. Web.
28 Apr. 2017.
http://journals.lww.com/thehearingjournal/Fulltext/2015/03000/Single_Sided_Deafness___Causes,_and_Solutions,.1.as
px
4. The relationship between Malala Fund and Cochlear Foundation is described as a "partnership" for convenience and
does not constitute a legal partnership, joint venture, agency, employment or any other relationship by which either
party may become liable for the acts or omissions of the other.
5. Cochlear Limited. D1926565. PSB Insights LLC. Cochlear Telehealth Study - December 2020
Growth opportunity
1. World report on hearing. Geneva: World Health Organization; 2021. Licence: CC BY-NC-SA 3.0 IGO.
(https://www.who.int/activities/highlighting-priorities-for-ear-and-hearing-care).
2. Market penetration estimate based on Cochlear sourced data.
3. Mohr et al., 2000.
4. CPI Inflation Calculator (http://www.in2013dollars.com).
5. Estimated from Mohr et al., 2000.
6. The Ear Foundation (2018). Spend2Save Report (2nd Edition).
7. World Alzheimer Report 2015 (https://www.alz.co.uk/research/WorldAlzheimerReport2015.pdf).
8. Lin et al., 2011.
9. Mohr et al., 2000.
10. Lupo JE, Biever A, Kelsall DC. Comprehensive hearing aid assessment in adults with bilateral severe-profound
sensorineural hearing loss who present for Cochlear implant evaluation. Am J Otolaryngol. 2020;41(2):102300.
doi:10.1016/j.amjoto.2019.102300.
11. WHO 2021 World Report on Hearing (https://www.who.int/activities/highlighting-priorities-for-ear-and-hearing-care).
12. Fact 5. Deafness and hearing loss. World Health Organization [Internet]. [cited July 2018]. Available from:
http://www.who.int/features/factfiles/deafness/en/.
13. Haile L.M et al., 2021; Hearing loss prevalence and years lived with disability, 1990–2019: findings from the Global
Burden of Disease Study 2019; Lancet, March 2021.
Cochlear Limited Annual Report 2022
142
14. Livingston G, Sommerlad A, Orgeta V, Costafreda S, Huntley J, Mukadam N, et al. The Lancet Commissions: Dementia
prevention, intervention, and care. The Lancet [serial on the Internet]. (2017, Dec 16), [cited July 2, 2018]; 3902673-
2734.
15. Hsu W, Hsu C, Wen M, Lin H, Tsai H, Hsu Y, et al. Increased risk of depression in patients with acquired sensory hearing
loss: A 12-year follow-up study. Medicine [serial on the Internet]. (2016, Nov), [cited July 3, 2018]; 95(44): e5312.
16. Stam M, Kostense P, Lemke U, Merkus P, Smit J, Kramer S, et al. Comorbidity in adults with hearing difficulties: which
chronic medical conditions are related to hearing impairment? International Journal Of Audiology [serial on the
Internet]. (2014, June), [cited July 3, 2018]; 53(6): 392-401.
17. Barnett S. A hearing problem. American Family Physician [serial on the Internet]. (2002, Sep 1), [cited July 3, 2018]; 66(5):
911.
18. Mick P, Kawachi I, Lin F. The Association between Hearing Loss and Social Isolation in Older Adults. Otolaryngology And
Head And Neck Surgery [serial on the Internet]. (2014), [cited July 3, 2018]; (3): 378.
19. Tomaka J, Thompson S, Palacios R. The Relation of Social Isolation, Loneliness, and Social Support to Disease Outcomes
Among the Elderly. Journal Of Aging And Health [serial on the Internet]. (2006), [cited July 3, 2018]; (3): 359.
20. Kramer S, Kapteyn T, Houtgast T. Occupational performance: comparing normally-hearing and hearing-impaired
employees using the Amsterdam Checklist for Hearing and Work. International Journal Of Audiology [serial on the
Internet]. (2006, Sep), [cited July 3, 2018]; 45(9): 503-512.
21. Nachtegaal J, Festen J, Kramer S. Hearing ability in working life and its relationship with sick leave and self-reported work
productivity. Ear And Hearing [serial on the Internet]. (2012, Jan), [cited July 3, 2018]; 33(1): 94-103.
22. Nachtegaal J, Kuik D, Anema J, Goverts S, Festen J, Kramer S. Hearing status, need for recovery after work, and
psychosocial work characteristics: Results from an internet-based national survey on hearing. International Journal Of
Audiology [serial on the Internet]. (2009, Oct), [cited July 3, 2018]; 48(10): 684-691.
Strategic priorities: Grow the hearing implant market
1. WHO 2021 World Report on Hearing (https://www.who.int/activities/highlighting-priorities-for-ear-and-hearing-care).
2. ClinicalTrials.gov [Internet]. Bethesda (MD): National Library of Medicine (US); 2017 March 22. Identifier NCT03086135.
Clinical Performance of a New Implant System for Bone Conduction Hearing; 2019 January 31 [cited 2019 June 20]; [4
screens]. Available from: https://clinicaltrials.gov/ct2/show/NCT03086135.
3. Unilateral Cochlear Implants for Severe, Profound, or Moderate Sloping to Profound Bilateral Sensorineural Hearing Loss.
A Systematic Review and Consensus Statements, JAMA Otolaryngol Head Neck Surg. doi:10.1001/jamaoto.2020
4. World report on hearing. Geneva: World Health Organization; 2021. Licence: CC BY-NC-SA 3.0 IGO.
(https://www.who.int/activities/highlighting-priorities-for-ear-and-hearing-care).
5. Tordrup et al 2022. Global return on investment and cost-effectiveness of WHO's HEAR interventions for hearing loss: a
modelling study. The Lancet. https://www.thelancet.com/journals/langlo/article/PIIS2214-109X(21)00447-2/fulltext
Cochlear Limited Annual Report 2022
143
Shareholder information
Additional information required by Australian Securities Exchange Listing Rules and not disclosed elsewhere in this report. The
information presented is as at 29 July 2022.
Substantial shareholders
Investor
BlackRock Inc
State Street Corporation
ABP (Algemen Burgerlijk PSF)
Total
Distribution of shareholders
Number of shares held
Number of ordinary shares
4,220,962
3,780,558
3,618,341
11,619,861
%
6.4
5.7
5.5
17.6
Number of ordinary shareholders
% shares
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Non-marketable parcels – 224 shareholders held less than a marketable parcel of ordinary shares.
43,504
2,604
118
67
15
46,308
Twenty largest shareholders
Shareholder
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSCO ECA
HSBC Custody Nominees (Australia) Limited
Australian Foundation Investment Company Limited
Netwealth Investments Limited
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Mr Christopher Graham Roberts
Citicorp Nominees Pty Limited
Custodial Services Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
BNP Paribas Nominees Pty Ltd ACF Clearstream
HSBC Custody Nominees (Australia) Limited
Netwealth Investments Limited
Cochlear Incentive Plan Pty Ltd
BNP Paribas Nominees Pty Ltd
Total
The 20 largest shareholders held 78.27% of the ordinary shares of the Company.
On market buy-back
There is no current on market buy-back.
Number of ordinary shares
29,929,736
9,232,006
5,195,387
2,049,928
1,812,476
715,344
386,396
360,746
324,174
304,947
239,876
172,387
171,493
147,414
102,317
86,107
63,693
62,655
60,109
59,445
51,476,636
10.9
7.6
1.2
2.6
77.7
100.0
%
45.50
14.04
7.90
3.12
2.76
1.09
0.59
0.55
0.49
0.46
0.36
0.26
0.26
0.22
0.16
0.13
0.10
0.10
0.09
0.09
78.27
Cochlear Limited Annual Report 2022
144
Contact information
Cochlear headquarters
1 University Avenue
Macquarie University NSW 2109
Australia
Telephone: +612 9428 6555
Fax: +612 9428 6353
Website: www.cochlear.com
Shareholder enquiries
Access to shareholding information is available to investors through Computershare.
Computershare Investor Services Pty Limited
GPO Box 2975
Melbourne VIC 3001
Australia
Telephone: 1300 850 505
Email: web.queries@computershare.com.au
Website: www.computershare.com.au
Calendar of events
19 August 2022
FY22 results announced
18 October 2022
Annual general meeting
15 February 2023
HY23 results announced*
15 August 2023
FY23 results announced*
* Indicative dates only.
Annual general meeting
The annual general meeting of Cochlear Limited will be held on 18 October 2022 at 10.00am. Further details will be provided
in the Notice of Meeting, which will be provided to shareholders in mid-September 2022. The Notice of Meeting will also be
available on the ASX Company Announcements Platform and Cochlear’s website at www.cochlear.com.
Cochlear Limited Annual Report 2022
145
Hear now. And always
As the global leader in implantable hearing solutions, Cochlear is dedicated to helping people with
moderate to profound hearing loss experience a life full of hearing. We have provided more than
700,000 implantable devices, helping people of all ages to hear and connect with life’s opportunities.
We aim to give people the best lifelong hearing experience and access to innovative future
technologies. We have the industry’s best clinical, research and support networks.
That’s why more people choose Cochlear than any other hearing implant company.
Cochlear Ltd (ABN 96 002 618 073) 1 University Avenue, Macquarie University, NSW 2109, Australia T: +61 2 9428 6555 F: +61 2 9428 6352
www.cochlear.com
Please seek advice from your health professional about treatments for hearing loss. Outcomes may vary, and your health professional will advise you about the
factors which could affect your outcome. Always read the instructions for use. Not all products are available in all countries. Please contact your local Cochlear
representative for product information.
Views expressed are those of the individual. Consult your health professional to determine if you are a candidate for Cochlear technology.
The Cochlear Nucleus Smart App is available on App Store and Google Play. The Cochlear Nucleus 7 Sound Processor is compatible with Apple and Android devices,
for compatibility information visit www.cochlear.com/compatibility.
ACE, Advance Off-Stylet, AOS, AutoNRT, Autosensitivity, Beam, Bring Back the Beat, Button, Carina, Cochlear,
Codacs, Contour,
MP3000, myCochlear, mySmartSound, NRT, Nucleus, Osia, Outcome Focused Fitting, Off-Stylet, Profile, Slimline, SmartSound, Softip, SPrint, True Wireless, the
elliptical logo, and Whisper are either trademarks or registered trademarks of Cochlear Limited. Ardium, Baha, Baha SoftWear, BCDrive, DermaLock, EveryWear,
Human Design, Piezo Power, SoundArc, Vistafix, and WindShield are either trademarks or registered trademarks of Cochlear Bone Anchored Solutions AB.
, Contour Advance, Custom Sound, ESPrit, Freedom, Hear now. And always, Hugfit, Hybrid, Invisible Hearing, Kanso, MET, MicroDrive,
,
,
코클리어
コクレア
, Cochlear SoftWear,
コントゥア
科利耳
Android, Google Play and the Google Play logo are trademarks of Google LLC.
Apple, the Apple logo, FaceTime, Made for iPad logo, Made for iPhone logo, Made for iPod logo, iPhone, iPad Pro, iPad Air, iPad mini, iPad and iPod touch are
trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
ReSound is a trademark of GN Hearing A/S.
© Cochlear Limited 2022. D2016447 V1 2021-08