Cochlear Limited
Annual Report 2024
Acknowledgment of Country
Cochlear acknowledges the Aboriginal and Torres Strait Islander
peoples and their custodianship of the various lands across
Australia on which we work, live and learn. We pay our respects to
ancestors and Elders past, present and emerging. Cochlear’s global
headquarters are located on the unceded lands of the Wallumattagal
Peoples of the Darug Nation.
About this report
The 2024 Annual Report provides an overview of Cochlear Limited’s
strategy to create long-term value for stakeholders as well as a
consolidated summary of performance for the financial year ended
30 June 2024 (FY24).
The report has been prepared with reference to the GRI (Global
Reporting Initiative) and in accordance with the IFRS (International
Financial Reporting Standards) Foundation’s Integrated Reporting
Framework. We use these guidelines to help us clearly articulate how we
aim to deliver long-term sustainable value for all our key stakeholders.
Cochlear Limited (Cochlear) publishes a suite of reports annually
including the Annual Report, which integrates sustainability reporting
and the corporate governance statement, the Tax Contribution Report
and Modern Slavery Statement. The reports are available at the
Investors section of the website.
Our company
4
About Cochlear
5
Cochlear at a glance
6
Product and services portfolio
7
Financial history
8
Review of FY24
9
FY24 highlights
10
Year in review
11
Strategy and value creation
20
Our strategy
21
Growth opportunity
23
Key market segments
25
Strategic priorities
27
Creating value for stakeholders
28
- A lifetime of hearing solutions
29
- A healthier and more productive society
40
- Thriving people
47
- Environmental responsibility
58
- Sustained value
64
Financial performance
71
Operational review
72
Financial review
73
Governance and risk
77
Governance
78
Risk
88
Board of directors
90
Executive team
93
Financial statements
97
Remuneration report
98
Financial report
121
Additional information
168
Sustainability data
169
References
182
Shareholder information
184
Corporate Directory
185
Front cover
Julie, Cochlear
™
Nucleus
® System recipient
Cochlear Limited Annual Report 2024
1
Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Contents
Our mission
We help people hear and be heard.
We empower people to connect with
others and live a full life.
We help 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.
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Our goal is to help more people
to hear, which contributes to
building a healthier and more
productive society.
At Cochlear, we are strongly connected to our mission
to help people hear and be heard. It’s the passion that
drives the organisation and focuses the strategy.
With every hearing implant, we begin a lifelong journey with
our recipients. In helping more people to hear, we create
value for our stakeholders by providing a lifetime of hearing
solutions for our recipients, building a healthier and more
productive society, having thriving employees and being
environmentally responsible. Doing these things well should
enable us to achieve sustainable financial returns over time.
Caroline,
Nucleus System recipient
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Our
company
Gabriela,
Osia® System recipient
Cochlear Limited Annual Report 2024
4
Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
About Cochlear
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 story
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, inspired by 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.
Our company
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 30 listed Australian company with
a market capitalisation of over $20 billion.
Our goal is to deliver value by helping more people to hear,
which contributes to building a healthier and more productive
society. Our strategy is focused on improving awareness
of and access to implantable hearing solutions for people
indicated for our products.
We are pioneers and global leaders in the development,
manufacture and commercialisation of implantable hearing
solutions, collaborating in over 100 research programs
worldwide to further research into hearing loss.
We invest around 12% of sales revenue each year in research
and development (R&D), with over $3 billion invested since
listing, and we have a portfolio of more than 2,300 patent and
patent applications worldwide.
Over the past 40 years we have helped over 700,000 people
to hear with one – or two – of our implantable solutions.
And we deliver a lifetime of hearing solutions for recipients,
with sound processor upgrades and services to support prior
generation products.
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 global workforce of over 5,000
employees and a wide geographical reach, selling in over 180
countries, with employees based in over 50 countries.
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Cochlear at a glance
Business segments
Global presence
Cochlear Implants
*
Services
*
Acoustics
*
Cochlear implant systems
Bone conduction systems and
sound processor upgrades
59
%
$2.2b+ 5,000+
manufacturing
locations6
30
%
11
%
Sound processor upgrades,
accessories and other
* Based on sales revenue (FY24) ^Nucleus
® Profile
™ Plus Series implant cumulative survival percentage within five years ^^Cochlear estimate for cochlear and acoustic implants
#Includes cochlear and acoustic implants. ** Measures a company’s resilience to financially material environmental, societal and governance (ESG) risk
700k+
AAA
Market leader
$270m+
>60
%
180+
50+
99.82
%
51
%
female
in sales revenue
* across
employees across
gender balanced
workforce
people to hear with one - or
two - of our implants#
Helping
MSCI ESG rating
Healthcare equipment
& supplies
**
in annual R&D investment
global market
share
^^
Cochlear implant reliability
^
countries
countries
Sweden
China
Malaysia
Australia
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Cochlear
Osia
® System
Product and services portfolio
Cochlear’s market-leading portfolio aims to improve hearing outcomes for recipients and provide a lifetime of hearing
solutions.
Cochlear
™
Nucleus
® System
Cochlear Custom Sound
® Pro
Fitting Software
Cochlear Nucleus
SmartNav System
Cochlear
™ Link
Cochlear Nucleus, Baha and Osia Smart Apps
Cochlear CoPilot App
Cochlear
Remote Check
Cochlear
Remote Assist
Cochlear
Baha
® System
Cochlear implant portfolio
Acoustic solutions portfolio
Recipient support tools
Cochlear Connected Care solutions
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Financial history
Cochlear has a long track record of investing to grow, delivering growing sales revenue, profits* and dividends.
12%
12%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
% of sales revenue
Research and development
$ million
$277m
Consistent investment in R&D
and market growth activities
Long-term growth
in sales revenue
Growing profits
and dividends
36%
34%
40%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
% of sales revenue
Operating expenses (excl R&D)
$ million
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Cochlear implants
units
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Sales revenue
$ million
14%
15%
17%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
% of sales revenue
Underlying net profit
*
$ million
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Dividends
per share
* Excluding one-off and non-recurring items. ** Constant currency
48,040
$2,258m
$387m
$4.10
$898m
↑9%
in FY24
↑24%
in FY24
↑12%
in FY24
in CC
**
↑12%
in FY24
in CC
**
↑9%
in FY24
in CC
**
↑15%
in FY24
in CC
**
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Review
of FY24
Scott,
Nucleus System recipient
Cochlear Limited Annual Report 2024
9
Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
• Helped over 47,000 more
people to hear with a cochlear
or acoustic implant
• Progress made in strengthening
the referral pathway for adults
• Growing links between hearing
loss and cognition in older
adults
• Expanding indications and
reimbursement in a number of
countries
A healthier and more
productive society
FY24 highlights
In FY24, we helped over 47,000 people hear with one – or two – of our cochlear or acoustic implants, providing an estimated
net societal benefit of more than $8 billion over the lifetime of the recipients from improved health outcomes, educational cost
savings and productivity gains.1
* Constant currency. ** Excluding one-off and non-recurring items.
• Continued focus on shaping
our culture through training
and leadership development
programs
• Employee engagement
maintained at 80%
• > 1,000 roles filled: 48% female,
37% internal placements and
55% of promotions to female
colleagues
• Continued to exceed gender
targets with 43% women in
senior leadership roles and
38% women on the Board of
directors
• Using 97% renewable energy
at our manufacturing facilities,
with 100% renewable energy in
five of our six facilities
• Reduced our Scope 1 and 2
emissions by 70%, from our
FY19 baseline
• Reduced the number of flights
taken per full time employee by
40%, from our FY19 baseline
• Completed an inventory of our
Scope 3 emissions
• Completed our first climate risk
assessment
• Delivered record sales revenue,
up 15% (12% in CC*)
• Underlying net profit** up 27%
(15% in CC)
• Underlying net profit margin of
18% (pre cloud investment)
• Full year dividends up 24%
• Completed the acquisition of
the Oticon Medical cochlear
implant business
• Achieved milestones in
strengthening our business
processes and IT platforms to
improve efficiency and agility
Thriving
people
Environmental
responsibility
Sustained
value
• Invested over $270m in R&D,
12% of sales revenue, with a
strong pipeline of products and
services in development
• Launched the 3T MRI
compatible Cochlear
™ Osia
®
Implant
• Positive study results from drug
eluting electrode trial
• Delivered latest generation
sound processors to over
50,000 prior generation
cochlear implant recipients
A lifetime of
hearing solutions
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Year in review
Over the past year, we have made great progress in our mission to help more people to hear. Our strong financial and
operational results reflect our unwavering dedication to our customers, our disciplined approach to execution and the efforts
of our most valuable asset, our people.
Our goal is to deliver value by helping more people to hear,
which contributes to building a healthier and more productive
society, and in FY24, we helped over 47,000 people hear with
one – or two – of our cochlear or acoustic implants.
To achieve our goal requires consistent investment over long
timeframes. Our research and development (R&D) investment
horizons span over ten years, and our ambition to improve the
uptake of cochlear and acoustic implants requires long-term
planning and investment.
This year we continued to lift our investment in R&D, investing
a record $277 million, or 12% of sales revenue. We launched the
new Cochlear™ Osia® OSI300 Implant, delivered positive study
results from our drug eluting electrode trial and helped over
50,000 of our prior generation cochlear implant recipients to
hear better with our latest generation sound processors.
Adult and senior candidates provide the biggest market
opportunity for us given the large, and growing, number of people
affected by hearing loss as the population ages, combined with
the current low levels of cochlear and acoustic implant uptake.
The ageing population has far-reaching consequences that
governments, businesses and wider society must reckon with.
Supporting the health and wealth of an ageing population can
bolster economic resilience in later life and prevent the onset
of dependence as a result of poor health.
There is a growing recognition that good hearing is an essential
part of healthy ageing and that treating age-related hearing
loss is cost-effective. Hearing loss affects communication and
is associated with cognitive decline, social isolation, anxiety
and depression.1
Cochlear implants play an important role in supporting healthy
ageing for those with hearing loss, enabling people to continue
in employment, while helping seniors remain independent. The
development of a consistent process by which all healthcare
professionals diagnose, refer and treat adults eligible for
cochlear implants therefore forms an important part of our
long-term strategy.
Over the past few years, we have seen a growing body of
research establishing links between hearing loss and cognition.
This year, a new study has demonstrated the potential for
cochlear implants to stabilise or improve cognition.
A Cochlear-sponsored study2 from the University of Melbourne
reported a significant and sustained improvement in executive
function and working memory in a group of older adults after
four and a half years of cochlear implant use.
We believe that the expanding body of compelling evidence
will further motivate candidates and professionals to consider
cochlear implants and will, over time, strengthen funding for
implants as part of healthy ageing strategies.
To support our growing business, we have continued our
work in shaping our culture through training and leadership
development programs, with our employee engagement
remaining high at 80%. We made good progress towards our
net-zero emissions targets, completed our Scope 3 emissions
inventory and our first climate risk assessment.
Sales revenue exceeded expectations, increasing 15% (12% in
constant currency*) to a record $2,258 million, driven by growth
across all business units. Underlying net profit** increased 27%
(15% in CC) to $387 million, within the guidance range which was
upgraded in February following a strong first half.
The balance sheet remains strong. We have net cash of $514
million, with operating cash flows sufficient to fund investing
activities and capital expenditure whilst delivering dividends to
shareholders. Full year dividends increased by 24% to $4.10 per
share, representing a payout of 69% of underlying net profit.
We are proud of the progress we have made this year and we
encourage you to read this report which integrates financial
and sustainability performance, providing all key stakeholders
with a holistic view of our business, strategy, value drivers,
performance and governance.
* Constant currency (CC) removes the impact of foreign exchange rate movements to facilitate comparability of operational performance. ** Excluding one-off and non-recurring items.
Alison Deans
Chair
Dig Howitt
CEO & President
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
A lifetime of hearing solutions
We innovate to build a market-leading portfolio of high-quality products and services that improve hearing outcomes and
support a lifetime of hearing outcomes for recipients. 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.
Growing investment in research and
development
Our market-leading technology underpins our global market
share of over 60%3, and in FY24 we invested over $270 million in
R&D, representing 12% of sales revenue. We made good progress
across our key projects, with key implant innovation focused on
implants designed to improve the quality of stimulation of the
auditory nerve, drug eluting electrodes and totally implantable
cochlear implants.
Launch of the 3 Tesla MRI compatible
Cochlear™ Osia® Implant
The new Cochlear™ Osia® OSI300 Implant achieved US Food
and Drug Administration (FDA) approval in the US, driving
strong demand from December 2023. The new implant enables
recipients to undergo high-resolution MRI scans at 1.5 and 3
tesla strength without the need to surgically remove the implant
magnet.
Helping recipients hear better
The popularity of the Nucleus® 8 Sound Processor has driven
strong growth in the Services segment. By delivering our
latest sound processor upgrade technology to our recipient
base, we helped over 50,000 of our prior generation cochlear
implant recipients to hear better, improving their hearing and
quality of life.
Positive study results from drug eluting
electrode trial
A core innovation focus is to further improve hearing
outcomes for recipients, to reduce listening effort and
improve sound quality. Together with our research partners,
we are investigating ways to better protect the structures
of the inner ear and improve the electrode-neural interface,
exploring drug/device combinations as well as new surgical
strategies.
We have been developing a drug eluting electrode (DEE), an
electrode incorporating the drug dexamethasone, to improve
hearing outcomes for patients. We have long-term data
supporting a sustained reduction in impedances from a
small DEE feasibility study from 2014.4
The latest data from a multi-centre randomised control
trial5 has demonstrated substantial impedance reduction,
suggesting a drug/device combination has the potential to
protect the cochlea, reducing inflammation and resultant
fibrosis. We are examining whether reducing fibrosis will
improve hearing preservation post-implantation.
“From the moment I put my Osia
on, I could hear 360 degrees
again — which I couldn’t hear for
23 years. It was a very emotional
experience because I didn’t
realise what I was missing.”
Doug,
Osia® recipient
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
A healthier and 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 to hear
Our mission is to help more people to hear and in FY24 we helped
over 47,000 people hear with one – or two – of our cochlear or
acoustic implants, an increase of 9% on last year. In doing so, we
provide an estimated net societal benefit of more than $8 billion
over the lifetime of this year’s new recipients from improved
health outcomes, educational cost savings and productivity gains.6
Strengthening the referral 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
hearing implants. This goal is supported by growing evidence
that hearing is an essential part of healthy ageing and treating
age-related hearing loss is cost-effective.
Over the past few years, we have invested in awareness
and access activities alongside industry professionals and
advocacy groups. The Living Guidelines set clear, practical,
evidence-based recommendations for improving the standard
of care and quality of life for adults living with hearing loss.
During FY24 we collaborated with university partners, industry
and advocacy groups globally to adapt the Living Guidelines
into country-based clinical guidelines, which are being
progressively rolled out. We have also focused on increasing
professional education to strengthen the referral channel.
Growing links between hearing loss and
cognition in older adults
Over the past few years, we have seen a growing body of
research establishing links between hearing loss and cognition.
In July 2023, interim results from the ACHIEVE study7 in the
US reported that after wearing hearing aids for three years,
cognitive decline slowed by 48% for a group of older adults
with mild to moderate hearing loss who were at a higher risk of
cognitive decline.
This year, an Australian study has demonstrated the potential role
of cochlear implants in stabilising or improving cognition in older
adults with severe-profound hearing loss. The ‘Cochlear implant
outcomes and cognitive health longitudinal evaluation of adults’
(COCHLEA) study8, is a long-term, Cochlear-sponsored study
being conducted by the University of Melbourne. A recent
analysis of follow-up data showed significant improvements in
executive function and working memory after four and a half
years of cochlear implant use, and stability on all other cognitive
domains measured. More detailed results from the study are
expected to be published later this year.
These findings are a major advancement in understanding of
the broader impact of hearing loss and the need for adults,
policy makers and health professionals to prioritise the
treatment of hearing loss. It not only helps people to hear but
has the potential to slow cognitive decline for adults.
Cochlear implant improves
triathlete’s racing experience
Kathy first started wearing hearing aids at age 17 and
used them for more than 40 years before getting her
cochlear implant and a Kanso 2 sound processor. An
avid sportswoman, she recently completed the 16 hour,
140-mile Ironman race in California. “With a cochlear
implant I can now hear the cars around me, I can hear
the people, I can have a conversation with someone
riding next to me.”
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Expanding indications and reimbursement
Over the past 12 months we have been successful in expanding
indications and funding across a number of countries.
The Osia System achieved funding in a number of countries
including France, Spain, Sweden and Israel. In April, we
obtained FDA clearance to lower the minimum age for
implantation of the Osia System from 12 to 5 year-old children
with conductive hearing loss, mixed hearing loss and single-
sided deafness (SSD).
Since achieving the indication for SSD for cochlear implants in
the US in 2022, we have been working with payers to provide
coverage for patients. By June, 70% of candidates had access
to commercial payer coverage for SSD, which is contributing
to growth. And in Belgium, the SSD indication expanded from
adults to now cover children.
China promotes hearing health for seniors
In June, the China National Health Commission announced an
action plan to promote hearing health for seniors. The initiative
recognises the importance of hearing health for quality of life
and social engagement as well as the role hearing plays in
reducing the risk of cognitive decline.
The key objectives of the plan are to improve awareness of
hearing health, promote hearing screening and drive early
diagnosis and intervention amongst seniors to proactively
maintain hearing health.
“The sound is so much better and clearer”
Albin was born with atresia and microtia, and has had hearing loss his entire life. Albin enjoys training in martial arts and
meeting all of his friends there, and with his Cochlear™ Osia® 2 Sound Processor, he can have a more active role when talking
to both friends and family.
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
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 over 5,000 people across the globe. Their
knowledge, expertise, passion and focus on delivering excellence is key to achieving future success.
Shaping our culture
We are pleased to report that overall employee engagement
continues to remain strong at 80%, with this year’s survey
highlighting that employees feel proud to work at Cochlear, and
that they understand their contribution to our strategy and how
they contribute to the satisfaction of our customers.
To ensure we have the necessary talent, capabilities and culture
to enable us to achieve our growth aspirations over the longer
term, we have commenced the implementation of our new
‘Talent vision and strategy’. The strategy focuses on capability
development for all employees to strengthen our culture of
innovation, achievement and inclusion.
In FY24, over 1,000 roles were filled at Cochlear. 48% of
placements were female, 37% of roles were filled by internal
candidates and 55% of all promotions were to female colleagues.
Championing a diverse, equitable and
inclusive workplace
Achieving gender equality is one important element of our
diversity, equity and inclusion strategy. Across the business,
51% of our people are female and we have achieved 43% female
representation amongst our senior leaders, exceeding our target
of 40%. At Board level, 38% of directors were female as at 30
June, and will increase to 44% with the appointment of a new
director who joins the Board in September 2024.
Aila meets the team that made her cochlear implant
Aila (holding the koala) and her family travelled from Canada to meet the members of our production team that made her
cochlear implant. We take pride in connecting our customers with our production team. It provides an opportunity for our
team to connect with customers and for our customers to see where we make their implants and meet the people who
brought them the joy of hearing. At Cochlear, we put the customer at the centre of everything we do, and this initiative is
a great way to remind ourselves that our work makes a difference to people’s lives.
Cochlear Limited Annual Report 2024
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Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Environmental responsibility
We are implementing initiatives to promote the sustainable use of natural resources, reduce our environmental footprint and
help tackle climate change.
Pathway to net-zero carbon emissions
We continue to make good progress towards our net-zero targets. We have reduced Scope
1 and 2 emissions by 70% from our FY19 baseline by increasing renewable energy use at our
manufacturing sites. We reached 97% renewable energy at our manufacturing facilities, using
100% renewable energy in five of our six facilities. And we reduced the number of flights taken
per full time employee by 40% from our FY19 baseline.
Our focus this year has been on preparing ourselves for upcoming mandatory reporting
requirements. We completed a Scope 3 emissions inventory, aligned to the Greenhouse Gas
(GHG) protocol, enabling us to better understand the key sources of emissions so that we
can focus our reduction initiatives. For Cochlear, the distribution of products to customers
and business travel contributes the vast majority of emissions, representing around 70% of all
emissions. We will further refine our methodology and expect to disclose our detailed Scope 3
emissions by the end of FY25.
We completed a qualitative climate-related risk and opportunity assessment to better
understand how climate change may impact the business. Climate-related risks and
opportunities identified map closely to our existing enterprise risks. We will continue to refine
and implement our approach in the coming years in line with the upcoming climate disclosures
across various jurisdictions.
Sustainable innovation
We conducted a Life Cycle Assessment (LCA) of the Cochlear™ Nucleus® 8 Sound Processor
to evaluate its environmental impact across the entire life cycle. The LCA informs our product
development and manufacturing teams on opportunities to strengthen our innovation process.
We found that the majority of lifetime emissions come from energy consumption during
manufacturing and repair of the processor, reinforcing the importance of using renewable
energy at our manufacturing sites.
Preparing for mandatory
sustainability reporting
requirements
Completed
Scope 3 inventory
Conducted a climate-
related risk assessment
Conducted one
lifecycle assessment
Environmental milestones
Cochlear Limited Annual Report 2024
16
Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Sustained value
Financial discipline and commitment to high standards of corporate governance and transparency are central to the creation,
maintenance and enhancement of long-term sustainable value.
Underlying net profit* increases 27% (15%
in CC**) to $387 million
We delivered record sales revenue of $2,258 million, an
increase of 15% (12% in CC), with growth across all business
units. The gross margin was maintained at 75%, with benefits
from improved average selling price offsetting the impact of
inventory write-downs and lower overhead recoveries from
the new Chengdu facility. The gross margin remained aligned
to the longer-term target.
Operating expenses (pre cloud investment) increased 13%
(10% in CC) reflecting growing investment in R&D and market
growth activities. Cloud computing-related investment was
$21 million after tax.
Underlying net profit increased 27% (15% in CC) to $387
million, within the guidance range, which was upgraded in
February following a strong first half. The underlying net profit
margin, excluding the impact of cloud computing-related
expenses, was 18%, and in line with our long-term target.
Dividends increase 24% to $4.10 per share
The balance sheet remains strong with net cash of $514
million. Operating cash flows were sufficient to fund investing
activities and capital expenditure whilst delivering growing
dividends to shareholders.
A final dividend of $2.10 per share has been determined, an
increase of 20% on last year, and franked at 80%. Full year
dividends have been declared of $4.10 per share, an increase of
24% and representing a payout of 69% of underlying net profit.
On-market share buyback
A progressive on-market share buyback program commenced
in March 2023 with the aim of reducing the cash balance to
around $200 million over a number of years. This program
complements the existing dividend policy which targets a 70%
payout of underlying net profit.
A progressive buyback program aligns with the interests of our
shareholders by reducing shares on issue, providing gradual
accretion in earnings per share and dividends per share over
the long term. In FY24, $43 million worth of shares were
bought back.
-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
14
15
16
17
18
19
20
21
22
23
24
Dividends
per share
$4.10
↑24%
in FY24
-
50
100
150
200
250
300
350
400
14
15
16
17
18
19
20
21
22
23
24
Underlying net profit
$ million
*
$387m
↑15%
in FY24
in CC
**
* Excluding one-off and non-recurring items. ** Constant currency (CC) removes the impact of foreign exchange rate movements to facilitate comparability of operational performance.
Cochlear Limited Annual Report 2024
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Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Acquisition of Demant’s cochlear implant
business
In May we completed the acquisition of the Oticon Medical
cochlear implant business from Demant for a zero-headline
purchase price. We welcome Oticon Medical’s cochlear implant
customers to Cochlear and are committed to supporting the
long-term hearing outcomes of these 20,000 patients.
We will develop and commercialise next generation sound
processors and services to enable the vast majority of
customers to transition to Cochlear’s technology platform over
time. We will also support customers with continued access to
repairs and replacements of current Oticon Medical cochlear
implant technology for as long as feasible.
The acquired cochlear implant business is being integrated
into Cochlear. We incurred integration costs of $28 million
after tax in FY24 primarily related to restructuring.
Strengthening our business processes
and IT platforms to improve efficiency
and agility
We have been investing in operating model re-design and
core business systems upgrades over the past four years 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.
We have invested over $90 million since 2021 in the $150
million program and have successfully deployed core cloud-
based customer relationship and human capital management
systems.
Cochlear warmly welcomes the Oticon Medical team in Vallauris, France
Cochlear Limited Annual Report 2024
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Our
company
Review of
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Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
FY25 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.
We continue to target sales revenue growth of around 10%,
with a net profit margin (pre-cloud investment) of around 18%.
For FY25, we aim to help over 50,000 people to hear with a
cochlear or acoustic implant, and expect to deliver underlying
net profit of $410-430 million, a 6-11% increase on FY24.
Cochlear implant trading conditions continue to be strong
across most markets, with an improving trend in adult referral
rates in many developed countries. As demand for cochlear
implants grows, we are seeing some signs of growing waiting
lists for audiological evaluation and/or surgery in some of
our key countries. Audiological capacity constraints are
being increasingly addressed by streamlining post-operative
appointments and increasing the adoption of remote care
tools, which can materially improve clinical capacity in many
practices. Surgical capacity has been a constraint in some
hospitals over the past few months and we continue to monitor
surgical waiting lists. At this stage, we expect solid market
growth rates to drive cochlear implant unit growth of around
10% in FY25.
Services growth is expected to slow following 18 months
of strong demand for upgrades since launching the
Nucleus® 8 Sound Processor. Acoustics growth rates are
expected to be strong with continuing geographic expansion
of the Osia System.
The gross margin is expected to fall by around half a percentage
point due to lower overhead recoveries at the new facility in
Chengdu.
We are continuing our investment in R&D and market growth
activities to support long-term market growth, with an
anticipated investment of around 12% of sales revenue in R&D.
Cloud computing-related investment is expected to increase to
around $34 million ($24 million after tax) in FY25.
Guidance is based on a 66 cent AUD/USD (66 cent average in
FY24) and a 61 cent AUD/EUR (61 cent average in FY24). Capital
expenditure is expected to be $110-130 million, with capacity
expansion across our Australian and Malaysian sites.
The Board has approved the buyback of up to $75 million
in shares over the next 12 months, and the dividend policy
continues to target a payout of 70% of underlying net profit.
Alison Deans
Dig Howitt
Chair
CEO & President
Julie, Nucleus System recipient
Cochlear Limited Annual Report 2024
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Our
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Review of
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and risk
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statements
Additional
information
Strategy
and value
creation
Noriko,
Nucleus System recipient
Cochlear Limited Annual Report 2024
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Our
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Review of
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Strategy and value
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Financial
performance
Governance
and risk
Financial
statements
Additional
information
We help more people to
hear, creating value across
five pillars
A lifetime of hearing solutions
Innovating to build a market-leading portfolio of
products and services that improve hearing outcomes
and provide a lifetime of hearing solutions for recipients.
A healthier and more productive society
Delivering societal benefit through improved health
outcomes, educational cost savings and productivity
gains.
Thriving people
An engaged, capable, high-performing and
diverse workforce that delivers on our strategy
and supports the creation of sustained value.
Environmental responsibility
Minimising the impact of our operations on the
environment.
Sustained value
Maximising spending to grow the market while
maintaining our competitive position. Ensuring we
operate fairly, honestly and legally.
Strategic priorities
focus our time and
resources
Longer-term targets
aim to provide clear
stakeholder benefits
Retain
market
leadership
Customers
Develop market-leading technology and
deliver a world-class customer experience
to recipients and professional customers.
Grow the
hearing implant
market
Society
Help at least 8% more people to hear
each year with a cochlear or acoustic
implant.
Build a
stronger
organisation
People
Retain employee engagement levels at
or above 80%.
Minimise
environmental
impact
Planet
Net-zero carbon emissions in our
operations by 2030 and across our
value chain by 2050.
Consistent and
sustainable
growth
Shareholders
Sustainable and responsible business
practices, targeting growth in sales
revenue of around 10% per annum and
an 18% net profit margin.
Our
strategy
Our goal is to help
more people to hear,
which contributes to
building a healthier
and more productive
society.
We create value for our
stakeholders by empowering
people to connect with others and
live a full life, transforming the way
people understand and treat hearing
loss and innovating and bringing
to market a range of implantable
hearing solutions that deliver a
lifetime of hearing outcomes.
Cochlear Limited Annual Report 2024
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Our
company
Review of
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Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Our strategy
There are many important elements to our strategy which aims to create value over the long term.
Key inputs to creating value
Central to how we deliver our strategy and create value are the
key resources we draw on.
• Customers and communities: Our capacity to create value
depends on the strong and trusted relationships we build
with our candidates, recipients, professional customers
and payers.
• Innovation: We are pioneers and global leaders in the
development, manufacture and commercialisation of
implantable hearing solutions, collaborating with a global
network of research partners.
• Our people: Our people’s knowledge and expertise are
central to how we deliver our strategy.
• Financial and environmental: Prudent management
of financial capital and responsible production and
consumption underpin the delivery of sustainable growth
over time.
Our 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 can
provide life-changing outcomes for recipients. Importantly,
they are a cost-effective solution for all age groups, delivering
significant returns on the investment made by the healthcare
system.
The factors driving industry growth are detailed on pages 23
to 24.
Key market segments
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.
On pages 25 to 26 we detail what we are doing to address our
key market segments.
Strategic priorities
On page 27 we provide a snapshot of the strategic priorities
that determine how we focus our time and resources to create
value. At a high level we aim to:
• Retain market leadership;
• Grow the hearing implant market;
• Build a stronger organisation;
• Ensure we are environmentally responsible; and
• Deliver sustained value.
Stakeholder benefits
On page 28 we outline how our key stakeholders should
benefit over time. Success for us is defined by creating value
across all key stakeholders, which includes our customers, our
people, our shareholders, the environment as well as society
more broadly.
Value creation
On pages 29 to 70 we describe some of the key activities we
are pursuing over the next five years to create value.
Governance and risk
On pages 77 to 89 we outline our approach to governance and
risk. We believe high standards of corporate governance and
transparency are fundamental to the sustainable, long-term
success of the business. Our strong governance framework
provides a solid structure for effective and responsible
decision-making, and our risk management framework enables
us to identify, assess and appropriately manage risks.
Our sustainability approach
Sustainability is integrated into business strategy, reinforcing
our focus on creating positive social impact at individual and
societal levels, while minimising our environmental impact.
Our material sustainability topics support and guide our
strategic priorities, helping us to assess and manage risk and
improve performance.
The Board is responsible for overseeing the approval and
integration of sustainability initiatives into business strategy
and operations and approving sustainability policies and goals.
Further details on our sustainability approach can be found in
the Sustainability data appendix on page 170.
Cochlear Limited Annual Report 2024
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Financial
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Governance
and risk
Financial
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Additional
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Growth opportunity
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 is prevalent and
under-treated
The World Health Organization (WHO) estimates that there
are over 60 million people worldwide who experience severe
or higher hearing loss,
1 yet fewer 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 can provide life changing outcomes for
recipients, empowering them to connect with others and live
a full life. They also provide a cost-effective solution for all age
groups, delivering significant returns on the investment made
by the healthcare system.
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. However, only 4% of people in this segment have a
cochlear implant.
Over 60m people with severe or
higher hearing loss
Significant return on investment for healthcare
systems investing in cochlear implants
We are the global leader in cochlear implants
but a small player in the severe or higher hearing
loss segment where hearing aids dominate
1153
million
Mild
Moderate
Globally 1.5 billion people live with hearing loss
Source: World Health Organization; 2021
Moderately
severe
Severe
Profound
Complete
266
million
103
million
31
million
17
million
13
million
14.9
% 3.4
% 1.3
% 0.4
% 0.2
% 0.2
%
For a pre-lingual deaf child, the return
to society is more than 13 times for
every dollar spent on a cochlear implant
solution based on the cost savings in
education and improved productivity as
an adult.
3
The effective use of implants is cost-
effective in adults and seniors with an
estimated return on investment of 10:1.
4
Cochlear implant
market share
Hearing devices treating
the severe or higher hearing
loss segment
>60%
global market share
*
~4%
global market share
* Cochlear estimate
Cochlear Limited Annual Report 2024
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Our
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Review of
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Strategy and value
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performance
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and risk
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statements
Additional
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Growth opportunity
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.
Good hearing is essential to healthy ageing
Hearing loss is particularly prevalent in people over the age of 60, with one in four suffering
moderate or higher hearing loss.
5
There is a growing understanding of the importance of properly treating hearing loss in this
age group. It affects communication and is associated with cognitive decline, social isolation,
anxiety and depression.
6
Depression
Significant association between
hearing impairment and
moderate to severe depression.
8
Cognitive decline
Hearing loss associated with
accelerated cognitive decline
and dementia in older adults.
7
Social isolation
Hearing loss linked to withdrawal
from social interactions, which
can have a significant impact on
psychological well-being and
physical health.
9
Falls
Higher risk of dizziness
causing falling.
8
Loss of independence
Seniors with hearing loss less
likely to be able to self-care.
8
Ability to work
Hearing loss can affect the
ability to work or stay in the
workforce.
10
US:
lowered the age of cochlear
implantation from 12 to 9 months for
Cochlear’s Nucleus
® implant
US, UK, Germany, France, Spain,
Sweden and Australia:
Cochlear
™ Osia
® System
reimbursement achieved
Japan, UK and Belgium:
expansion of reimbursement criteria
for cochlear implants to include severe
hearing loss
US:
lowered the minimum age for
implantation of the Osia System from
12 to 5 year-old children
US:
the Centers for Medicare & Medicaid
Services expanded coverage for
cochlear implants to cover a broader
spectrum of hearing loss
US:
obtained FDA approval for the
treatment of unilateral hearing loss
and single-sided deafness with a
Cochlear™ Nucleus® implant
France:
reimbursement approved for Baha
®
sound processors
Recent changes to reimbursement or indications
Growing understanding of the link between good hearing and healthy ageing
Cochlear Limited Annual Report 2024
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Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Key market segments
Our efforts are targeted at improving awareness, expanding access and building on the clinical evidence that demonstrates
the effectiveness of our products across four key market segments.
Cochlear implants:
Children in developed markets
Cochlear implantation has been established as the
standard of care for newborns across the developed
markets, with bilateral implants indicated across most
countries as evidence supports the benefit of binaural
hearing.
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.
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 young 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 countries 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 address 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 a range of 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.
What we are doing
What we are doing
Addressable market
*
>6m people
Current penetration
~3%
Addressable market
*
~130,000 people
Current penetration
>80% under 3-year-old children
* Cochlear estimates of segment prevalence of severe or higher hearing loss.
Cochlear Limited Annual Report 2024
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performance
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and risk
Financial
statements
Additional
information
Key market segments
Cochlear implants:
Children in emerging markets
Our emerging markets business has been growing
rapidly as awareness of cochlear implants increases
and wealth grows across many emerging economies.
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.
Our emerging markets business has been growing rapidly as awareness of cochlear implants
increases and wealth grows across many emerging economies. Most countries however
remain very 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
® System, providing a significant
improvement in performance and aesthetics for bone conduction patients.
Pre-market trials have demonstrated significant improvements in outcomes for patients
2
over traditional bone conduction hearing solutions, and we are already experiencing high
demand for the new implant in markets where we have launched.
We believe the Osia 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.
What we are doing
What we are doing
Addressable market
*
>3m people in developed markets
Current penetration
<1%
Addressable market
*
>1.3m people
Current penetration
<10%
* Cochlear estimates of segment prevalence of severe or higher hearing loss.
Cochlear Limited Annual Report 2024
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Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Grow the hearing
implant market
• Strengthen the referral
pathway for adults
• Develop the acoustic implant
segment
• Broaden reimbursement and
improve indications
• Expand access in emerging
markets
A healthier and more
productive society
Strategic priorities
Our strategic priorities determine how we focus our time and resources to create value. Over the coming years we are
focusing our efforts on delivering value across the following initiatives:
Build a stronger
organisation
• Strengthen and nurture
a culture of innovation,
achievement and inclusion
• Attract, develop and retain
world-class talent
• Support the wellness and
safety of our teams
Minimise
environmental impact
• Advance the implementation
of initiatives to reduce our
Scope 1, 2 and 3 carbon
emissions
• Embed sustainability into
product design, development
and manufacturing
• Deliver a global approach to
managing the environmental
impacts of packaging and
waste
Consistent and
sustainable growth
• Deliver sustainable financial
returns
• Improve efficiency and agility
• Maintain high levels of
corporate governance
• Ensure our supply chain is
ethical and sustainable
• Vigilance around data security
and privacy
Thriving
people
Environmental
responsibility
Sustained
value
Retain market
leadership
• Advance the product and
services pipeline, with annual
R&D investment of ~12% of
revenue
• Deliver our latest sound
processor upgrade technology
to existing recipients
• Strengthen our lead in
customer service and support
• Maintain high standards of
product quality, safety and
reliability
A lifetime of
hearing solutions
Cochlear Limited Annual Report 2024
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Our
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Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Society
• Appropriate funding and
indications for a cost-effective
intervention
• Standard treatment pathway
for implantable hearing
devices for all age groups
• Improved education and
productivity opportunities
• Understanding of the link
between good hearing and
healthy ageing and the need
to act
A healthier and more
productive society
People
• A collaborative, values-driven
culture that inspires innovation
and customer focus
• Engaged, capable and high-
performing employees
• Diverse, equitable, safe and
inclusive workplace
• Engaging development and
career opportunities
Planet
• Climate change mitigation and
resilience
• Conservation of natural
resources
• Reduced pollution and waste
• Healthier communities
Shareholders
• Consistent financial
performance
• Disciplined capital
management
• Strong corporate governance
• Ethical and responsible supply
chain
Creating value for stakeholders
Value creation describes the impact we have on all our key stakeholders – our customers, our people, our shareholders as well
as society more broadly. Successful execution means achieving the following outcomes for our stakeholders:
Thriving
people
Environmental
responsibility
Sustained
value
Customers
• High quality and reliability
• Improving hearing outcomes
and quality of life for new and
existing recipients
• The right care is available at
the right time and is easy to
use
• Reduced cost to serve for
professional customers
A lifetime of
hearing solutions
Cochlear Limited Annual Report 2024
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Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
A lifetime of
hearing solutions
Innovating to build a market-leading portfolio of products
and services that improve hearing outcomes and provide a
lifetime of hearing solutions for recipients.
Cochlear Limited Annual Report 2024
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Review of
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Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
A lifetime of hearing solutions
We innovate to build a market-leading portfolio of high-quality products and services that improve hearing outcomes and
provide a lifetime of hearing solutions for recipients. 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.
Cochlear has been the global leader in implantable hearing solutions for over 40 years. Our
investment in R&D aims to strengthen our leadership position through the development of
market-leading technology that improves hearing outcomes and quality of life for our recipients.
We invest around 12% of sales revenue each year in R&D, with over $3 billion invested since
listing, and we have a portfolio of more than 2,300 patent and patent applications worldwide.
We have a global innovation network with over 600 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 Belgium focused on advanced innovation. We have an acoustics and software hub
in Sweden, the Oticon Medical team in France and we are expanding our R&D capability in
Malaysia.
We helped over 47,000 people hear with one – or two – of our cochlear or acoustic implants
in FY24. We have the largest recipient base in the industry, with more than 850,000 implants
helping over 700,000 people to hear.
With every hearing implant we begin a lifelong journey with our recipients. Our goal is to
see our recipients continue to improve their hearing outcomes as our sound processor
technology improves, while making aftercare simpler and more cost effective for them and the
professionals that support them.
Over the next few pages we discuss our innovation priorities, our history of innovation, our
growing portfolio of connected care solutions as well as our dedication to product quality and
reliability.
Our target
Develop market-leading technology and deliver a world-class
customer experience to recipients and professional customers.
Retain market leadership
• Advance the product and services pipeline, with annual R&D
investment of ~12% of revenue
• Deliver our latest sound processor upgrade technology to existing recipients
• Strengthen our lead in customer service and support
• Maintain high standards of product quality, safety and reliability
How our customers benefit
• High quality and reliability
• Improving hearing outcomes and quality of life for new and existing recipients
• The right care is available at the right time and is easy to use
• Reduced cost to serve for professional customers
Relevant UN Sustainable Development Goals
Strategic priorities
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and risk
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Additional
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Innovation focus areas
Focus areas for R&D span four key areas – improving hearing outcomes, making life easier for customers, integrating our
ecosystem of products and services with connected care solutions and exploring options to expand the portfolio.
Hearing outcomes
We have made significant improvements in hearing outcomes
for recipients over the past 40 years. Key innovations like dual
microphone technology, pre-processing and user control have
improved the ability for recipients to hear in different sound
environments. These innovations have also led to an expansion
in indications for cochlear implants to now include people with
a severe or higher hearing loss.
There is still more that can be done to improve hearing
outcomes, to reduce listening effort and improve sound quality
for recipients. Together with our research partners, we are
investigating ways to better protect the structures of the inner
ear and improve the electrode-neural interface, exploring
drug/device combinations as well as new surgical strategies.
Lifestyle and ease-of-use
When it comes to lifestyle benefits, recipients want their
sound processor to be smaller, lighter and smarter. Each sound
processor generation has delivered on these expectations
with today’s sound processors integrated with smartphone
technology, making life easier.
Ultimately, recipients would also like to be able to hear
without an external sound processor. The development of
totally implantable cochlear implant technology is a long-term
development goal for Cochlear. It is an exciting part of our
development plan and aims to provide both functional and
aesthetic benefits with 24/7 hearing and invisible hearing.
A commercially available product is not expected for quite a
few years.
We are also innovating to deliver even better solutions for
professional customers to help ensure patient outcomes are
optimised and efficient. In the coming years the fitting process is
expected to become simpler, more automated and AI-assisted.
Connected care
Connected care is our vision for hearing care – where
Cochlear, the recipient and hearing care professionals work
together to ensure the right care is available at the right time
and is easy to use.
As the industry grows, connected care tools will increasingly
provide additional capacity for our professional customers to
manage growing volumes as well as provide convenience to
professionals and recipients.
By creating a cohesive and interconnected care ecosystem we
can provide a positive customer experience with on-demand
and secure access to comprehensive patient and product
information to drive evidence-based decision making and
delivery of high quality, accessible and patient-centred care.
Expanding the portfolio
Our innovation focus expands beyond cochlear implants,
spanning acoustic implants as well as exploring potential
opportunities to broaden the use of our technology outside of
hearing loss.
A key priority has been to revolutionise our bone conduction
technology and we achieved this in 2020 with the introduction
of a transcutaneous bone conduction implant. The Cochlear
™
Osia
® System represents a significant improvement in
performance, aesthetics and quality of life for bone conduction
patients and has great potential to see broader uptake and
geographic expansion of our acoustic implant portfolio.
Looking beyond hearing loss, our innovation fund and research
partnerships are investigating the potential for our technology
to be applied into new treatment areas.
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A history of meaningful innovation
Innovation matters. We are focused on delivering key technology improvements to our recipients. These innovations bring
performance that matters, a true connection to life and a lifelong commitment to all of our recipients. The most advanced and
reliable devices on the market are a result of over 40 years of dedication to innovation.
Cochlear implants
Our R&D is focused on improving hearing outcomes
and improving recipient quality of life. For more than
40 years Cochlear
™ Nucleus
® Implant innovations have
delivered:
• Improved hearing outcomes, resulting in improved
speech perception, particularly in noise. These
improvements have led to a broadening of
treatment indications from profound to moderate-
severe hearing loss and also new indications such
and hybrid and single-sided deafness;
• The world’s thinnest cochlear implants, designed to
be discreet when implanted and providing a natural
appearance;
• The world’s thinnest electrodes and only
perimodiolar electrode designed to sit close to
the hearing nerve, supporting cochlea health and
delivering clearer sounds;
• Convenient and pain-free
1 MRI scans at 1.5 and 3.0
Tesla without the need for magnet removal; and
• Industry-leading reliability based on exceptional
product design, extensive testing and world-
class manufacturing that speaks not just to past
performance but builds trust in future innovation.
Nucleus 22
World’s first
commercial multi-
channel cochlear
implant with 22
electrodes
1985
Nucleus 24
World’s first cochlear
implant with removable
magnet for MRI safety
1997
Nucleus 24 Contour
Released with
perimodiolar
and straight electrodes
2000
Freedom
World’s most
implanted cochlear
implant
2005
Nucleus Profile Plus
World’s thinnest
implant, MRI 1.5 and 3 T
compatible with magnet
in place
2019
Nucleus Profile
World’s thinnest
implant, offers ease of
use and faster surgery
due to minimal drilling
2009/2014
Cochlear implants
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Cochlear implant sound processors
Over the past 40 years we have been improving
the quality of life of our recipients with new sound
processing technology that is compatible with both
latest generation and older implants. Our sound
processor innovation has delivered:
• Improved hearing outcomes with sound
processing technology designed to provide
clearer sound and reduced background noise;
• Connectivity to the world and people, by
integrating with smartphone technology to allow
direct streaming, control and monitoring with
apps; and
• Lifestyle benefits, with each generation being
smaller and lighter, easier to use and with longer
battery life.
Cochlear implant sound processors
2005
Freedom
Offered input processing
technologies designed to
mimic natural hearing and is
the industry’s first water
resistant sound processor
2009
Nucleus 5
Was 36% smaller than the
Freedom sound processor
and offers an average hearing
improvement of 30% in
noisy environments. Includes
AutoPhone, the industry’s
first automatic phone
detection ability.
2016
Kanso
At launch, Kanso was the
smallest and lightest off-
the-ear sound processor
available. Kanso was designed
to help recipients hear
with clarity using SmartSound®
iQ with SCAN*
and dual microphones,
and is compatible with
Cochlear™ True Wireless™
devices. Kanso is dust
and splash resistant.
2022
Nucleus 8
Designed to make
communicating with people
easier, the Nucleus® 8 Sound
Processor delivers our latest
hearing technology. It senses
changes in the environment
and automatically adjusts
listening settings.
Ready for next generation
Bluetooth® LE Audio technology
and able to connect directly
to what’s being broadcast
at public venues such as
airports, conference centres
and theatres supporting
Bluetooth Auracast™.
50.7 mm
42 mm
40.9 mm
34.5mm
Winner of the prestigious Red Dot Design
Award for Nucleus 5 and Nucleus 8.
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Acoustic implants and sound processors
Bone conduction helps people with conductive hearing loss,
mixed hearing loss and single-sided sensorineural deafness.
Our solutions use the body’s natural ability to conduct sound
through bone by bypassing damaged or blocked parts of the
ear and delivering vibrations directly to the inner ear.
For more than 40 years, our Acoustic solutions have delivered
improving hearing performance, higher fitting ranges to help
more patients, wireless and direct streaming, simplified surgical
procedures and smaller external devices for better aesthetics.
In 2019, we expanded our portfolio into the next generation
of bone conduction hearing solutions with the launch
of the Cochlear™ Osia® System. It is the world’s first
active osseointegrated steady-state implant, using digital
piezoelectric stimulation to bypass damaged areas of the
natural hearing system, sending sound vibrations directly to
the cochlea.
The Osia System represents a significant improvement in
terms of hearing performance, aesthetics and quality of life for
bone conduction patients. We believe it is the right product
to drive category growth and deepen penetration of bone
conduction implants over time.
Baha System
Osia System
2019
OSI200 Implant &
Osia 2 Sound Processor
World’s first Active
piezoelectric bone
conduction System
2023
OSI300 Implant
World’s first Active
bone conduction
implant with MRI
compatibility at 3.0 T
2005
Baha Divino
World’s first digital
bone conduction
sound processor
2002
Baha Softband
World’s first bone
conduction softband
2003
Self-tapping implant
World’s first
FAST surgery
2013
Baha 4
World’s first wireless
bone conduction
sound processor
2010
BI300
World’s first bone
conduction implant with
surface technology
2015
Baha 5
World’s first MFi
bone conduction
sound processor
2021
Baha 6 Max
World’s first premium-
power bone conduction
sound processor
2017
Baha SoundArc
World’s first
bone conduction
arc solution
1985
HC-100
World’s first
bone conduction
sound processor
1997
Baha Cordelle
World’s first superpower
bone conduction
sound processor
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Connected care solutions providing convenience
and confidence
Connected care is our vision for hearing care – where Cochlear, the recipient and hearing care professionals work together to
ensure the right care is available at the right time and is easy to use.
Our connected care solutions comprise a range of digital
health solutions that provide new ways to deliver convenient,
evidence-based care for patients at every stage of their
journey, spanning surgical care, self-managed care, in-clinic
care and remote care.
Surgical care
Surgical care solutions enhance patient outcomes through
intraoperative tools and insights that improve the surgical
experience. The Nucleus
® SmartNav System supports
surgeons in optimising electrode placement during cochlear
implant surgery. It provides real-time, actionable intraoperative
insights that increase confidence in device placement to
help surgeons optimise outcomes and postoperative clinical
performance.
In-clinic care
In-clinic care solutions streamline patient management and
care, giving clinicians the time and flexibility to optimise
appointments.
Our comprehensive range of fitting software uses our
extensive fitting and performance data to inform and optimise
programming. Our software is created using best-in-class
design principles and harnesses over 40 years of experience
and input from thousands of clinicians worldwide
2 to help drive
consistent outcomes, clinic efficiency and personalised care.
Our fitting software keeps the patient at the centre of care,
promoting patient engagement and facilitating more effective
tracking of progress between appointments.
3
A recent innovation is the secure and seamless cloud transfer
of a patient’s surgical data from the operating room to the
fitting clinic via Nucleus SmartNav. This transfer ensures that
hearing health professionals can commence a patient’s first
post-surgical appointment with the information they need for a
successful first fitting.
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Remote care
Remote care solutions allow clinicians to monitor patients and
deliver quality care without a trip to the clinic.
We are the first company to offer app-based Remote care
solutions for our 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
they’re travelling.
With Cochlear
™ Remote Check, cochlear implant recipients can
complete an asynchronous 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.
By offering app-based Remote care solutions, we are meeting
our recipients’ needs and making care more convenient. We
assist our professional partners to increase clinic efficiency,
providing greater flexibility, allowing clinicians to see more
patients.
Over the longer-term, Remote care solutions have the potential
to expand access to those who live in remote areas or don’t
have access to a clinic.
Self-managed care
Cochlear
™ Self-managed care solutions empower patients to
actively manage their hearing experience in partnership with
their clinician through their smartphone.
Self-managed care gives patients the option to proactively
manage their device settings as they move through their
day and encounter different hearing and communication
conditions. Our range of mobile apps provide patients with the
tools to manage their everyday situational hearing – whether
they are adjusting their volume settings or using device
features such as ForwardFocus.
With Self-managed care, patients also have access to interactive
tools to help them practice and improve their listening
and communication skills. These app-based solutions are
designed to give patients the confidence to participate in the
conversations and moments that matter most.
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Leading on product quality and reliability
When choosing a cochlear implant, the reassurance of high-quality products that support a lifetime of hearing is key.
Our market-leading products are the result of our world-class manufacturing process and meet stringent, internationally
recognised standards.
As the global leader in implantable hearing, supporting more
than 850,000 devices, we take our responsibility to report
on the reliability of our products seriously. We report with
full transparency, in accordance with International Standard
ISO 5841-2
4, the reporting principles outlined in the European
Consensus Statement on Cochlear Implant Failures and
Explantations
5 and ANSI/AAMI CI86 – Cochlear implant
systems: Requirements for safety, functional verification,
labelling and reliability reporting.
6
Cochlear’s implants are the most reliable
7 in the industry over
time. Our products are approved by regulators around the
world for the treatment of moderate to profound hearing loss
after undergoing safety and efficacy reviews.
Implant reliability is important for successful patient outcomes,
with longevity an important factor when choosing an implant,
particularly for a child.
Our latest implant, the Nucleus
® Profile Plus Series implant, has
a combined cumulative survival percentage (CSP) of 99.82%
within five years. Our Nucleus CI24RE Series implant, the
world’s most widely used cochlear implant, with more than
200,000 registered devices, has a combined CSP of 98.95%
after being on the market for 19 years.
Each year we publish our product reliability data in the
Cochlear
™ Nucleus
® System Reliability Report, which can be
found on the website.
Our world-class manufacturing processes meet stringent,
internationally recognised standards. Our Quality Management
System (QMS) provides the framework, processes and
procedures for the:
• safety and efficacy of our products;
• compliance with regulatory requirements; and
• product design, manufacture and marketing consistently
meet customer and regulatory requirements.
Our QMS plays an integral part in our product safety and
reliability. During the design process, products go through
extensive testing both internally and externally to ensure they
are designed to meet all applicable standards for intended use.
Our products are manufactured to meet our design
specifications. We then continue to monitor the performance
of our products throughout their lifetime via an extensive post
market surveillance process. Information gathered throughout
the product lifecycle is used to improve current and future
products.
Our QMS is audited annually by regulatory agencies to ensure
compliance with applicable regulations and standards for the
countries where we market our products.
The Chief Technology Officer has executive accountability for
Quality and Regulatory Affairs and, along with the Executive
team, oversees the performance of the QMS to evaluate its
suitability, effectiveness and ensure it continues to improve.
Undertaking pre-clinical and clinical trials
to study the efficacy of new technology
Cochlear undertakes pre-clinical and clinical trials, often in
conjunction with leading universities and research partners, to
study the safety and efficacy of new technology in accordance
with relevant standards including ISO 14155: Clinical
investigation of medical devices for human subjects – Good
clinical practice.
We currently have 49 active sponsored studies in the areas
of technology development and lifecycle product support.
We make outcomes from clinical studies available to
payers, regulators, health technology assessment bodies
and other stakeholders via summary reports on clinical trial
public registry platforms and as published peer-reviewed
manuscripts.
In FY24, there were 40 peer-reviewed publications arising
from Cochlear-sponsored studies.
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Collaborating to advance hearing science and research
As a market leader we strive to help advance hearing health science and research. By working with other leaders in the sector,
we can harness our collective expertise, skills, and imagination to achieve more for our customers and for the community.
Strategic research partnerships and global collaborations
Cochlear has established research collaborations with leading universities, research
organisations and hospitals around the world. These collaborations build on the research
expertise of the institutions, as well as their broader networks and ecosystems, to drive
innovation in hearing technology and public health.
Many of these collaborations are focused on translating science into future products, with
timeframes that span many years. We work on a broad range of research areas covering novel
approaches to surgical techniques, electrodes, objective measures, sound coding, audiology
and aftercare.
University of Melbourne and the Royal Victorian Eye and Ear Hospital
It has been over 45 years since Professor Graeme Clark implanted the first multichannel
cochlear implant and our long-standing research collaboration with the University of Melbourne
and the Royal Victorian Eye and Ear Hospital continues.
Landmark collaborative research studies have been presented in recent international
conferences. Professor Stephen O’Leary recently reported the results of a multi-centre
research study8 of an electrode that incorporates a drug called dexamethasone that may be
beneficial in supporting the long-term health of the cochlea, and Professor Robert Briggs
reported on a study9 of a research on a totally implantable cochlear implant which allows a
recipient to hear without an external sound processor.
Macquarie University and the Australian Hearing Hub
We have renewed our strategic research partnership with Macquarie University, strengthening
the platform for co-funded multi-year and multi-disciplinary research projects with a focus on
advancing clinical practice, education and public policy.
Cochlear and Macquarie University are founding members of the Australian Hearing Hub
(AHH) which brings together leading researchers, clinicians, service providers and industry
participants with the vision of being the world leading community transforming hearing and
communication. Key collaborative AHH research projects include Hearing Impairment in
Adults: A Longitudinal Outcomes Study (HALOS) and the Cochlear Implant Neurotrophin Gene
Therapy Clinical Trial.
Johns Hopkins University and the Cochlear Center for Hearing and Public Health
In 2018 Cochlear pledged US$10 million over 10 years to establish the Cochlear Center for
Hearing and Public Health at Johns Hopkins Bloomberg School of Public Health. Under the
leadership of Professor Frank Lin, the Center focuses on hearing loss as a global public health
priority, with an emphasis on the public health impacts of hearing loss in senior adults. Priority
research areas include the contribution of hearing loss to the risk of cognitive decline and
dementia in older adults and the epidemiology of hearing loss prevalence and risk factors.
Professor Robert Briggs (left) and Ian Forster (right) celebrate Professor Graeme Clark (centre) receiving the
Bionics Institute Visionary Award in recognition of his immense contribution to science and society
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Growing connectivity and engagement with
our customers
We invest to provide our customers with a world-class customer experience with increased connectivity and engagement for
recipients and products and services to improve convenience and confidence for our professional customers.
Cochlear Family
Cochlear Family is our recipient awareness and education
membership program, providing information about the hearing
journey and support in living with hearing implant technology
for recipients and carers. It aims to help upskill recipients so
they can live a more confident life with their implant, and we
do this via proactive communications and hosted events.
Cochlear Family is the world’s largest community of hearing
implant recipients and is available in 70 countries. In FY24,
Cochlear Family membership increased 13% to support over
335,000 recipients around the world.
Cochlear Volunteer Community
The Cochlear Volunteer Community is a network of highly
engaged, committed recipients and carers who are motivated
to help others learn about and successfully live with
implantable hearing devices.
Volunteers provide candidates and recipients with relevant
information about the benefits of hearing implants and sound
processors and opportunities to maximise the benefits of
devices in daily life.
We work closely with our volunteers to provide them with the
knowledge and skills they need to be successful in supporting
others along their hearing journey.
Professional learning programs
In FY24, our professional education programs delivered virtual
and hybrid training sessions for ENT surgeons, audiologists, and
oral rehabilitation therapists.
We held 365 events in Europe, engaging over 7,800
professionals, and hosted 170 events in Latin America,
reaching over 3,100 professionals across the region. In
North America, we conducted 21 courses, training over
3,200 audiologists and 88 surgeons, and reached over 1,200
professionals through virtual sessions.
Our Cochlear Clinical Skills Institutes (CCSI) in Sydney
and Chengdu conducted surgical and clinical training for
professionals in the hearing implant industry, with 61 surgeons
trained in Sydney and 50 in Chengdu.
We also delivered a diverse range of face-to-face and online
training events in the Asia Pacific region, benefiting almost
5,000 professionals throughout FY24.
Professional training
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A healthier and more
productive society
Delivering societal benefit through improved health
outcomes, educational cost savings and productivity gains.
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A healthier and 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.
Cochlear implants provide life changing outcomes for recipients, empowering them to connect
with others and live a full life. They also provide a cost-effective solution for all age groups,
delivering significant returns on the investment made by the healthcare system. Despite this,
fewer than 5% of the people that could benefit from an implantable hearing solution have
received one.
1
Across developed markets, the largest unmet need is in the adults and seniors population.
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 cognitive decline, social isolation, anxiety and
depression.
2
The adults and seniors segment is however challenging to address 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.
Our efforts are therefore targeted at improving awareness, expanding access and building on
the clinical evidence that demonstrates the effectiveness of our products, particularly in the
adults and seniors segment.
Over the next few pages we discuss some of the key initiatives we are pursuing which aim to
create value by increasing awareness and access to implantable hearing solutions.
Our target
Help at least 8% more people to hear each year with a cochlear or
acoustic implant
Grow the hearing implant market
• Strengthen the referral pathway for adults
• Develop the acoustic implant segment
• Broaden reimbursement and improve indications
• Expand access in emerging markets
How society benefits
• Appropriate funding and indications for a cost-effective intervention
• Standard treatment pathway for implantable hearing devices for all age groups
• Improved education and productivity opportunities
• Understanding of the link between good hearing and healthy ageing and the need
to act
Relevant UN Sustainable Development Goals
Strategic priorities
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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:
• Building clinical and economic evidence that compels early adult referral
and coverage;
• Developing consistent referral guidelines to establish a clearly defined care
pathway for adult cochlear implantation;
• Driving awareness and advocacy through hearing professionals and patient
advocacy groups; and
• Behavioural change, enabling hearing professionals to identify and refer
potential candidates.
Creation of evidence
The continuous generation of robust clinical
evidence that demonstrates improved clinical
outcomes and patient quality
of life.
Policy and Advocacy
Engage key stakeholders to raise the awareness
and the importance of hearing health in adults
and, in particular, the role of cochlear implants.
Living Guidelines
An evidenced based set of treatment
guidelines for adults who would
benefit from a cochlear implant.
Behaviour change
Move hearing professionals into
willing and active referrers.
Key elements to developing a treatment pathway for adults
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Building clinical evidence
Growing links between hearing loss and cognition in
older adults
There is growing body of research establishing a link between
hearing loss and cognitive decline.
Hearing loss has been found to be associated with accelerated
cognitive decline and dementia. A study that tracked 639
adults for nearly 12 years found that mild hearing loss doubled
dementia risk, moderate hearing loss tripled risk and people
with a severe hearing impairment were five times more likely
to develop dementia.
4
To investigate this further, our partners at Johns Hopkins
University and their Center for Hearing and Public Health have
been conducting a randomised control trial known as the Aging
and Cognitive Health Evaluation in Elders (ACHIEVE) study.
5
ACHIEVE is the first randomised control trial to determine
whether hearing loss treatment could delay cognitive decline
and dementia in older adults with mild-to-moderate hearing
impairment. The multi-year study is taking place at four
centres in the US, with close to 1000 participants.
In July 2023, the study delivered its first results, finding
that for a group of participants who were at a higher risk of
cognitive decline, using hearing aids for three years slowed
cognitive decline by 48%.
6
A recent Australian study has demonstrated the potential role
of cochlear implants in stabilising or improving cognition in
older adults with severe-profound hearing loss.
The ‘Cochlear implant outcomes and cognitive health
longitudinal evaluation of adults’ (COCHLEA) study7, is a
long-term, Cochlear-sponsored study being conducted by
the University of Melbourne. A recent analysis of follow-up
data showed significant improvements in executive function
and working memory after four and a half years of cochlear
implant use, and stability on all other cognitive domains
measured. More detailed results from the study are expected
to be published later this year.
These findings are a major advancement in understanding of
the broader impact of hearing loss and the need for adults,
policy makers and health professionals to prioritise the
treatment of hearing loss. It not only helps people to hear but
has the potential to slow cognitive decline for adults.
Comparing cochlear implants with hearing aids
An important first of its kind randomised controlled trial
commenced in the UK in 2022. The ‘comparing cochlear
implants with hearing aids in adults with severe hearing loss’
(COACH) study8 is the first randomised controlled trial to
compare communication and quality of life outcomes with use
of hearing aids versus unilateral cochlear implants in 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 a hearing aid is better at improving speech understanding
for adults with severe sensorineural hearing loss. Half of the
trial participants will be randomly assigned with hearing aids,
with the other half receiving a cochlear implant. The study is
expected to take a few years to complete.
Our partners at Macquarie University are conducting a study to
evaluate the effects of hearing aids and cochlear implants in a
large sample of adults across a holistic range of health and social
outcomes.
The ‘hearing impairment in adults: A longitudinal outcomes study’
(HALOS)9 is a large-scale study tracking hearing, cognitive, social,
physical and quality-of-life benefits for over 750 hearing aid and
cochlear implant recipients.
The HALOS study will additionally evaluate the cost-
effectiveness of these interventions, considering their broad
health benefits, and will conduct in-depth interviews in a subset
of patients to improve understanding of the patient journey.
Cochlear implants and healthy ageing
In 2018, a Cochlear-funded study10 was initiated to investigate
whether cochlear implant treatment improves overall health-
related quality of life and general well-being in older adults.
100 senior adult subjects were recruited for the ‘Healthy
Ageing’ study across France, Israel, Italy and Spain.
Results showed that cochlear implantation made recipients
feel less handicapped by their hearing loss. Their quality of life,
ability to communicate verbally and their ability to function
independently improved, which made them feel less lonely.
These results support our Standard of Care initiatives,
highlighting the importance of cochlear implants as a routine
treatment option for those aged over 60 years with bilateral
severe to profound hearing loss.
Building economic evidence
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 services.
11 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.
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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, cochlear implant recipients
and public policy makers. There have been some important
developments over the past few years.
Inspired by the WHO’s call to action in the 2021 ‘World Report
on Hearing’12, a task force of 49 international experts including
academics, ENT surgeons, audiologists, general practitioners
and cochlear implant users came together to establish global
guidelines for adults with hearing loss and the role of cochlear
implantation.
These evidence-based recommendations cover various
aspects of a patient’s journey with hearing loss, from screening
and identification to specialist referral, referral for cochlear
implant evaluation and specialist aftercare.
These ‘Living Guidelines’ are designed to be regularly reviewed
and updated based on new evidence and are accessible here.
“There is a lack of person-centred
and consistent referral pathways,
which results in inconsistent
diagnosis and delays in referral to
cochlear implant specialists for
candidates who may benefit.”
Cochlear implant audiologist
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) Association was formed in 2021 and is the first global
cochlear implant user and family advocacy network that draws
upon a network of close to 600 individuals from 68 countries
across the globe.
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 to candidates, health care practitioners and
society more broadly as well as lobbying for changes to funding.
Cochlear is a member of the World Hearing Forum, a
global network promoting ear and hearing care worldwide.
Members of this advocacy network commit to facilitating
the implementation of World Health Assembly resolution
WHA70.13 on ‘Prevention of deafness and hearing loss’ and
supporting Member States.
The World Hearing Forum brings a collective vision to
advocacy and collaboration in this field. Through networking
and sharing knowledge, skills and experiences from the field,
the World Hearing Forum is galvanising action towards a
world in which no person experiences hearing loss due to
preventable causes and those with hearing loss can achieve
their full potential through early identification and appropriate
management of their condition.
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.
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.
CIICA was formed in 2021 and is the first global cochlear
implant user and family advocacy network that draws upon a
network of over 480 individuals and 98 organisations from 60
countries across the globe.
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 to candidates,
health care practitioners and society more broadly as well as
lobbying for changes to funding.
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.
Know your hearing number
Many of us know our height, weight, vision and blood
pressure. But what about our hearing? The Hearing
Number ranges from 0 to 100 dB and has been
introduced as a simple metric to categorise hearing.
The higher your Hearing Number, the louder sounds will
need to be for you to hear them. At 60, your hearing
loss may mean you should be assessed for cochlear
implant candidacy.
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Health, social and economic benefits of cochlear implants
The economic benefits associated with cochlear implants extend beyond healthcare budgets with significant net economic
gains reported from a broader societal perspective which includes health outcomes, educational costs and productivity gains.11
Expanding product indications
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 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
(>60dB).
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.
13 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 market access teams work with governments and payers
to recognise the benefits of treating hearing loss so we can
continue to increase access to our products.
Societal benefits of cochlear implants
A 2021 European study calculated the net societal benefit of
cochlear implants by age group. It estimated that adults and
seniors with progressive profound hearing loss with a cochlear
implant had a positive net benefit of £275,000 and £76,000
respectively.
14
Based on this study, we provided an estimated net societal
benefit of more than $8 billion over the lifetime of the
recipients implanted over just the past 12 months from
improved health outcomes, educational cost savings and
productivity gains.
By improving penetration rates in developed markets,
particularly for adults and seniors which currently sits at
around 3%, we can not only improve the quality of life of
thousands of people each year but also further reduce the cost
to society by billions of dollars.
Health, social and economic benefits of treating hearing loss
Children
Education
• Children with cochlear implants have a greater likelihood of acquiring oral language, integrating into
regular schools and being able to experience sounds along with better speech skills15
Employment
• More likely to be in paid employment as adults16
Adults
Employment and productivity
• Reduces odds of unemployment or underemployment17
• Cochlear implantation associated with positive change in employment status18 and increase in income
compared to pre-implantation
• Stay in work for longer19 – reduces premature retirement
Seniors
Health and community connection
• Untreated hearing loss is associated with lower quality of life and higher cost of care due to higher risk of
cognitive decline, depression, social isolation, falls and loss of independence20
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Improving access in emerging countries
We are continuing to identify opportunities in emerging economies to grow the hearing implant market, with a focus on
improving rates of implantation in children.
Our emerging markets business has been growing rapidly as
awareness of cochlear implants increases and wealth grows
across many emerging economies. Most countries however
remain very under-penetrated.
We support the development of localised training and
education tools to raise awareness about hearing loss
treatments among professionals and potential candidates.
We leverage our global collaborations with organisations
including patient advocacy group and researchers,
to help implement policy measures, such as newborn
hearing screening, expand clinical services and improve
reimbursement in these markets.
We are also focused on lowering the age of implantation for
children as evidence supports improved hearing outcomes
from early intervention, which in turn drives improved
educational and employment outcomes. This approach is
aligned with the Joint Committee on Infant Hearing
21 which
recommends that all children with hearing loss should receive
intervention by six months of age.
We are committed to advancing hearing
health care by developing a standardised
approach to treatment and care across
Latin America.
More than 140 hearing health professionals including surgeons,
audiologists and rehabilitators from eleven Latin American
countries gathered in Chile to launch the ‘Standard of Care:
Designing the Future’ project. This multinational collaboration
aims to develop care standards specific to Latin America that
enhance access to hearing devices and improve quality of life
for individuals with hearing loss.
During the inaugural event, working groups generated
technical content on the future of surgery, adult and pediatric
care standards, postoperative care and other critical topics.
The Steering Committee, which includes experts from
Mexico, Brazil, Argentina and Colombia will review and refine
the material. The final document, representing the ideal
standard of care for Latin American patients, is expected to be
published in February 2025.
This initiative is pivotal to our advocacy strategy, aiming to
improve patient journeys and expand access to hearing loss
health care throughout Latin America. It aims to support the
implementation of policy measures, guide the expansion
of clinical services and improve reimbursement, ensuring a
sustainable pathway for hearing health in the region.
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Thriving people
An engaged, capable, high-performing and diverse workforce
that delivers on our strategy and supports the creation of
sustained value.
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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 over 5,000 people across the globe. Their
knowledge, expertise, passion and focus on delivering excellence is key to achieving future success.
Cochlear has a rich history, helping people to hear for over 40 years, underpinned by a strong
culture of innovation, achievement and inclusion.
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.
Diversity, equity and inclusion continue to be key priorities as they are fundamental to our success
as an innovation leader. Over the past few years, we have also focused 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 to strengthen
our 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 at both an individual and organisational level.
Over the next few pages, we discuss some of the key elements of our people strategy which
aims to create value by investing in our people and culture.
Our target
Retain employee engagement levels at or above 80%
Build a stronger organisation
• Strengthen and nurture a culture of innovation, achievement and
inclusion
• Attract, develop and retain world-class talent
• Support the wellness and safety of our teams
How our people benefit
• A collaborative, values-driven culture that inspires innovation and customer focus
• Engaged, capable and high-performing employees
• Diverse, equitable, safe and inclusive workplace
• Engaging development and career opportunities
Relevant UN Sustainable Development Goals
Strategic priorities
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Strengthen and nurture a culture of innovation,
achievement and inclusion
As our business grows, we nurture the 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.
Ways of working together
Our culture is underpinned by a set of values and behaviours
that bring our mission to life and support our strategy.
Our values are the core principles and beliefs that guide
decision-making, behaviour and interactions within our
organisation. They align to our mission, support our culture
and serve as a declaration of how we treat each other, our
customers and our partners. At our core we value:
• Respect: We value all individuals, regardless of
background or beliefs.
• Integrity: We are honest, ethical and fact-based.
• Accountability: We own our responsibilities, actions and
outcomes.
Our HEAR behaviours reflect what we value as an
organisation and alongside the Global Code of Conduct,
provide a framework for working and interacting together.
Our HEAR behaviours
H
E
R
A
Hear the customer
Put the customer at the centre
of all that we do
• I see what we are doing through the customers’ eyes
• I factor in what the customer needs in my decision making
• I bring the voice of the customer into our conversations
Embrace change
and innovate
Think differently to change
and grow
• I simplify complex information to make it easy to understand
• I look for the simplest solution without adding complexity in
the future
• I change my mind when persuaded by a better idea
Aspire to win
Inspire each other to achieve
• I push the team to take actions toward our stretch goals
• I prioritise my actions to get things done
• I raise difficult and important issues
• I take calculated risks to achieve our goals
• I take action without being told what to do
Remove boundaries
Unite and act as one
• I challenge others’ opinions in a constructive way
• I speak supportively of decisions made by others outside my
immediate team
• I seek and use input from other parts of the business to
make decisions
• I put the interests of the organisation ahead of my own or my team
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Culture priorities
Over the last few years, we have been implementing
organisation-wide transformation programs aimed at
strengthening our business processes and IT platforms to
improve efficiency, agility and scalability.
To support this transformation, we have focused our culture
programs on strengthening two of our HEAR behaviours
– ‘Aspire to Win’ and ‘Remove Boundaries’ – to develop
organisational capabilities, skills and knowledge. For example,
we adapted our micro-behaviours to include calculated risk-
taking and empowerment and have provided training and
guidance to our people.
To further embed these new behaviours, an organisation-
wide goal to experiment was included in this year’s
objectives, supported by guidelines and frameworks to assist
in developing appropriate goals. The aim was to have all
managers implement a change or an experiment that could
result in a business improvement or learning for the future, and
to ensure that each member of the team aimed to achieve the
same goal.
We also recognise that providing a psychologically safe
workplace is critical to enabling experimentation and
innovation. Workshops and education help our leaders better
recognise, create and promote a safe workspace so that
employees can speak up and bring their full selves to work.
‘Safe to Speak Up’ workshops provide practical ways to
enhance team interactions, enabling teams to work more
effectively together, enhancing the quality of collaboration and
innovation.
Culture leadership
Leadership is one of the most powerful levers for culture
development. We have developed a ‘Talent Vision and Strategy’
that focuses on developing and retaining the capabilities needed
to deliver on our long term (10+ year) growth ambitions.
We have refreshed our leadership framework, ‘Leading the
Way’, establishing a new set of leadership capabilities covering
strategy, results, team and self which we believe will support
the future growth, aligned with our culture aspirations.
We set clear expectations of our leaders and recruit, measure
and reward based on these capabilities to ensure we build a
strong pipeline of leaders for the future and strengthen our
culture.
These capabilities, along with success profiles, will be used
to recruit, promote and develop leaders through our various
talent and succession processes.
In September 2023, we launched our ‘Manager Capability
Development’ pathways globally. The design of these
pathways focus on our employee experience and includes
practical people process up-skilling, incorporating culture and
diversity, equity and inclusion principles and practices.
EMBRACE
CHANGE &
INNOVATE
ASPIRE
TO WIN
REMOVE
BOUNDARIES
HEAR THE
CUSTOMER
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Cochlear’s Leadership Framework
Leading the Way
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Measuring our culture
The employee engagement survey provides a measure of how we are tracking on our culture
journey. The results provide insights into how our people feel about working at Cochlear,
highlighting both strengths and areas for improvement, enabling us to listen and respond in a
focused way.
We are pleased to report that our total engagement score has been maintained at 80%, with
88% of employees completing the survey.
In response to the engagement survey, work is conducted in teams or departments to identify
‘what is working well’ and recognising and acting on what would be ‘even better if’.
This year’s survey has highlighted many things that are working well, for example:
• We continue to have a strong sense of pride in working at Cochlear;
• People continue to feel a connection between their work and our customers’ needs;
• We have improved our open and honest two-way connection after concerted efforts in
building stronger communication practices and channels;
• We are continuing to remove boundaries, particularly in seeking opinions, advice and
solutions from people and teams across the business, and in sharing examples of diverse
people / teams collaborating to deliver better customer outcomes; and
• There is observable progress in ‘Aspiring to win’ with people feeling safe to ask questions and
try new ways of working in the interest of growth or innovation and prioritising our work.
We also have heard it would be even better if we:
• Continue to prioritise building skills and the environment where people have the confidence
and ability to speak up;
• Remain focused on developing communication across departments, clearly explaining
reasons for changes that are being made; and
• Continue providing career development opportunities.
Culture dashboard
Measuring the progress we are making in nurturing and strengthening our culture can be
challenging. Based on our current programs, we have identified ten key attributes that we
believe demonstrate our progress in fostering and strengthening our culture.
We have been measuring these culture indicators for four years, with the score increasing from
81% to 82% over that time. The improvement is particularly pleasing given the degree of change
our people are experiencing as we grow and implement our transformation programs.
The scores are supported by feedback received through various communication forums and
education sessions as well as the engagement survey commentary.
Culture dashboard
Percentage positive sentiment
Culture indicators
Overall engagement
FY21
81%
FY22
81%
FY23
81%
FY24
82%
My manager allows me flexibility to manage my work and
personal responsibilities
89%
89%
87%
89%
At Cochlear we respond promptly to safety concerns
raised by employees
84%
82%
81%
83%
People act in accordance with our HEAR behaviours
87%
88%
86%
88%
My manager is committed to the health and wellbeing of
their team
87%
88%
85%
88%
At Cochlear we value all types of diversity
83%
85%
82%
86%
There is open and honest two-way communication at
Cochlear
63%
64%
68%
70%
My manager is inclusive of diverse views and perspectives
82%
83%
84%
85%
I trust the people I work with
83%
83%
82%
81%
I feel confident calling out behaviour that is inconsistent
with the HEAR behaviours
75%
75%
72%
71%
I can openly raise difficult or important issues
79%
80%
80%
78%
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Our diversity, equity and inclusion
strategy
At Cochlear, diversity, equity and inclusion (DE&I) are integral
to our culture and strategy. Our DE&I strategy is aimed at
creating an environment where our people feel safe, valued,
included and empowered to do their best work. We have
developed three DE&I principles:
• Diversity and equity: We aspire to win with a diverse
workforce that is stronger together;
• Equity and access: We remove boundaries and provide
equal access to work and opportunities; and
• Inclusion and belonging: We hear our people, embrace and
leverage differences and create a safe place where everyone
can feel they belong.
These principles are underpinned by measurable objectives
and are supported by long-term goals and detailed short-term
objectives.
We continued to make good progress in FY24, maintaining
and/or growing female representation in Senior Leadership
roles. We improved our internal processes and practices in
Talent Management and Talent Acquisition, continued to
support flexible work arrangements and integrated our efforts
with our culture and leadership development initiatives.
Our DE&I dashboard below shows improvements across most
areas of focus and is aligned to the progress we are making
in developing an inclusive culture. It is particularly pleasing to
see continued positive progress to grow and maintain female
representation in our senior leadership cohort.
Over the coming years, we will be expanding our DE&I work
to include a stronger focus on inclusion to support our third
DE&I principle of inclusion and belonging, and ultimately
create a more inclusive culture where all employees feel
safe, respected, have a voice and feel heard, and are able to
develop skills and talents in line with our values.
To achieve this goal, we will continue to review and adapt
our talent management processes to embrace and leverage
differences, provide leader education and further develop a
feedback culture.
Diversity, equity and inclusion dashboard
Principle and objective
Goals
FY21
FY22
FY23
FY24
Scorecard
Diversity and equity
Achieve gender balance in
Senior Leadership roles and
on the Board
Board composition – minimum 30% female directors
Senior leadership roles (Band 1-3) – At least 40% female
Senior leadership roles (Band 2) – At least 40% female
Executive Team – continue to improve female representation
Succession pipeline for Band 2 roles by end FY25 – 50% female representation
30%
40%
37%
8%
43%
33%
42%
40%
20%
43%
40%
42%
40%
27%
46%
38%
43%
37%
25%
38%
✓
✓
↗
↗
↗
Equity and access
Create equal access to work
‘My manager allows me flexibility to manage my work and personal responsibilities’ – 80% EES target
‘At Cochlear we value all types of diversity’ – 80% EES target
Flexible working – 60% of eligible employees globally working flexibly in some form
(We exceed this target where we can measure it but are unable to measure reliably on a global basis at this point)
89%
83%
✓
89%
82%
✓
87%
85%
✓
89%
86%
✓
✓
✓
✓
Inclusion and belonging
Build an inclusive culture: All
employees embrace diversity
and foster an inclusive culture
‘Senior leaders value diverse perspectives, even if they are different from their own’ – 80% EES target by end FY25
‘My manager welcomes and considers diverse views and ideas’ – 80% EES target
‘My manager asks questions which encourage diversity of thinking’ – 80% EES target by FY25
Inclusive Leadership & Unconscious Bias Leadership Program – completed by 90% of leaders
-
82%
-
75%
-
82%
-
77%
64%
83%
75%
80%
63%
85%
78%
74%
↘
✓
✓
↘
✓ Achieving target ↗ On track ↘ Below expectations
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Gender diversity and equity
To support the achievement of our gender diversity and equity
goals, we have focussed on overcoming unconscious bias
and building the capability of people managers to create an
inclusive work environment for everyone. To supplement this
work, we have continued to review and improve our talent
management practices providing equal access to work and
ensuring decisions are made free from bias.
We continue to strive for gender pay equity and have seen
a reduction in our gender pay gap over time. We conduct
a comprehensive review of our performance assessment
processes and outcomes, salary increases and bonus
allocations by both gender and seniority.
We have also conducted analysis of pay for like roles and
regularly review remuneration decisions and outcomes. Where
we identify gaps between male and female pay, we take steps
to close them.
We comply with regulatory requirements to make submissions
to the Workplace Gender Equality Agency (WGEA) and follow
the Workplace Gender Equality Act 2012 (Cth) and Global
Reporting Initiative (GRI) disclosures.
Internal analysis of our Australian pay data has shown our
current average total remuneration pay gap was 12.6% in
FY23, meaning that our average female total remuneration is
lower than it is for male employees. This gap is driven by the
relatively higher number of males in senior leadership positions
in the business. Pleasingly, the gap has declined consistently
over the past eight years from 22.3% in FY16.
We remain committed to ensuring gender pay equity in
all the countries we operate. In FY25 we will commence a
global pay equity review, starting in our major markets, to
understand the drivers for any inequity, as well as developing
a roadmap to continue to close any pay gaps we may uncover
as part of this process.
Women in STEM
As a leading technology business, Cochlear understands the
significance of creating opportunities and minimising barriers
for women entering the industry.
We employ women across many STEM (science, technology,
engineering and mathematics) fields. Our engineering roles
span electrical, mechanical, software and manufacturing
engineers. Our scientists include audiologists, molecular
biologists, immunologists and neuroscientists and in
information technology we employ specialists in design and
development, data engineering, AI and automation, analysis,
project delivery and change management.
Over many years we have actively focused on improving
female representation in STEM roles. Our graduate hiring
program, which is a critical pipeline for STEM talent, targets
recruitment of 50% women and in FY24 we exceeded this with
56% women recruited into our STEM Graduate Program and
63% into our STEM Internship Program.
Our Women in STEM Group is dedicated to supporting
women by offering a safe space to discuss issues and share
experiences and has the active participation of over 170
women. The group provides mentoring support to younger
members as they start their career journeys and meets
regularly in-person and online, ensuring accessibility for
everyone. Sessions feature a diverse agenda, from sharing
insights on how to build a successful career with speakers
from inside and outside of Cochlear to providing networking
opportunities and leadership development training.
Diversity, equity and inclusion working
groups
Across the organisation we have employee-initiated groups
that work on diversity, equity and inclusion, including our
RAP Working Group, our inclusion, diversity, equity and
accessibility (IDEA) committee in the US, our DE&I committee
in Global IT and our Women in Leadership community in our
European business. These groups do important work in raising
awareness around diversity, equity and inclusion issues and
contribute to a variety of global and local initiatives including
activities around International Women’s Day, World Mental
Health Day, NAIDOC Week and WorldPride.
Solidea, Nucleus System recipient
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Reconciliation Action Plan
We are committed to helping create an equitable and
reconciled Australia and drive better outcomes for Australia’s
First Nations peoples.
In March we launched our Innovate Reconciliation Action Plan
(RAP), which builds on our Reflect RAP, demonstrating our
vision for reconciliation with Australia’s First Nations peoples.
The Innovate RAP focuses on three key areas – hearing and
ear health equity, cultural safety and understanding, and
employment opportunities and outcomes.
The RAP actions are guided by our employee-led RAP
Working Group, whose members represent various functions,
locations and levels of seniority.
The group reports quarterly to the Australian-based Senior
Executive team, which provides strategic direction and
resources to support the successful implementation of
initiatives and projects.
Our US team established IDEA, the inclusion, diversity,
equity and accessibility committee, to actively
encourage healthy conversations and engagement
on a wide range of issues designed to create a more
inclusive work environment for everybody.
The team aims to make every person feel valued and
recognised and be confident in bringing their whole
self to the workplace.
The committee runs experiments and hosts webinars
on a broad range of subjects spanning:
• Mental health awareness and psychological
safety – education, training and stories from
employees
• Mental health for parents – on being or
becoming a parent at Cochlear
• Women’s history – discussing the contributions
of women to society
• Traditions and celebrations – shared stories to
learn about diverse traditions and celebrations
• Disability awareness – sharing personal stories
from employees and learning about resources
available to employees
Innovate RAP launch event in March 2024
IDEA
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Senior
placements
Board of
directors
Attract, develop and retain world-class talent
We strive to attract and retain passionate and highly skilled professionals.
Our workforce
We are proud of our diverse and capable global workforce.
Our people are based in more than 50 countries around the
world with 51% females.
More information about our workforce is in the Sustainability
data appendix on page 169 and the Governance and Risk
section on page 77.
Talent vision and strategy
To ensure we have the necessary talent, capabilities and
culture to enable us to achieve our growth aspirations over
the longer term, we have commenced the implementation of
our new ‘Talent vision and strategy’. The strategy focuses on
capability development for all employees to strengthen our
culture of innovation, achievement and inclusion.
We recognise that the increasing complexity of the global
environment in which we operate will require our leaders to
possess new and different skills and attributes to our leaders of
today and we need to build this leadership capability internally
as well as bring in diverse talent for the future. To do this we
will focus on:
• Developing capability in enterprise leadership, where our
leaders are better able to navigate and perform horizontally
across the broader enterprise;
• Developing and retaining our unique expert talent which
is pivotal to the continued success and growth of our
business; and
• Building a strong and deep pipeline of emerging talent,
to ensure we have the high calibre leadership and expert
talent required to support our continued growth over the
longer term.
In addition to developing capability across all these areas, we
will embed and integrate our talent practices and principles into
our recruitment, assessment, reward and retention initiatives to
continue building and growing skills and capabilities end to end
at both an individual and organisational level.
Hiring and development
We continuously monitor outcomes and metrics to ensure
fairness and equity in our talent management activities,
including recruitment practices and performance and
remuneration review outcomes, while identifying opportunities
for further improvement.
For example, our hiring manager learning program, ‘Hiring to win’,
is focused on the removal of unconscious bias from our selection
processes. We continue to see pleasing results with females
comprising 54% of all senior placements made during the year.
Graduate program and internships
An important element of our talent strategy is to build our
relationships with school and university programs so that we
continue to grow a diverse pipeline of entry-level talent. Females
comprised over 55% of our 2024 Graduate Program intake.
We also partner with CareerTrackers offering multi-year
internships to First Nations students. This initiative aligns
with our Reconciliation Action Plan commitment to explore
opportunities to promote STEM development and career
pathways for First Nations peoples.
* For the purposes of this Statement, senior leaders are defined as all employees in Bands 1, 2 and 3; the three most senior levels with Band 1 being the Executive team.
Female
43
%
54
%
38
%
51
%
Senior
leaders*
All
employees
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Learning and development
Learning and development are vital for career growth. Cochlear Academy is our learning
platform, offering online and classroom courses offered by Cochlear, external courses and on
the job training. There are thousands of modules available as well as access to the LinkedIn
learning course library. It’s a place where everyone can learn, teach and grow, as well as
complete all mandatory compliance training.
This year our global workforce completed nearly 94,000 hours of formal training, as recorded in
our Learning Management System. Learning included compliance, product and systems training.
Additionally, our employees are engaged in informal learning activities such as coaching, mentoring,
one-on-one sessions, team learning and external learning opportunities.
Remuneration and incentive programs
Our remuneration philosophy is to ensure our remuneration frameworks are aligned with our
strategic priorities, differentiate and reward for performance and reward individuals equitably
based on individual contribution and market value.
Our goal is for our remuneration programs to support the attraction, engagement and retention
of talent. We employ a remuneration framework that allows us to compare positions internally to
support internal equity. We also assess the size and complexity of roles and benchmark against
market-based pay.
Our remuneration and incentive programs remain consistent with last year. Pleasingly, employee
sentiment relating to remuneration reviews has improved with employee engagement survey
scores for ‘At Cochlear, people are rewarded based on their performance’ increasing 11
percentage points and ‘I am paid fairly for what I do’ increasing two percentage points.
We again had strong uptake of our employee share purchase plan, with 41% of eligible
employees participating in the third year of the plan offering.
Recruitment overview
candidates hired
1,039
applications
43,352
global female
placements
48%
37%
promotions of
female employees
55%
internal recruitment rate
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Supporting the wellness and safety of our teams
We are committed to providing safe, healthy and secure workplaces for our employees and all others in our workplaces.
Flexible working
Remote and hybrid working has become an increasingly
common way of working for most employees. We continue to
support our people leaders and all employees with education
and support tools to keep our people connected, enabling then
to work in and effectively lead remote and hybrid teams while
having efficient, inclusive and safe remote working capabilities.
Our employee engagement survey revealed that 89% of
employees believe their manager allows them the flexibility to
manage their work and personal responsibilities.
Mental health training
To help our managers recognise and fully support their teams’
mental health we have implemented mandatory ‘Mental
Health for Managers’ training and are upskilling the workforce
through the provision of Mental Health First Aid training.
Employee assistance program
We are taking a holistic approach to the wellness of our people
by maintaining a physically safe and mentally healthy work
environment.
Our confidential Employee Assistance Program is available to
all employees and their immediate family members offering
confidential counselling and advice for those facing emotional,
financial, legal or work-life concerns.
Workplace health and safety
Over the past few years, injury and severity rates have
increased as a result of musculoskeletal disorders in our
ageing manufacturing workforce. As a result, our workplace
health and safety program focuses on the prevention and early
intervention of musculoskeletal disorders.
We are implementing a series of initiatives focused on
reducing physical risk to our manufacturing team. These
initiatives include:
• Process changes to improve safe work practices;
• Early intervention with onsite physiotherapy support for
education and prevention of chronic injury;
• Implementation of a safety gateway into the product
development cycle to ensure design for safety parameters
are met, preventing high risk or unsafe processes moving
into manufacturing;
• Active and ongoing involvement of manufacturing
employees in the continual improvement process for
manufacturing operations;
• Workplace exercises focused on the reversal of work
postures to allow for active recovery;
• Training of supervisors on appropriate ergonomic postures
and postural correction;
• Reviewing pre-employment medical testing to respond to
injury performance analysis; and
• Reviewing injury management approaches that
accommodate requirements of our higher injury risk
demographic, the 50+ age group, and an early intervention
focus for the 35-45 age group.
In FY24 our Total Recordable Injury Frequency Rate was 3.6,
having increased from 3.3 in FY23.
Looking forward, we continue to look for ways to improve our
workplace health and safety practices and aim to introduce
further automation into processes.
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Environmental responsibility
To be a sustainable business, we aim to minimise the impact
of our operations on the environment.
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Environmental responsibility
We have a role to play in promoting the sustainable use of natural resources and are implementing initiatives to reduce our
environmental footprint.
Sustainability is integrated into our operations, processes and procedures. We consider the
environmental impact of our product development, manufacturing, packaging, and logistics and
are committed to utilising natural resources in a responsible and efficient manner.
We are implementing initiatives to meet our science-based carbon emissions reduction targets.
Our short-term focus is on expanding renewable energy use at our sites and reducing our
Scope 1 and 2 emissions. We are reducing our business flight related carbon emissions and have
mapped our complete Scope 3 emissions in line with our net-zero strategy.
Addressing climate-related risks is part of our risk management strategy. This year we
conducted a qualitative climate-related scenario analysis in line with the Task Force on Climate-
Related Financial Disclosures (TCFD) recommendations. The analysis helps us better gauge the
significance of climate-related risks and opportunities to our business.
This section outlines the initiatives and processes we have established to drive our progress
towards our targets.
Our target
Net-zero carbon emissions in our operations by 2030 and
across our value chain by 2050
Minimise environmental impact
• Advance the implementation of initiatives to reduce our Scope 1, 2 and
3 carbon emissions
• Embed sustainability into product design, development and manufacturing
• Deliver a global approach to managing the environmental impacts of
packaging and waste
How the planet benefits
• Climate change mitigation and resilience
• Conservation of natural resources
• Reduced pollution and waste
• Healthier communities
Relevant UN Sustainable Development Goals
Strategic priorities
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Our pathway to net-zero emissions
We are committed to taking an active role in the global effort to tackle climate change and are using climate science to better
understand our impacts and define our strategy.
Our emission reduction targets
We have established short, medium and long-term Greenhouse
Gases (GHG) emission reduction targets from our 2019 baseline.
These targets are aligned to the Science Based Target Initiative
(SBTi) methodology.
2025
• 25% reduction in our absolute Scope 1 and
Scope 2 emissions
• 50% reduction in business flight emissions
2030
• Net-zero emissions in our operations
(Scope 1 and 2)
2050
• Net-zero emissions across our value chain
(Scope 1, 2 and 3)
Scope 1 and 2 emissions
We have reduced our Scope 1 and 2 emissions by 70% from our
2019 baseline, primarily through increased renewable energy use
at our manufacturing sites, which account for 75% of our total
energy consumption.
In FY24, our manufacturing facilities reached 97% renewable
energy, using 100% renewable energy in five out of six locations.
We expect to expand access to renewable energy at our
remaining site in Malaysia in FY25.
We continue to implement initiatives to further reduce our
fossil fuel use and energy consumption. For example, we have
renovated the air conditioning system at our Macquarie University
site with a technology 30% more efficient, representing annual
savings of around 6% of the annual consumption.
Our solar system, installed in 2023, is generating approximately
800 MWh annually, which represents around 30% of the site’s
annual consumption. We are installing solar panels at our Brisbane
site, and expect them to be operational by September 2024, with
an average capacity of generating 270 MWh per year.
Our historical emissions and energy use data are available in
the Sustainability data appendix.
Scope 3 emissions
This year we completed a Scope 3 emissions inventory, aligned
to the GHG protocol, enabling us to better understand the
key sources of emissions so that we can focus our reduction
initiatives. For Cochlear, the distribution of our products to
customers and business travel contribute the vast majority of
emissions, representing around 70% of all emissions.
We are already engaged in initiatives to reduce Scope 3
emissions. We have been working with our freight partners
to boost low-carbon initiatives and better coordinate freight
movements. In FY25, we will be implementing an initiative
to optimise shipping routes, significantly reducing the travel
distance for certain products.
And while emissions from sourcing and manufacturing our
products are relatively small, we have been actively employing
initiatives to better manage the environmental impacts of our
packaging.
The Scope 3 inventory also underscores the importance of
our target of reducing emissions from business flights. We are
making steady progress towards reaching our targets. In FY21,
we set a target to reduce our business flights per full-time
equivalent employee by 20% and our flight-related emissions
by 50% by 2025, from a 2019 baseline.
By June 2024, we had reduced the number of flights by full-
time employee in 40%, and our flight-related emissions by over
80%, which includes the use of offsets.
Over the coming months we will be refining the processes for
measuring our Scope 3 emissions data, minimising reliance on
spend-based estimates, to reflect emissions more accurately.
We expect to disclose the complete Scope 3 emissions by the
end of FY25.
FY22
FY23
FY24
Increasing the use of renewable
energy in our operations
52%
79%
81%
Scope 1 and 2 emissions roadmap
tCO2e
Emissions trajectory based on the Science Based Targets initiative (SBTi)
methodology and aligned with our initiatives
FY19
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29 FY30
10,234
9,674
12,267
8,945
3,316
3,040
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Managing our climate-related
sustainability risks
We recognise that climate change is one of the greatest
challenges of our time, significantly impacting human health.
This year we completed a qualitative climate-related risk and
opportunity assessment to better understand how climate
change may impact the business. The assessment is aligned
to the Task Force on Climate-Related Financial Disclosures
(TCFD) recommendations.
In this first assessment, we identified specific climate-related
risks and opportunities and pleasingly, they map closely to our
existing enterprise risks.
We will continue to refine and implement this approach in the
coming years in line with the upcoming climate disclosures
across various jurisdictions.
Strategy
We conducted a qualitative scenario analysis to further
address our climate risks and opportunities across three time
horizons: short-term (up to 2030), medium-term (up to 2040)
and long-term (up to 2050). The analysis considered two
different emission scenarios to assess potential impacts on
Cochlear’s business and resilience:
• A low emissions scenario, aligned with limiting global
temperature rise to below 1.5°C, consistent with an orderly
transition towards a decarbonized future and net-zero by
2050; and
• A high emissions scenario, consistent with a conservative
estimate of emissions reduction resulting in a temperature
rise above 4°C by 2100.
To identify potential physical and transition risks and
opportunities across our operations and value chain, we
conducted an extensive desktop review, interviews with
relevant internal stakeholders and a validation workshop with
relevant internal stakeholders.
The identified risks and opportunities were categorised
according to our enterprise risk register. A list of the identified
risks and opportunities is available in the Sustainability Data
Appendix.
Metrics and targets
The main metrics used to assess and manage climate-related
risks and opportunities include:
• Scope 1, 2 and 3 emissions;
• Our targets to reach net-zero, in line with the SBTi; and
• Climate-related risks and opportunities.
Refer to Sustainability data index on page 169 for more details.
Governance
The Audit and Risk Committee assists the Board to discharge
its responsibilities in monitoring sustainability performance,
overseeing the implementation of sustainability initiatives and
commitments and reviewing the assessment, management and
response to these risks and opportunities.
The Executive Risk Management Committee is responsible
for identifying, assessing and appropriately managing risk
throughout Cochlear. Key risks are reported to the Audit and
Risk Committee. The Global Sustainability Team provides
regular updates to the committee on sustainability risks and
opportunities.
Please refer to the Sustainability governance section of this
Report for more details.
Low emissions scenario
Aligned with achieving net-zero
by 2050, assumes an ambitious
and orderly rapid transition,
aiming to limit global warming
to 1.5˚C by 2100.
Climate scenarios applied
High emissions scenario
With minimal to no additional
actions to reduce GHG
emissions, potentially leading
to a 4˚C or more in global
temperatures.
Medium term
up to 2040
Short term
up to 2030
Long term
up to 2050
Timeframes
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Enhancing environmental management and compliance
We continue to integrate environmental considerations into our business, focused on minimising our impact and improving
efficiency.
Sustainable design and packaging
We incorporate a sustainability mindset into our product
development, packaging and logistic processes. Multidisciplinary
teams work on increasing the environmental efficiency of our
products, aligned with the medical device regulations which are
focused on protecting the safety of patients.
In light of growing environmental regulation related to
packaging, we are exploring initiatives to minimise the
environmental impact of our packaging while still meeting
medical device safety standards. For example, we use
recyclable PaperFoam and biodegradable packaging across
all our products. We also use paper filler in shipping boxes,
avoiding plastic bubble-wrap.
Environmental management
Our Environmental Policy sets out our commitment to
managing and reducing our impact on the global environment.
Working closely with our partners and suppliers, we monitor
our environmental performance across our operations and
across the value chain.
Life Cycle Assessment
We have completed a systematic Life Cycle Assessment
(LCA) of the Cochlear™ Nucleus® 8 Sound Processor using
the SimaPro modelling software, a leading science-based
methodology. The LCA measures environmental impacts
during all stages of the product’s life.
The result is being used to foster sustainable innovation and
guide better decisions throughout our products’ life cycle.
Most lifetime emissions are from manufacturing energy
consumption, which reinforces the importance of transitioning
our manufacturing sites to renewable energy. The key
conclusions are summarised in the following table.
Area
Conclusion
Carbon emissions
The small size of the products
contributes to low manufacturing-
related emissions. Utilising renewable
energy at our manufacturing facilities
has significantly reduced emissions
related to manufacturing our products.
Batteries and
magnets
Due to relatively high emissions, we
will focus on efficiency and reuse
opportunities.
Waste
Impact not material given the small
size of the products.
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Resource efficiency
We are identifying ways to improve resource efficiency,
reduce waste and drive greater circularity in our operations.
In the US, we have collaborated with the regulator to achieve
changes to the labelling process, allowing us to shift from
paper-based to digital documents. Last year we implemented
electronic labelling for the Nucleus® 8 Sound Processor. This
year we expanded the electronic labelling to bone conduction
implants.
Since November 2022, we have saved over 14 million paper
pages of manual labeling and over 64,000 plastic sleeves. We
continue to explore opportunities to implement these changes
in other markets.
Our current production processes use limited quantities of
water, with the majority consumed through staff kitchens and
bathrooms. We encourage responsible water consumption and
continuously identify appropriate water-saving initiatives.
Environmental compliance
We comply with the European Union (EU) Restriction of
Hazardous Substances (RoHS) Directive 2002/95/EC, which
governs the use of heavy metals and halogenated compounds
in electrical and electronic equipment.
We also comply with the EU’s regulation on the Registration,
Evaluation, Authorisation and Restriction of Chemicals
(REACH) for the safe manufacture and use of chemical
substances throughout their lifecycle. In addition, we comply
with the Directive 2012/19/EU aiming to prevent and reduce
waste from electrical and electronic equipment.
In addressing packaging and packaging waste, we comply
with the European Parliament and Council Directive 94/62/
EC aimed at preventing the production of packaging waste,
reusing packaging, recycling and other forms of recovering
packaging waste and, hence, at reducing the final disposal of
such waste.
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Sustained value
Maximising spending to grow the market while maintaining
our competitive position. Ensuring we operate fairly, honestly
and legally.
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Sustained value
Financial discipline and commitment to high standards of corporate governance and transparency are central to the creation,
maintenance and enhancement of long-term sustainable value.
Cochlear has a long history of delivering growing sales revenue, profits and dividends. This
track record can be attributed to our unwavering dedication to our core competency, the
development of implantable hearing solutions, and has been supported by a multi-decade
philosophy of investing to grow, disciplined management of capital and high standards of
corporate governance.
As a business we plan and invest over long timeframes. Our R&D investment horizons span over
10 years, and our ambition to improve the uptake of cochlear and acoustic implants requires
long-term planning and consistent investment over many years.
Over the coming years we expect to continue to invest consistently to improve the adoption of
our products. We see a significant opportunity to grow by strengthening the clinical pathway for
adults and seniors through improving awareness and access for those who would benefit from
a cochlear implant. Improving these pathways takes time, requires us to trial novel approaches
and adapt quickly as we learn. We need to constantly challenge ourselves on how best to
prioritise and optimise this growth investment and measure progress.
We have set high level targets to guide our investment, aiming to balance financial objectives
and expectations with the organisation’s capacity to grow at a manageable pace. Over the
coming years we aim to grow sales revenue at around 10% per annum, while targeting an
investment of 12% of sales revenue in R&D and an underlying net profit margin of 18%. While
the outcomes for any individual year may vary as a result of prevailing trading conditions, these
guiderails provide us with the ability to grow our investment in market growth activities.
We are also cognisant that to be successful over the long term, we must create value
responsibly. We recognise that high standards of corporate governance and transparency are
important for the creation, maintenance and enhancement of long-term sustainable value.
Over the coming pages we discuss some of the key elements of our financial and governance
objectives aimed at creating sustained value.
Our target
Sustainable and responsible business practices, targeting growth
in sales revenue of around 10% per annum and an 18% net profit
margin
Consistent and sustainable growth
• Deliver sustainable financial returns
• Improve efficiency and agility
• Maintain high levels of corporate governance
• Ensure our supply chain is ethical and sustainable
• Vigilance around data security and privacy
How shareholders benefit
• Consistent financial performance
• Disciplined capital management
• Strong corporate governance
• Ethical and responsible supply chain
Relevant UN Sustainable Development Goals
Strategic priorities
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Delivering sustainable financial returns
Our long-term approach to investing, combined with disciplined capital management, has delivered consistent growth in sales
revenue, profits and dividends over many decades.
Investing to grow
We take a long-term approach to investing and have
consistently invested in growing the market for implantable
solutions since listing in 1995.
Consistent investment in sales and marketing
Our investment in sales and marketing is building awareness of
and access to implantable solutions and driving market growth.
Over the past few years, we have accelerated our investment
in growth activities including direct-to-consumer marketing,
standard of care initiatives and market access.
898
36%
34%
40%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
% of sales revenue
Operating expenses (excl R&D)
$million
Growing R&D capability
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 $3
billion has been invested in R&D since listing and we target an
annual R&D investment of 12% of sales revenue
Delivering stable net profit margins
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 an 18% net
profit margin over the long-term, reinvesting any efficiency
gains, currency or tax benefits into market growth activities.
Operational improvement
Disciplined capital investment and optimising cost of
production strengthens our competitive position.
Disciplined use of capital
Since listing, 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); and
• Demant’s cochlear implant business (FY24).
The innovation fund has invested around $180 million in
companies with novel technologies that may, over the longer
term, enhance or leverage our core technology. The innovation
fund includes investments in Nyxoah, Precisis, Epiminder, Seer
Medical and Sensorion.
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Strong financial position
Strong free cash flow generation provides funding for market
growth activities and R&D as well as the ability to reward
shareholders with a growing dividend stream.
High return on capital employed (ROCE)
ROCE measures the cash return for each dollar invested in the
business. We generate a high ROCE reflecting our competitive
position in the market and the high barriers to entry to the
cochlear implant industry which have proven to be robust over
many decades.
The high ROCE is also a function of the relatively low level of
tangible assets employed by the business. Our competitive
advantage is driven by our strong product and patent portfolio,
a result of investment in R&D over many years, as well as
customer knowledge and strong relationships. As R&D
investment is expensed through the income statement, no
value for this important asset is captured on the balance sheet.
1,327
22%
29%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Capital employed ($m)
ROCE % (after tax EBIT* / Capital employed)
ROCE
Quality operating cash flows
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 underlying net profit and
the operating cash flows generated by the business.
Conservative gearing levels
We have a strong balance sheet, with over $500 million in net
cash. We are a growth company that had, 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.
A progressive on-market share buyback commenced in
February 2023 with the aim of reducing the cash balance to
around $200 million over a number of years.
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 continue meeting 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 around $150 million in cloud-based technology solutions
over approximately five years, and to date have invested over
$90 million.
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.
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and risk
Financial
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Additional
information
Creating value responsibly
We recognise that high standards of corporate governance and transparency are important for the creation, maintenance and
enhancement of long-term sustainable value.
The Board is committed to high standards of corporate
governance practice and fostering a culture of compliance
which values ethical, lawful and responsible behaviour,
personal and corporate integrity, accountability, transparency
and respect for others.
The Board and its committees regularly review the governance
arrangements and practices to maintain compliance with
regulatory requirements and industry practice and to ensure
they continue to support business objectives.
Key aspects of our corporate governance framework and
practices are set out in the Governance and Risk section of
this report (pages 77 to 89), which includes the Corporate
Governance Statement.
Our Global Code of Conduct describes our commitment to
maintaining the high standard of conduct, business ethics and
integrity required of all our people around the world in driving
our business forward. We conduct mandatory training on the
Global Code of Conduct for all staff and Board of Directors on
an annual basis.
In the following section we discuss a few important areas
where we have been increasing our governance metrics. These
areas include procurement, cyber security and data privacy.
Responsible supply chain
We have a framework of policies, procedures and processes
in place to manage risks relating to human rights, labour
practices, corporate governance, safety and wellbeing and
environmental sustainability in our supply chain.
Our Modern Slavery Statement provides an overview of this
framework as it relates to these risks as well as further detail
on our global approach to modern slavery and is available on
the website.
The cross-functional Responsible Supply Chain Working
Group, established in FY23, met quarterly to manage
opportunities for improvement in our processes, address
emerging trends and monitor our progress. This working group
reviews our Supplier Code of Conduct, which is available on
our website.
During FY24, we continued to implement our supplier due
diligence assessments to support sustainable and ethical
procurement. No suppliers have required mitigation action plans.
We are taking action to engage a more diverse range of
suppliers with the aim of generating social value beyond
the value of goods or services being procured. In FY24,
our spending with First Nations suppliers increased by 41%
compared to the previous year, generating over $4.5 million
in social value (as calculated by Supply Nation, provider of
verified Australian Indigenous businesses).
As a signatory to the voluntary Business Council of Australia
Supplier Code, we aim to pay eligible Australian small businesses
within 30 days of receiving correct invoices and/or products.
For the 12 months ended 31 December 2023, we procured 13%
of our supplies from Australian small businesses with 84% of
invoices (by value) paid within 30 days. We continue to drive
process improvements to ensure we pay small businesses
promptly.
Cochlear Limited
Modern Slavery
Statement 2023
Cochlear
Supplier Code
of Conduct
Cochlear’s Supplier Code of Conduct, Modern Slavery Statement and Global Code of Conduct
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information
Cyber security
We handle and store personal information, including health
information, for our customers and employees. With expanding
information privacy and security regulations, we recognise
data security as a key element of our relationship with our
stakeholders.
We design and implement our information technology systems
and applications with security controls in line with industry
standards. Our Connected Care products are certified under
the ISO 27001 Information Security standard, enhancing our
ability to identify emerging threats and manage cyber-risks.
All employees must comply with our policies, standards and
procedures to protect our information technology systems
and data.
We maintain a defence-in-depth approach to security with
multiple layers of controls and countermeasures in place to
protect our information technology systems and data.
We have strong resilience controls which are tested regularly
and we conduct incident response drills to ensure our teams
remain vigilant and ready to respond. Independent third-
party specialists conduct regular security assessments of our
Information Technology systems.
We conduct regular information security awareness training
for all employees to raise awareness of the importance of
information security.
The Chief Information Officer is charged with overseeing the
organisation’s information and cyber security programs and is
a member of the Executive team.
The Audit and Risk Committee is responsible for oversight
of our Risk Management Framework and risk management
practices, including risks associated with the technology and
R&D aspects of the business.
Data privacy
Our commitment to privacy is reflected in our Global Code
of Conduct and our Privacy Values. As part of our vision and
ambition for data, we have made commitments to process and
protect the personal information of all our stakeholders in a
compliant and ethical way.
Our Global Privacy Program reinforces this commitment and
embeds privacy into our business operations. We adopt a
privacy-by-design approach in designing our products and
services and keep the personal information entrusted to us
secure.
Responsibility for privacy matters lie with the Chief Privacy
Officer, who leads the Global Privacy Office and is supported
by staff globally.
As a multinational company, we operate in many jurisdictions,
subject to different laws and regulations. There is a continuous
trend of strengthening privacy laws or introducing new privacy
laws if none exist.
As digitalisation and new technologies such as artificial
intelligence advance, privacy and data protection continues
to be increasingly important for our stakeholders and for
Cochlear’s success. To meet our privacy commitments and
evolving stakeholder expectations we have a Global Privacy
Program based on internationally recognised privacy and
data protection principles that promotes compliance and
transparency in data use practices.
We strive to be transparent with individuals in relation to how
we process their personal information and to provide them
with meaningful control over how their personal information is
collected and used, including responding to their requests and
complaints. Our Global Privacy Notice explains how we handle
personal information across our global operations.
We conduct mandatory web-based privacy training for all staff
as part of the onboarding process. We supplement this training
with specific web-based or face-to-face training for targeted
audiences, as well as general privacy awareness activities.
We ensure proper third-party management and vendor
compliance with data protection standards. Our vendors who
process personal information are subject to a vendor privacy
risk assessment as part of our privacy compliance and vendor
management.
We aim to prevent and address privacy issues wherever they
occur within the business and across our vendors. If we receive
reports of data incidents involving personal information,
we investigate allegations and act if there is evidence of
wrongdoing. This includes informing customers, employees,
regulators and other appropriate stakeholders of a data breach
that has a material impact where we are required to do so under
local laws or as is otherwise appropriate in the circumstances.
Over the past year, we have not identified any substantial
complaints concerning breaches of customer privacy or
experienced any leaks, thefts or losses of customer data that
required Cochlear to report such an incident to a regulatory
authority.
Tax transparency
We have a strong commitment to transparency and compliance
from a regulatory and financial perspective and value the
principles of being transparent with respect to tax strategy and
compliance in Australia and globally.
We support robust tax systems built on the principles of
integrity, transparency and sustainability and have published
details of our taxes paid globally for ten years. Given our
growing investment in Australian based R&D as well as growing
the business with broad economic benefits for Australia, the
majority of our corporate income tax is paid in Australia.
Our Tax Contribution Report details our tax strategy and tax
governance, taxes paid globally and expenditure on R&D and is
available on the website.
The tax residency of Cochlear and its subsidiaries are included
in the Consolidated Entity Disclosure Statement on pages 162
to 163.
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Additional
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Public policy engagement
We engage with key stakeholders to enhance the public policy
environment with a focus on patient access to appropriate
care, public health, and our business operating environment.
Through optimising public policy we can better serve patients,
healthcare professionals and other customers, along with our
representatives and communities.
We engage with governments directly and through
participation in industry groups and other forums. We also
collaborate with a range of other stakeholders including
consumer/patient organisations, professional associations and
industry peers on public policy issues at global, national and
local levels.
We paid a total of $2.2 million in membership to industry
associations, think-tanks and related organisations across 27
countries including Australia, Canada, Colombia, Denmark,
France, Germany, Italy, Korea, Mexico, Panama, Switzerland,
Turkey, the UK and the US.
Animal welfare
As a medical device industry, we are required to demonstrate
and document both safety and efficacy of our products
in accordance with relevant regulations, guidelines and
international standards.
Where an assessment of biological safety is required and
animal studies are mandated by the regulations or guidelines,
we subcontract studies to experienced and accredited
contract research organisations.
Our Animal Ethics Policy outlines the core ethical principles
in the respectful and humane use of animal subjects when
required to be used in product development and research
projects.
We apply the 3R principle – replacement, reduction,
refinement – limiting animal testing as much as possible.
Please refer to our Animal Ethics Policy for more details, which
is available on the website.
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performance
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and risk
Financial
statements
Additional
information
Financial
performance
Josh,
Baha® System recipient
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Business performance
$m
FY24
FY23
Change %
(reported)
Change %
(CC
*)
Sales Mix
Cochlear implants (units)
48,040
44,156
↑ 9%
Sales revenue
Cochlear implants
1,329.6
1,131.4
↑ 18%
↑ 14%
59%
Services (sound processor
upgrades and other)
672.3
584.4
↑ 15%
↑ 12%
30%
Acoustics
256.3
239.9
↑ 7%
↑ 3%
11%
Total sales revenue
2,258.2
1,955.7
↑ 15%
↑ 12%
100%
Sales revenue increased 15% (12% in constant currency*) to $2,258 million, with growth across
all business units.
Cochlear implants
Sales revenue increased 18% (14% in CC) to $1,329.6 million and cochlear implant units
increased 9% to 48,040.
Developed market units grew 11% and average selling price increased 2% in CC. We
experienced strong growth in the US and Western Europe driven by market growth and
share gains following the launch of the Nucleus® 8 Sound Processor. Implant growth has
been strongest in the senior’s segment, up 15%, with increasing confidence that initiatives to
strengthen the referral pathway for adult cochlear implant candidates are having an impact.
The ongoing emergence of the digital savvy senior has opened new communication pathways
leading to increased awareness. In the US, our direct-to-consumer (DTC) marketing programs
now contribute over 30% of surgeries, with 70% of our lead generation coming from digital
engagement with seniors. We are also experiencing a lift in professional referrals into our DTC
funnel. As a result, time from awareness to surgery is reducing as candidates are more informed
about cochlear implants before having discussions with their hearing care professional.
The children’s segment also experienced solid growth across the year, with over 10% growth in
the first half moderating, as expected, during the second half to normalise across the year.
Emerging market units grew 5%, with strong growth in the first half offset by a decline in the
second half. Units grew strongly in China, Brazil and Central/Eastern Europe with declines in a
number of countries including India and Argentina due to a combination of the timing of tenders
and the impact of political and economic conditions. As a result of the lower-than-expected
tenders, mix skewed to private pay units, increasing the average selling price in the emerging
markets for the year.
Services
Services revenue increased 15% (12% in CC) to $672.3 million, with continuing solid uptake of
the new sound processor across the developed markets. Emerging market sound processor
upgrade penetration is continuing to improve in a number of markets as funding improves.
Acoustics
Acoustics revenue increased 7% (3% in CC) to $256.3 million. Growth was weighted to the
second half, which was up 15% in CC, with strong demand for the new 3 Tesla MRI compatible
Cochlear™ Osia® Implant, launched in the US in December. Osia units grew over 30% across
the year driven by a combination of brand preference, market growth and expansion into new
markets. Acoustics growth was moderated by lower demand for upgrades to the Cochlear™
Baha® 6 Max Sound Processor following three years of strong demand.
* Constant currency (CC) removes the impact of exchange rate movements and foreign exchange (FX) contract gains/(losses) to facilitate comparability. See Notes on page 76 for further detail.
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Additional
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Profit and loss
$m
FY24
FY23
Change %
(reported)
Change %
(CC)
Sales revenue
2,258.2
1,955.7
15%
12%
Cost of sales
562.1
488.0
15%
15%
% Gross margin
75%
75%
Selling, marketing and general
expenses
685.0
606.5
13%
10%
Research and development expenses
277.0
244.9
13%
12%
% of sales revenue
12%
13%
Administration expenses
(excluding cloud investment)
182.3
165.4
10%
10%
Administration expenses
(cloud investment)
30.3
38.5
(21%)
(21%)
Operating expenses
1,174.6
1,055.3
11%
9%
Other income
(5.9)
(3.3)
FX contract gains / (losses)
22.6
19.6
EBIT (underlying)
*
504.8
396.1
27%
16%
% EBIT margin
*
22%
20%
Net finance expense / (income)
(9.8)
(7.1)
Income tax expense
*
128.0
98.0
% Effective tax rate
25%
24%
Underlying net profit
*
386.6
305.2
27%
15%
% Underlying net profit margin
*
17%
16%
% Underlying net profit margin
(pre cloud investment)
*
18%
17%
One-off and non-recurring items (after-tax):
Innovation fund losses
1.9
4.6
Oticon Medical integration expenses
27.9
-
Statutory net profit
356.8
300.6
19%
8%
Sales revenue increased 15% (12% in CC) to $2,258.2 million and underlying net profit increased
27% (15% in CC) to $386.6 million. Statutory net profit increased 19% to $356.8 million.
Key points of note:
• Cost of sales increased 15% (15% in CC) to $562.1 million. The gross margin was maintained
at 75%, with benefits from improved average selling price offsetting inventory write-downs
and the commencement of production at Chengdu. A $22.0 million write-down in the value
of inventories largely relates to components for older generation products which are being
progressively obsoleted;
• Selling, marketing and general expenses increased 13% (10% in CC) to $685.0 million,
reflecting continued investment in market growth activities, standard of care and market
access initiatives;
• Investment in R&D increased 13% (12% in CC) to $277.0 million, with continued investment
made in key R&D projects and development of the product and services pipeline; and
• One-off and non-recurring items primarily relate to restructuring costs for acquired Oticon
Medical cochlear implant business.
* Excluding one-off and non-recurring items. See Notes on page 76 for further detail.
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Cash flow
$m
FY24
FY23
Change
EBIT (underlying)
504.8
396.1
108.7
Depreciation and amortisation
84.9
80.9
4.0
Increase in working capital and other
(79.2)
(42.4)
(36.8)
Net interest received
9.8
7.1
2.7
Income taxes paid
(131.5)
(79.3)
(52.2)
Operating cash flow
388.8
362.4
26.4
Capital expenditure
(89.8)
(95.9)
6.1
Other net investments
(15.9)
(29.8)
13.9
Free cash flow
283.1
236.7
46.4
Outlay from exercise of share options and
performance rights
(2.8)
(10.7)
7.9
Payments for share buyback
(43.0)
(29.6)
(13.4)
Dividends paid
(245.7)
(197.4)
(48.3)
Payment of lease liability and other
(33.5)
(30.2)
(3.3)
Increase / (decrease) in net cash
(41.9)
(31.2)
(10.7)
Operating cash flow increased $26.4 million to $388.8 million, with free cash flow increasing
$46.4 million to $283.1 million.
Key points of note:
• EBIT (underlying) increased $108.7 million as a result of strong business performance;
• The increase in working capital and other reflects investment in inventories to support
business growth;
• Capital expenditure (capex) of $89.8 million includes investment in the upgrade of the Lane
Cove facility and stay-in-business capex; and
• Payments for share buyback reflects the $43.0 million outlay for the repurchase of ordinary
shares as part of the on-market share buyback.
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Capital employed
$m
Jun24
Jun23
Change
Trade receivables
425.3
388.4
36.9
Inventories
391.6
311.5
80.1
Less: Trade payables
(303.2)
(270.4)
(32.8)
Working capital
513.7
429.5
84.2
Working capital / sales revenue
23%
22%
Property, plant and equipment
304.8
276.7
28.1
Intangible assets
451.0
444.1
6.9
Investments and other financial assets
181.3
188.1
(6.8)
Other net liabilities
(123.9)
(145.1)
21.2
Capital employed
1,326.9
1,193.3
133.6
Funding sources:
Equity
1,840.5
1,748.8
91.7
Less: Net cash
(513.6)
(555.5)
41.9
Capital employed
1,326.9
1,193.3
133.6
Capital employed increased $133.6 million to $1,326.9 million since June 2023.
Key points of note:
• Working capital increased $84.2 million, reflecting investment in inventories to support
business growth;
• Property, plant and equipment increased $28.1 million primarily reflecting investment in
capacity expansion at the Lane Cove manufacturing facility; and
• Net cash decreased $41.9 million to $513.6 million, primarily reflecting the buyback of
$43.0 million in shares.
Dividends
FY24
FY23
Change %
Interim ordinary dividend (per share)
$2.00
$1.55
29%
Final ordinary dividend (per share)
$2.10
$1.75
20%
Total ordinary dividends (per share)
$4.10
$3.30
24%
% Payout ratio
(based on underlying net profit)
69%
71%
% Franking (final dividend)
80%
70%
A final dividend of $2.10 per share has been determined, taking full year dividends to $4.10,
an increase of 24% and representing a payout of 69% of underlying net profit. The interim
dividend was 70% franked and the final dividend is 80% franked. The ex-dividend date is 17
September 2024. The record date for calculating dividend entitlements is 18 September 2024
with the final dividend expected to be paid on 10 October 2024.
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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 compare 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
$m
FY24
FY23
Change %
Underlying net profit
386.6
305.2
27%
FX contract movement
(3.0)
Spot exchange rate effect to sales revenue
and expenses*
28.6
Balance sheet revaluation*
5.4
Underlying net profit (CC)
386.6
336.2
15%
One-off net gains / (losses)
(29.8)
(4.6)
Statutory net profit (CC)
356.8
331.6
8%
* FY24 actual v FY23 at FY24 rates.
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Julia,
Nucleus System recipient
Governance
and risk
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Our approach to Corporate Governance
High standards of corporate governance and transparency are fundamental to the sustainable, long-term success of our
business. Cochlear’s strong governance framework provides a solid structure for effective and responsible decision-making.
The Board is committed to maintaining high standards of effective
corporate governance arrangements to help create, protect and
enhance shareholder value, while taking into account the interests
of other stakeholders, including employees, customers, suppliers
and the wider community.
The Board considers that Cochlear’s corporate governance
practices have been consistent with the recommendations
contained in the fourth edition of the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations
(ASX Principles) throughout the reporting period from 1 July 2023 to
30 June 2024 (Reporting Period).
This Corporate Governance Statement sets out the corporate
governance framework currently in place at Cochlear, is current as
at 15 August 2024 and has been approved by the Board.
For more information on Cochlear and our corporate governance,
including Company policies as well as the Board Charter and
Committee Terms of Reference, please go to the ‘Investors’ section
of our website: www.cochlear.com.
Cochlear Board of directors
Oversee the leadership of the Company with the aim of maximising its long-term sustainable value while delivering on
Cochlear’s mission to help people hear and be heard.
CEO & President
Responsible for the implementation of Cochlear’s strategic objectives and the day-to-
day management of Cochlear.
Executive team
Responsible for supporting CEO & President with the implementation of the strategic
objectives and operational, financial and risk management.
Our people
Aim to achieve individual and team goals (objectives) while conducting themselves in line with
the mission, HEAR behaviours, Global Code of Conduct, Company policies and procedures.
Audit and Risk
Committee
Oversee corporate
reporting, the
audit process, risk
management and
internal controls.
Medical
Science
Committee
Oversee medical
aspects of
Cochlear’s
implantable devices
program.
Nomination
Committee
Oversee Board
and Committee
composition,
renewal and
succession planning.
People and
Culture
Committee
Oversee values
and behaviours,
organisational culture
and remuneration
framework.
Product and
Services
Innovation
Committee
Oversee strategy
and implementation
of product and
related services
innovation.
Independent
Assurance
Governance framework
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Our Board is structured to add value
Cochlear is committed to maintaining a Board comprising directors with the appropriate mix of skills, experience, knowledge,
expertise and diversity required to oversee the business.
The role of the Board
The role of the Board is to provide leadership, including
setting Cochlear’s strategic direction, and to oversee the
management of the Company and the implementation of
good governance practice.
The Board Charter sets out the Board’s role and
responsibilities, and describes those matters expressly
reserved for the Board’s determination. The Board’s
responsibilities include:
• providing input into Management’s development of
corporate strategy and performance objectives and
approving the corporate strategy;
• succession planning for the Board, CEO & President and
the Executive team;
• satisfying itself that Cochlear’s remuneration policies are
aligned with the Company’s purpose, values, strategic
objectives and risk appetite;
• reviewing, ratifying and monitoring the effectiveness of
Cochlear’s systems of governance, risk management and
internal compliance and control;
• overseeing the integration of ESG into business strategy
and operations;
• approving and monitoring the progress of major capital
expenditure, capital management, operational budgets,
acquisitions, divestments and dividend policy; and
• approving Cochlear’s interim and annual reports and
financial statements and overseeing the integrity of
Cochlear’s accounting and corporate reporting systems.
The Board reviewed and updated its Charter during the
Reporting Period so that the role, responsibilities and
accountabilities of the Board remain appropriate and reflect a
high standard of corporate governance.
The CEO & President has responsibility for the day-to-day
management of Cochlear and is supported in this function
by the Cochlear Executive team. The CEO & President
is accountable to the Board and the Board monitors the
decisions and actions of the CEO & President and the Group’s
progress on achieving the short, medium and long-term
objectives as set by the Board.
Board meetings
The Board meets for at least eight scheduled meetings each
year. Other meetings are called as and when necessary. A
summary of Board and committee meeting attendance for
FY24 is set out on page 122.
In addition to the scheduled Board meetings each year, the
Board has frequent interactions across the Company in
different jurisdictions, through site visits and out of cycle
sessions with our leaders on topical areas relevant to our
global business. In FY24, a multi-day Board strategy session
was held and one meeting held offshore to provide detailed
local and regional reviews and engagement with offshore
employees, customers and research partners.
Members of the Board
The Board is comprised of seven independent Non-executive
Directors and the CEO & President, who is an Executive
Director.
A description of each Board member’s tenure, qualifications
and experience is set out in their respective biography on
pages 90 to 92.
Chair of the Board
The Chair is elected from the independent Non-executive
Directors. The role of the Chair includes:
• leading the Board in the performance of its duties;
• facilitating and promoting constructive communication
between Directors and between the Board and
management; and
• setting the Board’s agenda and ensuring adequate time is
available for discussion of all agenda items.
Board experience and skills
The Board believes that its membership should comprise
directors with an appropriate mix and diversity of skills,
professional experience, knowledge and expertise that
allows the directors individually, and the Board collectively, to
effectively discharge their responsibilities and duties.
The Cochlear Board Skills Matrix, on page 80, sets out the mix
of skills represented on the Board. The Nomination Committee
considers that the Board currently has an appropriate mix of
skills, experience, knowledge and expertise.
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Board skills matrix
The Board skills matrix sets out the mix of skills that the Board currently has in its membership and is reviewed annually to ensure the prescribed skills address our strategy and operating environment.
It is also used to guide the identification of potential director candidates as part of the ongoing Board renewal process and professional development initiatives for existing directors. The Board’s
collective knowledge is supplemented by briefings from management as well as internal and external subject matter experts, including on topics such as sustainability.
Skills
No. of Directors (8)
Medical device industry
Capability to oversee product commercialisation by applying a deep understanding of the medical device industry.
Healthcare industry
Competency in the healthcare industry including international health systems and medical science. Ability to influence
public policy development in healthcare.
Research and
development
Ability to develop product innovation to drive long-term business growth through strategic investment in research and
development activities.
Technology and
digital expertise
Ability to leverage new technologies, innovation processes and digital services to drive growth, realise scale benefits
and enhance the customer experience.
Strategy
Ability to develop and implement successful strategies.
Global perspective
Ability to manage and oversee an organisation’s business and strategic objectives from an international perspective.
Financial acumen
Ability to understand and analyse financial statements to assess financial performance and probe the adequacies
of internal financial and risk controls. Understanding capital management and capital markets.
Public policy and
regulatory affairs
Ability to manage the implications of public and regulatory policy on product development and commercialisation.
Ability to influence public policy development.
Risk management
Ability to identify and manage key risks to an organisation to ensure the delivery of long-term value to shareholders.
Sustainability
Ability to oversee the integration of environmental, social and governance into business strategy and operations to
support long-term value creation for all stakeholders.
Governance
Commitment to the highest standards of governance. Ability to assess the effectiveness of process and procedures,
and to manage legal, compliance and reputational risks.
People and culture
Understanding of remuneration practices and frameworks. Ability to attract talent, oversee talent management and
retention initiatives and develop succession plans. Ability to set and oversee corporate culture (‘tone from the top’).
Expert
Experienced
Limited experience
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Non-executive Director appointment and
election
The Board adopts a structured and rigorous approach to
Board succession planning. The Board regularly evaluates
and reviews its succession planning process to support the
progressive and orderly renewal of Board membership.
In selecting potential new directors, the Nomination
Committee considers the Board Skills Matrix, as set
out on page 80, as part of assessing the range of skills
and experience required to enable the Board to fulfil its
responsibilities into the future.
A Non-executive Director appointed to the Board must stand
for election at the Company’s next Annual General Meeting
(AGM). Cochlear provides shareholders with all material
information in its possession relevant to a decision on
whether or not to elect or re-elect a director.
New Non-executive Directors receive a letter of appointment
that sets out the terms of their appointment as well as a deed
of access and indemnity.
The Board has continued to implement and deliver on its orderly
renewal process and announced the appointment of Caroline
Clarke as a Non-executive Director on 30 July 2024. Caroline
Clarke’s appointment will be effective on 2 September 2024 and
she will stand for election at our 2024 AGM. Further information
will be available to shareholders in the notice of meeting.
Director independence
All directors are expected to bring an impartial judgement to
bear on Board decisions and are subject to the Board’s policy
regarding management of conflicts of interest, as well as
common law and Corporations Act requirements.
The Board formally assesses director independence annually.
The Nomination Committee Terms of Reference outline
how Cochlear determines the independence of Directors.
The matters to be considered include the factors set out in
the ASX Principles, as well as other facts, information and
circumstances that the Board considers relevant.
The Board has determined that each Non-executive Director
was independent throughout the Reporting Period.
The term in office of each director is disclosed on pages 90
to 92.
Induction and development
New Non-executive Directors participate in a comprehensive
induction program. The program includes the provision of a
briefing pack, online and face-to-face product training, one-
on-one meetings with the CEO & President and the Executive
team and visits to key functional areas.
Directors are expected to maintain the skills required
to discharge their obligations to the Company and
are encouraged to undertake continuing professional
development training.
Directors periodically undertake site visits to Cochlear’s
operations overseas and in Australia to assist the directors
in maintaining an appropriate level of knowledge of the
operations of the Company. These visits include interactions
with recipients, customers and employees and result in a
deeper understanding of our key markets. The directors visited
Cochlear’s operations in the US this reporting period.
In addition, directors may also approach the Chair with requests
to pursue learning related to the fulfilment of Board and Board
committee duties, such as attendance at conferences.
The Nomination Committee periodically reviews ways in
which the skills, experience, and expertise levels of existing
directors can be enhanced through learning and continuing
professional development. Recognising the importance
of providing continuing education, directors take part in a
range of training and continuing education programs which
are conducted by internal and external experts. Topics in
the program include digital disruption and technology, crisis
response table-top exercises and sustainability.
Background checks
Before any potential candidate is appointed as a member
of the Executive team or director, or recommended to
shareholders as a candidate for election as a director,
appropriate background checks are performed including as
to the person’s criminal record, bankruptcy history, character,
experience and education.
Access to information and independent
advice
The Board may seek independent professional advice at
the expense of Cochlear whenever the Board judges such
advice to be necessary for its members to discharge their
responsibilities as directors.
Individual directors may also seek independent professional
advice at the expense of Cochlear where the Chair agrees (in
advance) that separate advice is appropriate.
The Board receives from the Company Secretary copies of
all material market announcements promptly after they have
been made.
The role of the Company Secretary
The Company Secretary is accountable directly to the Board,
through the Chair, on all matters to do with the proper functioning
of the Board and Board committees. All directors have access to
the services and advice of the Company Secretary.
In accordance with the Company’s constitution, the
appointment and removal of the Company Secretary is a
matter for the Board as a whole. Details of the Company
Secretaries are set out in the Directors’ Report on page 122.
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Board committees
Cochlear has adopted a Board committee structure as part of our Governance Framework as set out in the diagram on page 78. Each Board committee has an independent director as its
Chair and comprises at least three members, majority of whom are independent directors.
Audit and Risk
Committee
Medical Science
Committee
People and Culture
Committee
Product and Services
Innovation Committee
Nomination
Committee
Members
Karen Penrose (Chair)
Glen Boreham, AM
Sir Michael Daniell, KNZM
Christine McLoughlin, AM
Prof Bruce Robinson, AC (Chair)
Sir Michael Daniell, KNZM
Michael del Prado
Dig Howitt
Christine McLoughlin, AM (Chair)
Glen Boreham, AM
Karen Penrose
Michael del Prado
Sir Michael Daniell, KNZM (Chair)
Glen Boreham, AM
Christine McLoughlin, AM
Karen Penrose
Michael del Prado
Prof Bruce Robinson, AC
Dig Howitt
Alison Deans (Chair)
Glen Boreham, AM
Sir Michael Daniell, KNZM
Christine McLoughlin, AM
Karen Penrose
Michael del Prado
Prof Bruce Robinson, AC
Responsibilities include:
• Review financial statements,
corporate reporting processes and
external audit reports
• Review and monitor key policies and
procedures to ensure compliance
with relevant laws, ASX Listing Rules
and reporting requirements
• Make recommendations to the Board
on the appointment and/or removal
of the external auditor and review
their performance
• Review the independence and
performance of the internal audit
function
• Review the assessment,
management and response to ESG
risks and opportunities
• Review risk management practices
and effectiveness of Cochlear’s risk
management framework at least
annually
• Monitor the establishment of
an appropriate internal control
framework
• Oversee clinical strategy and its
implementation by management
• Oversee regulatory compliance
• Oversee Cochlear’s quality systems,
including institution of critical
corrective actions
• Oversee Cochlear initiated or
sponsored clinical studies and
literature research
• Monitor risk management and the
adequacy of internal controls with
respect to medical risks associated
with Cochlear’s activities
• Make recommendations to the Audit
and Risk Committee with respect
to medical risks associated with
Cochlear’s activities
• Review and monitor the strategies
that shape organisational culture,
ensuring management fosters a healthy
culture that promotes legal, ethical and
responsible behaviour
• Oversee the development,
maintenance and monitoring of talent
management policies, programs and
procedures
• Develop and recommend to the Board
workplace health and safety metrics
and initiatives to ensure a safe working
environment at Cochlear
• Monitor the implementation of
Cochlear’s Diversity Policy and set
measurable objectives for achieving
diversity
• Review and make recommendations to
the Board on the remuneration of the
Chair, Non-executive Directors, the
CEO & President and other Executive
team members
• Oversee the Company’s strategy and
implementation for product and related
services innovation and business
development
• Oversee resource allocation to support
Cochlear’s agreed corporate strategy
• Monitor risk management and the
adequacy of internal controls to
manage risks associated with the
product and services research and
development aspects of Cochlear’s
business and liaise with the Audit and
Risk Committee when appropriate
• Review composition of the Board and
mix of expertise, skills, knowledge and
diversity
• Recommend to the Board candidates
the Committee considers appropriate
for appointment, re-election or removal
from the Board
• Establish and maintain process for
performance evaluation of individual
directors and the Board as a whole
• Establish and maintain the selection,
appointment and succession planning
process for the CEO & President
• Ensure effectiveness of induction
process for individual directors and
recommend continuing professional
development to the Chair of the Board
• Assess the independence of directors
and review any changes in interests,
positions, associations or relationships
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Board of
directors
Senior
Leaders*
Diversity and inclusion
As a global business, our workforce is made up of individuals with diverse skills,
values, backgrounds and experiences. Cochlear is committed to providing an
inclusive workplace where individual differences are valued.
The People and Culture Committee approves the diversity-related measurable objectives and assesses progress towards
achieving those objectives on an annual basis. Progress towards achieving those objectives is outlined below:
Achieve 40 | 40 | 20 gender
balance in Senior Leadership
roles and minimum of 30% female
representation on the Board
Progress achieved:
• Our Board and Senior Leadership
targets have been met.
• Females comprise 45% of
Growth and High Potential talent,
amongst our Senior Leader cohort.
Females also comprised 55% of all
promotions made during the year.
• We continued to deploy our ‘Hiring
to Win’ program and embed our
‘Sound Recruitment’ practices to
counteract unconscious bias and
make fair and equitable decisions.
Our sustained attention on attraction
and recruitment practices have
resulted in 54% of placements in
Senior Leader roles being female,
significantly higher than FY23 (47%)
and FY22 (40%).
All employees embrace diversity
and foster an inclusive culture
Progress achieved:
• We continued to deploy our Culture
Conversations series to employees
through all levels of the organisation.
• In March we launched our Innovate
Reconciliation Action Plan (RAP),
which builds on our Reflect RAP,
demonstrating our vision for
reconciliation with Australia’s First
Nations peoples. The Innovate RAP
focuses on three key areas – hearing
and ear health equity, cultural safety
and understanding, and employment
opportunities and outcomes.
• Programs focused on continuing to
build an inclusive workplace have
been progressed, including Safe to
Speak Up, Respectful Workplace
training, Mental Health for Managers,
Inclusive Leadership and Smarter
Meetings.
Create equal access to work to
generate a wider pool of talent
by making it easier for people to
successfully work at Cochlear
Progress achieved:
• 89% of our people believe they have
flexibility to manage their work and
personal responsibilities.
• We continue to monitor and review
our performance and remuneration
outcomes and metrics and educate
people managers on making
objective, fair and equitable pay
decisions.
• Our Recruitment Policy, Career
Development Policy, Remuneration
Governance Policy and Performance
Policy are designed to ensure we
attract diverse pools of talent and
that opportunities and rewards are
provided in a fair and equitable
manner.
* For the purposes of this Statement, Senior Leaders are defined as all employees in Bands 1, 2 and 3; the three most senior levels of roles within the Company, with Band 1 being the Executive Team.
Board of directors
30 June 2020
30 June 2021
30 June 2022
30 June 2023
30 June 2024
20%
30%
33%
40%
38%
Senior Leaders*
30 June 2020
30 June 2021
30 June 2022
30 June 2023
30 June 2024
36%
38%
41%
43%
43%
All employees
30 June 2020
30 June 2021
30 June 2022
30 June 2023
30 June 2024
53%
52%
52%
52%
51%
Cochlear’s workplace profile
The below summary of Cochlear’s workplace profile
shows the percentage of females by employment
category as of 30 June 2024.
Overall, females represent 51% of Cochlear’s workforce
and we maintained 43% female representation in Senior
Leader roles.
All
employees
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Performance evaluation and remuneration
Remuneration
The Board is responsible for Cochlear’s remuneration
strategy and policy. Cochlear has disclosed its policies
and practices regarding the remuneration of directors and
executives in the Remuneration Report on pages 98 to 120.
It is the Company’s policy that participants in the Cochlear
Executive Incentive Plan (CEIP) are not permitted to enter
into transactions to limit the economic risk of participating in
the CEIP. Our Trading Policy and the CEIP documents include
provisions to reflect this position.
Board performance evaluation
The Board (with assistance, where necessary or appropriate,
from external consultants) regularly carries out a review of
the performance of the Board, its committees, and each
director. A detailed and externally facilitated Board review
was undertaken during the Reporting Period, which involved
the external facilitator holding individual discussions with each
director, the Company Secretary and certain Executives.
The review assesses, amongst other things:
• the effectiveness of the Board and its committees and
whether the Board and each committee has members with
the appropriate mix of skills and experience to properly
perform their functions;
• the contribution made by each director at meetings and in
carrying out their responsibilities as directors generally; and
• whether the content, format and timeliness of agendas,
papers and presentations provided to the Board and each
committee are adequate for them to properly perform
their functions.
The Board establishes the procedures for and oversees the
assessment program. The results and any key opportunities
following the assessment are documented, together with
actions to be undertaken in response to those areas for
development that are agreed by the Board.
The Board also undertakes regular reviews of its structure
and composition, to manage retirements and succession
planning in an orderly way and to ensure the Board continues
to have the appropriate overall skill set.
Executive performance evaluation
The CEO & President and each member of the Executive
team has a written contract with the Company, setting out
the terms of their appointment or employment (as applicable)
including details of their role, responsibilities, remuneration
and their disclosure/compliance obligations.
All employees, including members of the Executive
team, participate in annual performance reviews, where
achievement of key goals is assessed and future goals
are agreed upon. The Chair facilitates the performance
evaluation of the CEO & President with ultimate oversight by
the Board.
A performance evaluation for the CEO & President and the
Executive team took place during the Reporting Period and
was carried out in accordance with the above process.
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Lawful, ethical and responsible behaviour
Our Company values – as demonstrated through our Global Code of Conduct and our global HEAR behaviours – guide us on
our expected behaviours. Our governance policies play a vital role in guiding decision-making and conduct across Cochlear.
Our values and HEAR Behaviours
Our values are the core principles and beliefs that guide
our decision-making, behaviour and interactions within our
organisation. At our core, we value:
• Respect: We value all individuals, regardless of
background or beliefs.
• Integrity: We are honest, ethical and fact-based.
• Accountability: We own our responsibilities, actions and
outcomes.
Our HEAR behaviours are integral to the way we behave, our
Company’s culture and how we do business by providing a
framework for working and interacting together.
Further information about our values, the four pillars of our
HEAR behaviours and the micro behaviours of each pillar can
be found on page 49.
Our Governance Policies
Global Code of Conduct
Cochlear is committed to acting lawfully, ethically and
responsibly, wherever we operate around the world.
This commitment is reflected in our Global Code of Conduct
(Code), which applies to all our employees, officers and
directors, contracted staff, contractors and consultants
and third parties that conduct business for or on behalf of
Cochlear. Cochlear’s stance on anti-bribery and corruption
and related guidelines form part of the Code. In addition, the
Code also covers topics such as insider trading, competition
and consumer laws, human rights and confidentiality.
The Code is available on the Company’s website in English
and other languages relevant for our global business.
Any material breaches of the Code, including bribery or
corruption, are reported to the Audit and Risk Committee.
Whistleblower Protection Policy
The Whistleblower Protection Policy empowers eligible
persons to report any suspected or actual misconduct in
relation to Cochlear. The Cochlear Whistleblower Service
is available anywhere in the world, in multiple languages, 24
hours a day and 7 days a week. The Whistleblower Protection
Policy is available on the Company’s website in English and
other languages relevant for our global business.
All material incidents reported under the Whistleblower
Protection Policy are reported to the Audit and Risk Committee.
Continuous Disclosure Policy
Cochlear has obligations under the Corporations Act and ASX
Listing Rules to provide shareholders and the market generally
with timely, direct and equal access to information which may
have a material effect on the price or value of its securities.
Cochlear’s policy is to strictly comply with these requirements
as set out in our Continuous Disclosure Policy.
Trading Policy
Cochlear’s Trading Policy is an important tool in managing the
risks associated with dealings in securities. The Policy helps
to protect Cochlear’s reputation and assists our people in
complying with the laws against insider trading.
Diversity & Inclusion Policy
The Diversity & Inclusion Policy sets out Cochlear’s
commitment to providing an inclusive workplace that
is diverse and representative of our customers and the
communities in which we operate.
Supplier Code of Conduct
The Supplier Code of Conduct outlines the standards of
behaviour we require our suppliers to maintain in relation
to human rights, corporate governance, ethics, safety and
environmental sustainability. Cochlear will work with our suppliers
to encourage the standards outlined in that Code to be met.
Copies of our Governance Policies summarised on
this page are available in the ‘Investors’ section of our
website, www.cochlear.com
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Shareholder engagement and corporate reporting
Shareholder engagement
Communications with shareholders
Shareholders and other stakeholders are informed of material matters affecting the Company
through ASX announcements and the ‘Investors’ section of our website contains a range
of useful information, including a dedicated section on ‘Shareholder communications’.
Shareholders have the option to receive communications from, and send communications to,
the Company and its share registry electronically.
Information most likely to be of interest to shareholders is available under the ‘Investors’ section
of our website and includes the Company’s published reports, presentations and webcasts,
shareholder meeting details, company policies and material ASX announcements.
Investor relations program
We have an investor relations program designed to facilitate effective two-way
communications with analysts, investors, proxy advisors and the media. This includes regular
briefings at interim and full year results announcement, investor days held periodically, and
separate one-on-one and/or small group meetings when requested and in compliance with
our governance parameters.
The Company will not disclose any information in discussions with analysts and investors
that may have a material effect on the price or value of the Company’s securities unless such
information has already been announced to the ASX. Any new and substantive investor or
analyst presentations are released on the ASX Market Announcements Platform ahead of the
presentation and following which, are also made available on our website.
Annual General Meeting
Cochlear is committed to facilitating shareholder participation in shareholder meetings,
and to respectfully dealing with shareholder inquiries. Our 2023 AGM was held as a hybrid
meeting offering shareholders a choice to either attend the AGM in person or online. All
resolutions put to the AGM are voted on by poll.
The Company provides a forum to address individual shareholders’ questions at each AGM. In
addition to attending the AGM, shareholders may view a webcast of the AGM online. Shareholders
who are unable to attend the AGM are able to submit questions and comments to Cochlear in
advance of the meeting. Where appropriate, questions submitted will be answered at the AGM.
Corporate reporting
Integrity of disclosures in periodic reports
Cochlear has an internal verification and approval process to support the integrity of the
information being disclosed to the market in periodic corporate reports which are not
required to be audited or reviewed by our external auditor. The specific process for each
periodic corporate report will vary depending on the particular release but may generally
involve:
• the individuals with responsibility for the information:
• validating key information back to the source;
• confirming to the best of their knowledge and belief that the information is accurate and
not misleading;
• the review of the report or document by relevant internal subject matter experts (and in
some cases our external advisers); and
• the review by and confirmation from the individual responsible for the corporate report
that it is appropriate for release.
Periodic corporate reports released to the market may also, depending on the report, be
required to be approved by the Board or the Audit and Risk Committee.
Assurances by management
Before approving the financial statements for each full year and half year, the Board receives
from the CEO & President and Chief Financial Officer a declaration that, in their opinion,
Cochlear’s financial records have been properly maintained and that the financial statements
comply with the appropriate accounting standards and give a true and fair view of Cochlear’s
financial position and performance and that their opinion has been formed on the basis of a
sound system of risk management and internal control which is operating effectively.
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Risk management and assurance
Cochlear is committed to the identification, monitoring and management of material financial and non-financial risks
associated with its business activities.
Risk management oversight
The Board sets Cochlear’s appetite for risk and provides oversight of the practices used by
management to govern risk, and addresses specific issues escalated by the Audit and Risk
Committee or management. Senior leadership across Cochlear are responsible for reinforcing
and modelling the key behaviours required to maintain a sound risk culture, including
encouraging constructive reporting, challenging and transparency.
Senior leadership also reports to the Board, through the Audit and Risk Committee, on the
adequacy of the risk management systems and processes.
The risk management framework has regard to relevant regulations, standards and guidelines
including the ASX Principles and the Australian/New Zealand standard AS/NZS ISO 31000:2018
Risk management – Guidelines. The Audit and Risk Committee reviews the effectiveness of
Cochlear’s risk management framework at least annually and this review was last conducted in
May 2024.
The diagram below sets out a high-level description of how risk governance operates at Cochlear.
Environmental and social risks
Cochlear monitors its exposure to risks, including environmental and social risks. Principal
business risks (and how those risks are managed or intended to be managed) are described on
pages 88 to 89.
Principal business risks include interruption to product supply, market access and product
quality risks. There are no additional material exposures to environmental and social risks in
addition to those disclosed in this Report.
Cochlear’s approach to sustainability is outlined on pages 170 to 171.
Internal audit
Cochlear’s Internal audit function is managed by and within the Group Risk and Assurance
team and is accountable to the Board. Internal audit provides assurance services to
management and the Board in relation to the internal controls, risk management framework
and governance of Cochlear. It does so through:
• performing audits in accordance with an Internal Audit Plan. The Plan is formulated using a
risk-based approach and approved annually by the Audit and Risk Committee;
• having direct access to the Board through the Audit and Risk Committee, with the right to
communicate to it in the absence of management; and
• regular reporting to the Executive team and the Audit and Risk Committee on the results of
its audits.
The Audit and Risk Committee reviews and approves the Internal Audit Plan every six months.
It also reviews the hiring and performance of the Vice President Group Risk and Assurance
and the Internal audit function. This process was followed during the Reporting Period.
Business
(1st line)
Owns and manages risk
Oversight functions
(2nd line)
Oversees and sets frameworks and standards
Assurance
(3rd line)
Provides independent and
objective assurance and
advice of frameworks and
controls effectiveness
Board of directors
• Provides oversight of risk exposures and
risk taking
• Sets and communicates expectations for
risk management
• Sets risk appetite
Executive team
• Implements business strategy and
resolves significant enterprise risk issues
• Provides recommendations to the Board
on risk policy, frameworks, risk appetite
and risk practices
• Implements enterprise risk management
in the business units
Risk leadership
Lines of defence
Business unit
line management
Group risk
Health &
safety
Legal &
compliance
Quality &
regulatory
People & culture
Finance
Internal audit
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Financial
statements
Additional
information
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.
Risk
Description and potential consequences
Strategies used to mitigate the risk
Product and
services
innovation and
competition
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 that meet the needs of customers. 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.
We strategically review our product and services development plans considering market
dynamics, the competitive landscape and technological advancements.
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.
Interruption to
product supply
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.
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 review the business continuity plans for manufacturing and maintain business
interruption insurance. Qualitative scenario analysis is conducted to understand the
impact of climate risks to our product supply.
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.
Pandemics
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.
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.
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Risk
Description and potential consequences
Strategies used to mitigate the risk
Market access
The majority of our developed market customers rely on a level of reimbursement
from insurers and government health authorities to fund their purchases. We
recognise that macroeconomic pressure on government healthcare budgets may
lead to pressure on reimbursement levels, impair access and impact growth.
Healthcare-related taxes by government agencies could also impact candidates’
ability to access our products.
We continue to work closely with reimbursement and government agencies in the
countries where we market our products to emphasise the health and economic
benefits of cochlear and acoustic implants. We seek to ensure our pricing reflects
the value our products bring, and that it remains competitive and responsible.
Credit and
currency
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.
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 and 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.
Privacy and
information
security
We handle and store personal information, including health information, for our
customers and employees. The external risk environment continues to increase as
the global landscape of regulation develops across areas such as data protection,
data sovereignty, privacy and information security as well as the introduction of
legislation around the use of AI and Machine Learning. The external risks that
may lead to the privacy and security of the data we hold being compromised also
continues to rise as our digital footprints evolve, geopolitical conflicts increase
and cyber threats mature and become more sophisticated. Minimising this risk is
of critical importance to Cochlear.
We have dedicated privacy and information security professionals that provide
specialist support. Our information security and privacy frameworks are supported
by principles, processes and regular training and awareness programs. Our
information security controls are regularly assessed through both management and
independent reviews, with mature processes in place to respond to data or privacy-
related incidents should they occur. Whilst we maintain cyber insurance as part
of our overall risk mitigation strategy, our proactive approach aims to ensure that
controls of these risks are prevalent.
Geopolitical risk
Our business is subject to risks associated with doing business internationally.
Unexpected geopolitical 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 our suppliers and reduce key dependencies. Engagement with governments,
experts and regulators enables us to ensure compliance with the latest regulations,
economic sanctions and trade rulings.
Legal, regulatory
and governance
We are subject to a wide range of legal and regulatory requirements in relation
to our products, their sale, privacy and data protection, competition, health and
safety, employment and corporate regulation. Failure to comply with any legal
and regulatory requirements could negatively impact our operations, customers,
employees and shareholders, and expose Cochlear to investigations, litigation or
prosecution which may adversely impact our financial performance, our ability to
operate in certain markets or reputation.
Our risk exposure is stable due to our internal systems, processes and monitoring to
ensure proactive and timely response to regulatory changes. We have a dedicated
legal team, supported by Risk and Compliance teams, to support our business in
the provision of advice on, and monitoring of, legal, regulatory and policy changes.
Our compliance framework and assurance programs are evolving to support the
changing nature and complexity of our compliance obligations.
Talent
management
Our employees are critical to our success. We operate in a competitive
environment in relation to attracting, retaining and developing 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. We perform regular employee surveys to obtain
feedback that enables us, along with other mechanisms, to adapt and refine our
existing people strategies and continuously improve employee experience.
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Board of directors
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, Calix
Limited, Deputy Group Pty Ltd and Fitness Passport Pty Ltd.
Director of The Observership Program.
Former directorships: SCEGGS Darlinghurst Limited,
Westpac Banking Corporation, Insurance Australia Group
Limited and Social Ventures Australia. Former Member of
AICD Corporate Governance Committee.
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 Product and Services Innovation Committees.
Background: 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, 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 and a Fellow of Engineers Australia. He
was appointed as President of Cochlear on 31 July 2017 and
became CEO & President on 3 January 2018.
Qualifications: BE (Hons), MBA
Glen Boreham, AM
Non-executive Director
Appointed to the Board 1 January 2015: Member of the
Audit & Risk, Nomination, People and Culture and Product and
Services 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: Strategic Advisor, IXUP.
Former directorships: Southern Cross Media Group, Data#3
and Link Group. 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
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Sir Michael Daniell, KNZM
Non-executive Director
Appointed to the Board 1 January 2020: Chair of the Product
and Services 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.
Other boards: Director, Fisher & Paykel Healthcare Corporation
Ltd. Director, Tait International Limited. Director, Medical
Research Commercialisation Fund.
Former directorships: Advisory Board Chair, Te Titoki
Mataora (NZ).
Qualifications: BE (Hons), Electrical, CMInstD (NZ)
Michael del Prado
Non-executive Director
Appointed to the Board 1 January 2022: Member of the
Medical Science, Nomination, People and Culture and Product
and Services 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
Karen Penrose
Non-executive Director
Appointed to the Board 1 July 2022: Chair of the Audit
and Risk Committee. Member of the People and Culture,
Nomination and Product and Services Innovation Committees.
Background: Extensive executive career in senior leadership
and Chief Financial Officer roles in financial services. An
experienced 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, Bank
of Queensland Limited and Reece Limited. Director, Ramsay
General De Sante (associated with Karen’s directorship of
Ramsay Health Care Limited), Marshall Investments Pty
Limited, NSW Waratahs Ltd and Waratahs Rugby Pty Ltd.
Former directorships: Vicinity Centres, Estia Health Ltd,
Rugby Australia Limited.
Qualifications: BCom, CPA, FAICD
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Christine McLoughlin, AM
Non-executive Director
Appointed to the Board 1 November 2020: Chair of the
People and Culture Committee. Member of the Audit and Risk,
Nomination and Product and Services Innovation Committees.
Background: Extensive experience as a director on the boards
of ASX Top 50 Companies in financial services (including
banking, life insurance, superannuation, asset management
and general insurance), resources, health insurance and
infrastructure sectors over the past 14 years. She is a Fellow of
the Australian Institute of Company Directors, and a member
of Chief Executive Women. She has been active in the not-for-
profit sector over her entire career.
Other boards: Chairman of the Suncorp Group Limited.
Co-founder and Chairman of the Minerva Network.
Former directorships: Chairman and Director of Venues
NSW and Chairman of Destination NSW. Director, nib Holding
Limited, Whitehaven Coal Limited, Spark Infrastructure, the
McGrath Foundation and more recently the Chancellor of the
University of Wollongong.
Qualifications: BA, LLB (Hons), FAICD
Prof Bruce Robinson, AC
Non-executive Director
Appointed to the Board 13 December 2016: Chair of Medical
Science Committee. Member of the Nomination and Product
and Services Innovation Committees.
Background: Over 20 years’ leadership experience as an
academic physician/scientist across research, healthcare and
medicine, and tertiary education. Co-Head of the Cancer
Genetics Laboratory at the Kolling Institute for Medical
Research and Chair of Research, North Sydney Local Health
District. Former Dean, The University of Sydney’s Sydney
Medical School and Head of Medicine at Sydney’s Royal North
Shore Hospital.
Other boards: Director, MaynePharma, QBiotics, Ecofibre
and EOF BIO LLC (associated with the Ecofibre directorship).
Deputy Chairman (former Chairman), Hoc Mai Foundation.
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 and Woolcock
Institute of Medical Research.
Qualifications: MD, MSc, FRACP, FAAHMS, FAICD
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Executive team
Dig Howitt
CEO & President
Dig was appointed Chief Executive Officer and President of
Cochlear in January 2018. He joined Cochlear in 2000 and has
held several positions in both Manufacturing and Logistics and
the Asia Pacific Region.
Prior to joining Cochlear, Dig worked as a consultant for the
Boston Consulting Group and held general management
positions in Boral and Sunstate Cement.
Dig is a member of the Champions of Change Coalition, STEM
group and is also a Fellow of Engineers Australia.
Qualifications: BE (Hons), MBA
Stu Sayers
Chief Financial Officer
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 and McKinsey.
Stu will be appointed President, Asia Pacific & Latin America
from 1 January 2025.
Qualifications: BEc (Hons), MBA
Jan Janssen
Chief Technology Officer
Jan joined Cochlear in 2000 and was appointed Senior Vice
President Research & Development in 2005.
Jan leads a team of over 600 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.
In 2017 Jan was appointed Chief Technology Officer and took
on the additional accountability for Business Development.
Since 2019 he has also been accountable for Quality and
Regulatory Affairs.
Jan holds 12 granted patents in the field of implantable hearing
technology.
Qualifications: MScEE
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Lisa Aubert
President, North America
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 April
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.
Lisa has been working in the cochlear implant specialty for
over 25 years and was once a customer of Cochlear’s. She was
the primary research audiologist on one of the first cochlear
implant programs in the UK and was part of the team that
lobbied the government for funding.
Qualifications: BA Communication Disorders, MA in
Audiology, MBA
Richard Brook
President, EMEA
Richard is responsible for the development and execution of
the strategic direction for all our operations in Europe and
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.
Richard will be stepping down as President, EMEA at the end
of December 2024.
Qualifications: BSc Management, MBA
Anthony Bishop
President, Asia Pacific & Latin America
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.
With nearly 30 years of experience in the MedTech industry,
including over 20 years at Johnson & Johnson Medical,
Anthony has held various roles in general management
and sales & marketing across country, regional, and global
contexts. Anthony’s professional journey has taken him to
Australia, NZ, Singapore, the UK, China, and the USA.
Anthony will be appointed President, EMEA from 1 January
2025.
Qualifications: BBus (Hons), MManagement, GAICD
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Dean Phizacklea
Senior Vice President, Global Strategic Marketing
Dean joined Cochlear in June 2016 and is responsible
for product and services planning, marketing and
commercialisation, customer acquisition, consumer marketing,
innovation, market access, insights, brand, 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
Karen O’Driscoll
Chief Information Officer
Karen has global responsibility for Cochlear’s information
technology strategy and management. She leads a team of
more than 350 information technology professionals and is
responsible for strengthening business processes and systems
to improve efficiency and agility, enabling the business to be
more scalable and provide even better solutions for customers.
Karen joined Cochlear in February 2023. Prior to Cochlear,
Karen was Group Executive for Digital Services for Ventia Ltd
and brings over 20 years of experience across pharmaceuticals
and infrastructure industries.
Qualifications: BSc (Hons), GAICD
Greg Bodkin
Senior Vice President, Global Supply Chain
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
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Jennifer Hornery
Senior Vice President, Global People & Culture
Jennifer joined Cochlear in 2008 working in senior HR
business partnering roles until her appointment as SVP, Global
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
Rob McGrory
Group General Counsel & Company Secretary
Rob was appointed as Group General Counsel in September
2023 and as Company Secretary in April 2024. Rob is
responsible for Cochlear’s corporate legal and governance
functions.
Rob has more than 25 years of experience as in-house lawyer
working across diverse industries from electricity generation,
energy trading, and financial services. Most recently Rob was
a General Counsel at Westpac Group.
Qualifications: BBus (Accountancy), LLB, LLM, Grad Dip in
Legal Practice.
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Financial
Statements
Katarina,
Baha Start recipient
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Remuneration report
Key management personnel (KMP)
101
Our remuneration strategy and framework
102
Executive KMP remuneration received in FY24 (unaudited)
106
Executive KMP remuneration and link to performance
107
Executive KMP statutory remuneration disclosure
111
Executive service agreements
112
Remuneration governance
112
Executive KMP equity disclosures
113
Non-executive Director fees
118
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).
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Letter from the Chair of the People and Culture Committee
Dear Shareholders,
As the newly appointed Chair of the People and Culture Committee, I am pleased to present, on
behalf of the Board, Cochlear’s Remuneration report for 2024.
This year, we have made great progress in our mission to help more people to hear, delivering
financial and operational results that exceeded expectations. We continued to make good
progress across our strategic priorities, balancing short-term and long-term investment to support
our ambition to deliver consistent growth over the long-term. Highlights included the launch of
the Cochlear™ Osia® OSI300 Implant, helping over 50,000 recipients to hear better with latest
generation sound processor technology and delivering strong growth in the seniors segment.
As a Board, an important focus is on building a stronger organisation to enable us to grow and
deliver for our customers over the long term. To continue to ensure we have the necessary talent,
capabilities and culture to enable Cochlear to achieve its growth aspirations, we have commenced
the implementation of our new Talent Vision and Strategy. This approach will focus Cochlear on
strengthening the capabilities of all employees to deliver our growth ambitions over the next 10
years, and further enhance our culture of innovation, achievement and inclusion.
We recognise leadership is one of the most powerful levers for culture development and that the
increasing complexity of the global environment will require leaders to continue to acquire new
skills and demonstrate a broader set of leadership attributes. To meet this challenge, we took
further steps towards developing both enterprise and expert leadership capability so that our
leaders are better equipped to navigate these complexities.
Diversity, equity and inclusion continue to be key priorities as they are fundamental to our success
and in FY24 we continued to make progress towards the achievement of our diversity, equity and
inclusion goals. This focus is particularly critical for Cochlear as an innovation leader and a global
Australian ASX listed business selling to customers in over 180 countries.
FY24 performance and reward outcomes
Cochlear’s remuneration strategy is designed to provide competitive and equitable remuneration
that reflects a globally integrated business, rewards responsible behaviours and aligns to the
required level of performance to create long-term stakeholder value. Every year we invest in
activities that lay the foundations for long-term success and we want Executives to focus
appropriately on these long-term goals. As such, our variable Short-Term Incentive (STI) is
structured to have an appropriate weighting to strategic measures given the importance of
consistent investment every year and over long timeframes and our ambition to be here to
support a lifetime of hearing for our recipients.
We employ a combination of qualitative and quantitative performance measures to assess
achievement each year. Longer-term initiatives are, by nature, more difficult to measure on an
annual basis and the Board needs to use some judgement to assess progress against specific
qualitative milestones. Nevertheless, we continue to refine our approach each year on our STI
strategic measures.
Our remuneration strategy is also designed to ensure remuneration meets the expectations of our
customers, shareholders, and the community. The Terms of Reference of the People and Culture
committee has been updated to reflect the importance of stakeholder interests in decisions
related to Executive remuneration.
The Board is satisfied that the reward outcomes for FY24 reflect our remuneration strategy and
the Company’s performance. In FY24 we delivered a record $2,258 million in sales revenue,
increasing 15.5% (12.1% in constant currency), and underlying net profit increased 27% (15% in
constant currency) to $387 million, alongside retaining market leadership with gains in key
markets.
The performance of Executive KMP, in line with company performance and their FY24 objectives,
was assessed by the Board who awarded an average STI outcome for KMP of 115.9% of target. The
CEO & President was awarded an STI payment of 115.9% of target, of which 40% is deferred as
service rights for two years. For long-term incentives (LTIs), relative total shareholder return (TSR)
against the ASX 100 was above median (at the 63.6th percentile) and basic earnings per share
(EPS) represented a 23.9% compound annual growth rate over the last four years. This resulted in
86.3% vesting under the FY21-24 LTI plan.
Further details on this year’s remuneration outcomes are provided in this report.
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Non-executive Directors
On an ongoing basis, the Board seeks to ensure renewal and diversity across management and the
composition of Board committees, and in FY24 we rotated the role of Chair of the People and
Culture committee. Additionally, I would like to take this opportunity to welcome Caroline Clarke
who will join the Board and this committee on 2 September 2024.
Our executive remuneration framework
There were no major changes to our executive reward framework during FY24. As per last year’s
remuneration report we adjusted the FY24 LTI grant to use face value as the basis for the
allocation of performance rights noting the greater alignment this provides between Executives
and shareholders. We will continue this approach for the FY25 LTI grant, as well as service rights
granted as part of our deferred STI. Whilst no further changes to the executive remuneration
framework are planned for FY25 at this point, the Board recognises the ongoing strong
competition for talent across many of the markets in which we operate and is focused on best
positioning Cochlear to operate with a highly capable group of Executives to deliver our business
priorities into the future.
Thank you for your support in FY24, and I welcome your feedback on our remuneration report.
Christine McLoughlin, AM
Chair, People and Culture Committee
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1. Key management personnel
This report covers key management personnel (KMP) who have authority for planning, directing, and controlling the activities of Cochlear and comprises Non-executive Directors (NEDs) and executive KMP as
outlined in the table below.
Name
Position
Term as KMP
Non-executive Directors1
Alison Deans
Chair
Full year
Glen Boreham, AM
Non-executive Director
Full year
Sir Michael Daniell, KNZM
Non-executive Director
Full year
Michael del Prado
Non-executive Director
Full year
Christine McLoughlin, AM
Non-executive Director
Full year
Bruce Robinson, AC
Non-executive Director
Full year
Karen Penrose
Non-executive Director
Full year
Yasmin Allen, AM
Non-executive Director
1 July 2023 to 31 March 2024
Andrew Denver
Non-executive Director
1 July 2023 to 17 October 2023
Executive KMP
Dig Howitt
CEO & President (CEO&P)
Full year
Jan Janssen
Chief Technology Officer (CTO)
Full year
Stu Sayers
Chief Financial Officer (CFO)
Full year
1As per the ASX announcement dated 30 July 2024, a new Non-executive Director (Caroline Clarke) will be appointed to the Cochlear Board on 2 September 2024.
There are no other changes to KMP after the reporting date and before the date the Directors’ report was authorised for issue.
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2. 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.
Our mission
We help people hear and be heard.
We empower people to connect with others and live a full life. We help 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.
Our strategy
Our goal is to deliver value by helping more people to hear, which contributes to building a healthier and more productive society. Our strategy is focused on improving awareness of and access to
implantable hearing solutions for people indicated for our products, creating value across five pillars.
A lifetime of
hearing solutions
A healthier and
more productive
society
Thriving
people
Environmental
responsibility
Sustained
value
Our strategic priorities determine how we focus our time and resources to create value.
Retain market leadership
Grow the hearing implant
market
Build a stronger organisation
Minimise environmental
impact
Consistent and sustainable
growth
The performance measures across our incentive plans reflect achievement of both financial and strategic objectives.
Financial measures
Underlying net profit
Sales revenue
Compound annual growth rate in underlying earnings per share
Strategic measures
Achievement of strategic priorities and growth initiatives
Market measures
Relative total shareholder return (TSR)
With actual outcomes directly driving executive remuneration.
Fixed
remuneration
Short-term
incentive
Long-term
incentive
Total
remuneration
=
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2.1 FY24 remuneration framework
Our executive remuneration framework supports the Corporate strategy and is guided by our remuneration principles.
The total remuneration for executives is made up of both fixed and variable remuneration. Variable remuneration is provided through the short-term incentive (STI) and long-term incentive (LTI) plans.
Fixed remuneration
Fixed remuneration comprises base salary,
superannuation, annual leave loading and non-monetary
benefits (insurances).
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.
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 People and Culture
Committee (P&CC).
Short-term incentive (STI)
Short-term incentive opportunity that awards
against business and individual performance objectives.
Business performance is measured through a balanced
scorecard, with 60% weighted on financial measures and 40%
on following strategic measures:
• Retain market leadership
• Grow the hearing implant market
• Build a stronger organisation
• Minimise environmental impact
• Consistent and sustainable growth
Individual performance includes assessment against business
outcome, strategic priorities, and ways of working goals.
60% of the STI is delivered in cash and the
remaining 40% is deferred as share rights for two years.
Further details on STI are provided on page 104 (Table 2.3)
Long-term incentive (LTI)
Long-term incentive opportunity focused on
growth strategy, long-term priorities, and
alignment with shareholder value creation over a
four-year performance period.
Share rights are granted at the start of the performance
period with value realised at time of vesting.
The LTI aligns executives to overall company
performance through two measures focused on
strategic business drivers and long-term shareholder
return:
• Relative TSR performance – 50% weighting
• Basic EPS – 50% weighting
Further details on LTI are provided on page 105 (Table 2.4)
2.2 FY24 remuneration mix
A revised executive remuneration mix is effective from 1 July 2023. The remuneration mix for executive KMP is strongly weighted towards at-risk performance-based remuneration to ensure a strong focus on
short, medium and long-term performance. A portion of executive remuneration is delivered in equity (deferred STI and LTI), to align our executives with shareholder interests.
The following diagrams set out the maximum and target remuneration mix for executive KMP in FY24.
CEO&P
Fixed remuneration – 36%
Target STI – 35%
Target LTI – 29%
21% cash
14% deferred
share rights
Share rights
Total Target Mix
Performance based
Total Maximum Mix
Fixed remuneration– 25%
Maximum STI – 44%
Maximum LTI – 31%
26% cash
18% deferred
share rights
Share rights
Performance based
Other executive KMPs
Fixed remuneration – 42%
Target STI – 35%
Target LTI – 23%
21% cash
14% deferred
share rights
Share rights
Total Target Mix
Performance based
Total Maximum Mix
Fixed remuneration– 30%
Maximum STI – 45%
Maximum LTI – 25%
27% cash
18% deferred
share rights
Share rights
Performance based
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2.3 Short-term incentive (STI)
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
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.
Performance measure and
weighting
Description
Performance Gateway
•
Group Performance Gateway (minimum underlying net profit threshold) to drive global alignment.
Sales revenue (60%)
•
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 (40%)
Every year we invest in activities that lay the foundations for long-term success and we want management to focus appropriately on these long-term goals. As such,
our reward structure is designed to have a relatively high weighting to strategic measures given the importance of consistent investment over long timeframes. Our
strategic measures recognise that to build:
•
A lifetime of hearing solutions takes more than ten years of investment in R&D to commercialise new implants;
•
A healthier and more productive society requires long-term investment to establish a consistent process for diagnosing and referring adult cochlear implant
candidates. This long-term goal is dependent on our ability to work with professionals, researchers and other industry participants to build the evidence to
support bringing about a change in referring behaviour;
•
Thriving people is a journey of culture, capability and enterprise leadership development; and
•
Environmental responsibility involves targeting environmental outcomes that extend out to 2050.
We have developed a set of milestones and metrics to assess progress each year. Some of these targets are easier to quantify, for example, employee engagement and carbon emission levels,
while others require qualitative assessment on progress against specific milestones. The performance outcome balances both quantitative and qualitative measures. We continue to refine our
process each year, providing more disclosure on this process. We note however that many components of our strategic measures relate to building competitive advantage for the future. It is
therefore not in the best interests of the company to be specific about these activities and the milestones achieved, with examples including product development and some market development
activities.
Individual contribution
•
Each executive’s contribution against performance objectives and HEAR behaviours is assessed at an individual level at the end of the performance period.
Opportunity
CEO&P: target opportunity is 100% of base salary, and maximum (based on exceeding the performance measures and at the discretion of the Board) is up to 180% of base salary.
Other executive KMP: target opportunity is 90% of base salary, and maximum is up to 162% of base salary.
Delivery
60% of the award is paid in cash annually, with 40% 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. The number of service rights to be allocated is determined by dividing the value of 40% of the STI outcome by the face value of a service right. The face value is the five-
day volume-weighted average share price, from the next business day following the announcement of the full year results in August each year. Each vested service right entitles executive KMP to
receive a share plus additional shares equal to the dividends paid by Cochlear from the grant date to the exercise date, however no additional shares will be allocated to any service rights that do
not vest.
Cessation of employment
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.
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2.4 Long-term incentive (LTI)
Purpose
To align the remuneration opportunity for the executive team with shareholder value and provide a stimulus for the retention of executives within the Company.
Award vehicle
LTI is delivered as 50% options and 50% performance rights.
Opportunity
CEO&P: maximum opportunity is 125% of base salary.
Other executive KMP: maximum opportunity is 90% of base salary.
Allocation method
The award is calculated by dividing the value of the LTI opportunity by the value of the options and performance rights.
The value of an option and a performance right is determined by taking account of the present value of each award, the fact that dividends are not payable on options, and is based on
Cochlear’s share price at five business days following the announcement of the full year results in August each year.
Performance period
Performance is measured over a four-year performance period.
There is no retesting of performance hurdles under the LTI plan.
Exercise period
Options: Post vesting, options expire 25 months after the vesting date if they have not been exercised.
The Board also has 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.
Performance Rights: Post vesting up to 15 years from the date of grant.
Performance measures and hurdles 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 underlying basic EPS.
The proportion of awards that vest for performance is:
Relative TSR
Underlying Basic EPS
Performance
% of instruments that vest
Performance (CAGR)
% of instruments that vest
Less than 50th percentile
0%
Less than 7.5%
0%
At the 50th percentile
40%
7.5%
50%
50th percentile to 75th percentile
40% to 100% (pro-rata)
7.5% to 12.5%
50% to 100% (pro-rata)
Above 75th percentile
100%
Above 12.5%
100%
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.
Dividends
Options do not carry an entitlement to dividends. Each vested performance right entitles executive KMP to receive a share plus additional shares equal to the dividends paid by Cochlear from
the grant date to the exercise date, however no additional shares will be allocated to any performance rights that do not vest.
Cessation of employment
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.
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3. Executive KMP remuneration received in FY24 (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 FY24.
Executive KMP
Year
Fixed remuneration1
Cash STI2
Vested deferred STI3
Vested LTI4
Total
D Howitt
FY24
2,101,129
1,415,888
948,116
611,090
5,076,223
FY23
2,034,343
1,866,877
–
–
3,901,220
J Janssen
FY24
1,055,012
633,394
348,373
182,405
2,219,184
FY23
1,006,581
750,611
–
–
1,757,192
S Sayers
FY24
946,651
566,425
243,738
43,605
1,800,419
FY23
893,594
699,799
–
–
1,593,393
1 Fixed remuneration earned in the year (base salary, superannuation, and non-monetary benefits)
2 Cash STI earned and relating to performance during the financial year. For example, FY24 is reported as STI payments which are accrued at year end, and received in September 2024, 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,
FY24 is reported as the FY21 deferred STI grant which vested in August 2023.
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). FY24 is reported as the second tranche of the FY20 LTI grant which vested in August 2023 (26.12% of awards
vested due to performance).
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4. Executive KMP remuneration and link to performance
4.1 FY24 STI outcomes
STI is based on meeting a Group Performance Gateway of underlying net profit, and performance against financial measures (60%) and strategic measures (40%).
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 FY24, sales revenue grew 15.5% (12.1% in constant currency) over prior year, 2.1 percentage points above the constant currency STI target of 10.0% growth. Underlying net profit ($387
million) was above the Group Performance Gateway, which for FY24 was set at $355 million. Each year the committee sets a Group Performance Gateway which is designed to deliver positive performance
results for our stakeholders in line with stretching, but achievable, targets for management. In addition to financial measures, the Board also considered progress against strategic measures which are critical
to the achievement of Cochlear’s longer-term goals.
Validation of performance against the measures set for:
•
the CEO&P involves an independent review and endorsement by the CFO, reviewed and approved by the P&CC and Board; and
•
other executive KMP involves a review by the CEO&P based on inputs from the CFO with a final review undertaken by the P&CC.
Any anomalies or discretionary elements are validated and approved by the Board.
Key performance targets were met for FY24 resulting in an average actual STI of 115.9% of target and 64.4% of maximum for executive KMP. The following STI payments were made as outlined in the table
below. 60% of the actual STI will be delivered in cash in September 2024, and 40% will be deferred into service rights and subject to service conditions until August 2026.
Executive KMP
STI target as a
% of base salary
STI maximum as a % of base
salary
Actual STI1 as a % of
target
Actual STI1 as a % of
maximum
STI forfeited as a % of
maximum
Actual STI1 ($)
D Howitt
100%
180%
115.9%
64.4%
35.6%
2,359,813
J Janssen
90%
162%
115.9%
64.4%
35.6%
1,055,657
S Sayers
90%
162%
115.9%
64.4%
35.6%
944,041
1 Please refer to page 104 which illustrates how the STI award is calculated combining factors of both corporate (114.5%) and individual performance, with individual performance variations associated with the Executive’s
achievements against their performance objectives and adherence to Cochlear’s HEAR behaviours. (HEAR behaviours reflect organisational values linked to Cochlear’s mission: Hear the customer, Embrace change & innovate, Aspire
to win, and Remove boundaries).
4.2 FY24 STI performance summary
The table below (unaudited) provides a summary of achievement against each of the financial 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. While annual financial results are critical for dividends and funding development and growth, they are
just one part of what is necessary each year for sustained performance. This is why we emphasise achieving on non-financial strategic measures (some of which are not amenable to a quantitative scale), as
well as financial indicators of annual STI performance.
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How we create value
Strategic priorities
Performance Outcome
Strategic measures (40%)
FY24 highlights
A lifetime of
hearing solutions
Retain market
leadership
• Advance the product and services pipeline, with
annual R&D investment of ~12% of revenue
• Deliver our latest sound processor upgrade
technology to existing recipients
• Strengthen our lead in customer service and support
• Maintain high standards of product quality, safety
and reliability
• Milestones reached on product and services pipeline
• Launched the 3T MRI compatible Cochlear™ Osia® Implant
• Retained market share >60%
• Retained cochlear implant reliability >99%1
• Delivered >50,000 latest generation sound processors to prior
generation cochlear implant recipients
• Achieved connected care rollout targets
A healthier and more
productive society
Grow the
hearing implant
market
• Strengthen the referral pathway for adults
• Develop the acoustic implant segment
• Broaden reimbursement and improve indications
• Expand access in emerging markets
• Delivered cochlear implant unit growth of 9%
• Delivered growth in seniors segment of 15% in developed markets
• Milestones met in referral pathway development for adults
• Delivered expanding indications and reimbursement in a number of
countries (details on page 14)
Thriving
people
A stronger
organisation
• Strengthen and nurture a culture of innovation,
achievement and inclusion
• Attract, develop and retain world-class talent
• Support the wellness and safety of our teams
• Employee engagement maintained at 80% and improved Culture Index
to 82%
• Continued to exceed gender targets with 43% women in senior leader
roles and 38% women on the Board of Directors
• 74% of leaders completed inclusive leadership program
• Achieved transformation program milestones (embedding new CRM
and HCM systems and operating model updates for marketing)
Environmental
responsibility
Minimise
environmental
impact
• Advance the implementation of initiatives to reduce
our Scope 1, 2 and 3 carbon emissions
• Embed sustainability into product design,
development and manufacturing
• Deliver a global approach to managing the
environmental impacts of packaging and waste
• Achieved emission reduction targets
• Reached 97% renewable energy at our manufacturing facilities, using
100% renewable energy in five of our six facilities
• Reduced our Scope 1 and 2 emissions by 70%, from our FY19 baseline
• Reduced the number of flights taken per full time employee by 40%,
from our FY19 baseline
Financial measures (60%)
FY24 highlights
Sustained
value
Consistent and
sustainable
growth
• Deliver sustainable financial returns
• Improve efficiency and agility
• Maintain high levels of corporate governance
• Ensure our supply chain is ethical and sustainable
• Vigilance around data security and privacy
• Delivered record sales revenue of $2,258m, up 15.5% (12.1% in CC)2 on
prior year, 2.1 percentage points above the CC STI target of 10.0%
growth
• Delivered underlying net profit3 of $387m, up 27% (15% in CC) on prior
year and above the group performance gateway of $355m
102.1%
Threshold
Target
Stretch
120.9%
Threshold
Target
Stretch
0%
200%
Threshold
Target
Stretch
105.0%
0%
125%
90%
110%
On Track
Threshold
Target
Stretch
Exceeding Expectations
Threshold
Target
Stretch
STI Payout % on corporate performance
114.5%
Exceeding Expectations
Threshold
Target
Stretch
Exceeding Expectations
Threshold
Target
Stretch
1 Based on the cumulative survival percentage of the Nucleus® Profile Plus Series implant over five years
2 Constant currency
3 Excluding one-off and non-recurring items
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4.3 FY20-24 LTI vesting outcomes
LTI is based on performance against relative TSR (50%) and basic EPS growth (50%) over a four-year performance period. The graphs below illustrate Cochlear’s relative TSR and underlying basic EPS
performance over the past five years.
1 For the purpose of the FY20-24 LTI, EPS is determined based on underlying net profit 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’s underlying basic EPS1 for the performance period 1 July 2020 to 30 June 2024 was
589.8 cents, which is a 23.9% CAGR over the four-year performance period. This resulted in
performance above target2 and as a result, 100% of the EPS portion of the LTI vested.
(12.9%)
(5.6%)
(2.7%)
0.4%
23.9%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
FY20
FY21
FY22
FY23
FY24
4-year EPS CAGR
Cochlear EPS performance
Target
Stretch
Cochlear’s TSR for the performance period 1 July 2020 to 30 June 2024 was 77.7%, which
was ranked at the 63.6th percentile of the ASX 100 comparator group. This resulted in
performance above target, and as a result, 72.6% of the TSR portion of the LTI vested.
30.6%
26.1%
3.6%
22.3%
77.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY20
FY21
FY22
FY23
FY24
4-yearTSR
Cochlear TSR performance
Median TSR (target)
75th percentile TSR (stretch)
Cochlear TSR performance against targets
Cochlear EPS performance against targets
92.8%
50.1%
TSR vesting %
0.0%
52.2%
72.6%
0.0%
0.0%
EPS vesting %
0.0%
0.0%
100.0%
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4.4 Financial performance history (FY20 to FY24)
FY20
FY211
FY22
FY23
FY24
Sales revenue ($million)2
1,352.3
1,493.3
1,641.1
1,955.7
2,258.2
Earnings/(loss) before interest and tax (EBIT) ($million)
(262.2)
370.2
400.0
389.5
475.0
Underlying EBIT ($million)
206.9
326.3
382.7
396.1
504.8
Reported EPS
Net profit/(loss) after tax (NPAT) ($million)
(238.3)
323.8
289.1
300.6
356.8
Basic earnings/(loss) per share (EPS) (cents) – reported
(399.6)
492.6
439.6
457.0
544.5
EPS growth4
(200.8%)
4.9%
(2.9%)
(1.2%)
n/a
Underlying EPS
Underlying NPAT ($million)3
149.1
234.0
277.0
305.2
386.6
EPS (cents)3
250.0
356.0
421.1
464.1
589.8
EPS growth4
(12.9%)
(5.6%)
(2.7%)
0.4%
23.9%
Share price and dividends
Total dividend per share ($)
1.60
2.55
3.00
3.30
4.10
Shares bought back and cancelled ($million)
–
–
–
26.4
46.2
Share price as at 30 June ($)
188.93
251.67
198.70
229.07
332.15
Relative total shareholder return (TSR)
30.6%
26.1%
3.6%
22.3%
77.7%
TSR percentile ranking5
72nd
54th
42nd
55th
64th
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 FY20 and FY21 has been restated for the accounting policy change in relation to cloud computing as they relate to LTI awards vesting in current and future years.
4 EPS growth for FY20 to FY22 is as reported in prior Remuneration Reports, as it relates to LTI awards that have already vested in prior years. EPS growth for FY20 to FY22 is based on 3-year CAGR and EPS growth for FY23 and FY24 is
based on 4-year CAGR. EPS growth has been calculated based on the reported basic earnings per share adjusted for restatements for the accounting policy change in relation to cloud computing. For FY24, Reported EPS growth from a
negative starting EPS on FY20.
5 TSR percentile ranking for FY20 to FY22 is shown over three financial years to 30 June. TSR percentile ranking for FY23 and FY24 is shown over four 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 71 to 76.
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5. Executive KMP statutory remuneration disclosure
The table below presents the total remuneration for executive KMP in accordance with the accounting standards.
Executive
KMP
Year
Short-term benefits
Post- employment
Other long-
term benefits
Share-based payments
Total
% of performance
related
remuneration
Salary1
Cash STI
Non-monetary
benefits2
Superannuation
contributions3
Long service
leave
Deferred STI4
LTI performance
rights5
LTI
options5
D Howitt
FY24
2,072,022
1,415,888
1,709
27,399
(27,757)
852,783
986,454
1,118,358
6,446,856
67.84%
FY23
2,007,343
1,866,877
1,709
25,292
47,439
826,481
700,726
833,498
6,309,365
67.00%
J Janssen
FY24
1,025,904
633,394
1,709
27,399
(69,025)
343,330
328,957
372,548
2,664,216
62.99%
FY23
979,580
750,611
1,709
25,292
(29,683)
308,548
214,348
252,376
2,502,781
60.97%
S Sayers
FY24
918,227
566,425
1,025
27,399
29,920
316,319
279,683
316,648
2,455,646
60.23%
FY23
867,277
699,799
1,025
25,292
16,456
264,637
170,594
199,533
2,244,613
59.46%
Total
FY24
4,016,153
2,615,707
4,443
82,197
(66,862)
1,512,432
1,595,094
1,807,554
11,566,718
65.11%
FY23
3,854,200
3,317,287
4,443
75,876
34,212
1,399,666
1,085,668
1,285,407
11,056,759
64.11%
1 Salary includes annual base salary of $2,036,000 to D Howitt, $1,012,670, to J Janssen and $905,000 to S Sayers.
2 Non-monetary benefits represent insurance (Salary Continuance) premiums for all executive KMP.
3 Superannuation contributions are paid on earnings up to the Maximum Superannuation Contribution Base.
4 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 FY24 amount represents the portion of the FY22, FY23 and FY24 deferred STI expensed in FY24.
The FY23 amount represents the portion of the FY21, FY22 and FY23 deferred STI expensed in FY23.
5 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.
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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
CEO&P: 12 months’ written notice by either party.
Other executive KMP: between 12 weeks to 6 months’ written notice by either party (exact period specified in each contract).
Post-employment restraints
All executive KMP are subject to post-employment restraints for up to 12 months.
7. Remuneration governance
7.1 Governance framework for remuneration at Cochlear
The Board is responsible for defining Cochlear’s purpose, strategic direction and satisfying itself that Cochlear’s remuneration policies are aligned with Cochlear’s purpose, value, strategic objective and risk
appetite. Consistent with this responsibility, the Board has established the P&CC which comprises solely of independent NEDs.
Board
Management
People and Culture Committee
• 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
• 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
• Reviews, applies judgement and, as
appropriate, approves
recommendations from the P&CC
on remuneration matters
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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 FY24, the P&CC engaged Guerdon Associates to provide
information used as an input to the annual review of NED and executive KMP remuneration.
No remuneration recommendations (as defined by the Corporations Act 2001 (Cth)) were provided by Guerdon Associates or any other advisor during the year.
The P&CC is satisfied that the information received from Guerdon Associates is free from undue influence in accordance with the Corporations Act 2001.
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. NEDs are required to hold
shares equivalent to the value of their previous year’s total annual fees (including both Board and committee fees). The Board considers the minimum shareholding guidelines to be best practice to
strengthen the alignment of executives and NEDs’ interests to those of shareholders. The table in section 8.2 details the current holdings of executive KMP and table 9.3 details the minimum shareholding
requirements for NEDs. A copy of our Share Ownership Policy is available in the ‘Investor’s section of the Company’s website.
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’ section of the Company’s website. The policy enables the Board to clawback 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, or inappropriate post-employment actions, are 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.
8. Executive KMP equity disclosures
Executive KMP participate in the deferred STI and LTI plans which offer equity under the Cochlear Equity 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.
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8.1 Equity granted as remuneration
The table below presents the number of options and performance rights granted to executive KMP and the number of instruments that vested or were forfeited during the year. Equity granted in FY24 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.
Executive KMP
Plan
Grant date
Options
Performance rights
Vesting date3
Expiry date
(Options)3
Expiry date
(Rights)3
Vested
Forfeited
Number
Maximum value to
be expensed ($)1
Number
Maximum value
to be expensed ($)1
D Howitt
FY20 LTI (Grant 2)4
25-Oct-19
24,041
–
4,432
–
16-Aug-23
16-Mar-24
16-Aug-23
26%
74%
FY21 LTI
21-Oct-20
21,217
–
4,782
–
16-Aug-24
21-Mar-25
16-Aug-24
86%
14%
FY21 deferred STI
30-Sep-21
–
–
3,851
–
16-Aug-23
16-Aug-23
100%
0%
FY22 LTI
20-Oct-21
21,808
272,352
5,341
232,340
20-Aug-25
20-Mar-26
20-Aug-25
FY22 deferred STI
29-Sep-22
–
–
3,257
–
16-Aug-24
16-Aug-24
FY23 LTI
19-Oct-22
19,087
565,290
6,041
504,652
18-Aug-26
18-Sep-28
18-Aug-26
FY23 deferred STI
18-Sep-23
–
–
3,622
314,211
18-Aug-25
18-Sep-38
FY24 LTI
18-Oct-23
14,089
907,441
4,938
808,876
18-Aug-27
18-Sep-29
18-Oct-38
Total
100,242
1,745,083
36,264
1,860,079
J Janssen
FY20 LTI (Grant 2)4
08-Nov-19
4,413
–
813
–
16-Aug-23
16-Mar-24
16-Aug-23
26%
74%
FY21 LTI
21-Oct-20
5,197
–
1,171
–
16-Aug-24
21-Mar-25
16-Aug-24
86%
14%
FY21 deferred STI
30-Sep-21
–
–
1,415
–
16-Aug-23
16-Aug-23
100%
0%
FY22 LTI
17-Sep-21
7,685
95,975
1,882
81,869
20-Aug-25
20-Mar-26
20-Aug-25
FY22 deferred STI
29-Sep-22
–
–
1,112
–
16-Aug-24
16-Aug-24
FY23 LTI
16-Sep-22
6,726
199,201
2,129
177,852
18-Aug-26
18-Sep-28
18-Aug-26
FY23 deferred STI
18-Sep-23
–
–
1,456
126,309
18-Aug-25
18-Sep-38
FY24 LTI
18-Sep-23
5,042
324,744
1,767
289,446
18-Aug-27
18-Sep-29
18-Sep-38
Total
29,063
619,920
11,745
675,476
S Sayers2
FY21 deferred STI
30-Sep-21
–
–
990
–
16-Aug-23
16-Aug-23
100%
0%
FY22 LTI
17-Sep-21
7,636
95,363
1,870
81,347
20-Aug-25
20-Mar-26
20-Aug-25
FY22 deferred STI
29-Sep-22
–
–
1,060
–
16-Aug-24
16-Aug-24
FY23 LTI
16-Sep-22
6,010
177,995
1,902
158,889
18-Aug-26
18-Sep-28
18-Aug-26
FY23 deferred STI
18-Sep-23
–
–
1,357
117,721
18-Aug-25
18-Sep-38
FY24 LTI
18-Sep-23
4,509
290,415
1,580
258,814
18-Aug-27
18-Sep-29
18-Sep-38
Total
18,155
563,773
8,759
616,771
1 The options granted in FY24 have an exercise price of $257.69, and an expiry date of 18 September 2029. Fair values (AASB 2) of FY24 options and performance rights under the LTI plan as at the date of grant are as follows: options
(EPS growth: $90.32; relative TSR: $81.44) and performance rights (EPS growth: $257.69; relative TSR: $158.37). 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 2.4.
2 LTI reported for S 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.
3 Vesting and expiry dates are indicative only and subject to change based on the full year results release dates.
4 Grant date for FY20 LTI plan has been corrected to 25 October 2019 (from 23 October 2019) for D Howitt and 8 November 2019 (from 23 October 2019) for J Janssen.
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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 FY21 deferred STI plan and FY20 LTI plan (Grant 2) vested in August 2023, and executives’ options/rights converted into shares under these plans.
Executive KMP
Balance 1 July 2023
Received on exercise of options/rights1
Purchases and sales
Balance 30 June 2024
D Howitt
48,786
11,287
(6,000)
54,073
J Janssen
7,093
2,022
(3,022)
6,093
S Sayers
2,842
1,146
(580)
3,408
1 Shares received after cashless exercise for all KMP except D Howitt (a reduced number of fully paid Cochlear shares reflecting the “net” value of the options at the time of exercise in lieu of paying the Exercise Price to Cochlear).
Rights held during the year
Rights are acquired by executive KMP under the deferred STI and LTI plans. During the year:
•
Granted: FY24 LTI awards were granted in September/October 2023 and FY23 Deferred STI awards were granted in September 2023; and
•
Vested: 26.12% of the FY20 LTI (Grant 2) award and 100% of the FY21 deferred STI award was vested in August 2023.
Executive KMP
Balance
1 July 2023
Deferred STI service rights
LTI performance rights
Balance
30 June 2024
Granted
Vested
Forfeited
Granted
Vested
Forfeited
D Howitt
27,704
3,622
(3,851)
–
4,938
(1,157)
(3,275)
27,981
J Janssen
8,522
1,456
(1,415)
–
1,767
(212)
(601)
9,517
S Sayers1
6,622
1,357
(990)
–
1,580
(85)
(243)
8,241
1 For S Sayers vested and forfeited awards also relate to roles prior to appointment as KMP.
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Options held during the year
Options over ordinary shares are acquired by executive KMP under the LTI plan. During the year, FY24 LTI awards were granted in September/October 2023 and 26.12% of the FY20 LTI (Grant 2) award was
vested. All options held at the end of the year are unvested.
Executive KMP
Balance
1 July 2023
LTI options
Balance
30 June 2024
Vested and
exercisable at 30
June 2024
Granted
Vested and exercised
Vested and lapsed
Forfeited
D Howitt
86,153
14,089
(6,279)
–
(17,762)
76,201
–
J Janssen
24,021
5,042
(1,152)
–
(3,261)
24,650
–
S Sayers1
17,525
4,509
(465)
–
(1,317)
20,252
–
1 For S Sayers, vested and forfeited options also relate to roles prior to appointment as KMP.
Executive minimum shareholding
As at 30 June 2024, 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, which they have confirmed through the executive KMP disclosures for FY24.
Executive KMP
Ordinary shares held
Policy value of Cochlear shares at year end ($)1
% of base salary2
D Howitt
54,073
15,593,572
766%
J Janssen
6,093
1,757,099
174%
S Sayers
3,408
982,799
109%
1 In line with the Share Ownership Policy, the value has been calculated as the average daily share price over the previous 12 months ($288.38), as at closing on the ASX up to 30 June 2024, times the number of shares.
2 The % of base salary is calculated as the value of shares divided by the contractual base salary as at 30 June 2024.
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8.3 Potential dilution if options vest and ordinary shares issued (unaudited)
The Board encourages employee ownership of Cochlear shares. To restrict dilution of shareholders’ interests, the total employee interests in unvested equity cannot exceed 5% of share capital.
At the date of this report, the number of ordinary shares that would be issued if all options were vested (having met the service and performance conditions) and exercised and assuming ordinary shares
were issued, is as follows.
Grant date
Number of options
Exercise price per
share ($)
Exercise period
Current net value of outstanding
options as at 30 June 2024 ($)2
Issued
Forfeited/ lapsed1
At report date
FY21 LTI
21-Oct-20
55,729
(998) 54,731
206.06
Aug-24 to Mar-25
6,901,032
FY22 LTI
17-Sep-21 (Executives)
20-Oct-21 (CEO&P)
80,240
(11,105) 69,135
232.52
Aug-25 to Mar-26
6,887,920
FY23 LTI
16-Sep-22 (Executives)
19-Oct-22 (CEO&P)
67,487
– 67,487
216.33
Aug-26 to Sep-28
7,816,344
FY24 LTI
18-Sep-23(Executives)
18-Oct-23 (CEO&P)
58,805
– 58,805
257.69
Aug-27 to Sep-29
4,378,620
Total
262,261
(12,103)
250,158
25,983,916
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 2024 (exercise price less the closing share price as at 30 June 2024 of $332.15).
Total unvested equity currently accounts for approximately 0.64% of the total number of issued shares, as set out below.
Instrument
Number of equivalent shares at 30 June 2024
Unvested LTI options
250,158
Unvested LTI rights
71,224
Unvested deferred STI rights
74,107
Service rights
21,429
Total
416,918
As % of total issued shares
0.64%
Number of issued shares
65,494,161
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.
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9. Non-executive Director fees
NEDs are paid from an aggregate annual fee pool of $3,500,000 for FY24 (approved at the 2022 Annual General Meeting). Total remuneration paid during the year was $2,649,925, which is within the fee
pool limit (represented 75.7% 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 and base Member fees by 3.5%, effective 1 July 2023. Committee fees remain unchanged, and will remain unchanged through FY25. 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 FY23 and FY24.
Amounts $1
FY23
FY24
Chair
Member
Chair
Member
Cochlear Board
550,126
182,022
569,380
188,393
Committees2
Audit and Risk
50,000
25,000
50,000
25,000
People and Culture
40,000
20,000
40,000
20,000
Product and Services Innovation
40,000
20,000
40,000
20,000
Medical Science
30,000
15,000
30,000
15,000
Nomination
No fee
No fee
No fee
No fee
1 Superannuation contributions have been made in accordance with Australian superannuation legislation at a rate of 11% up to the Australian Government’s prescribed maximum contributions limit. Fees are presented exclusive of
superannuation.
2 Committee fees are not paid to the Chair.
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. Currently 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 FY24, one NED based in
the United States received a travel allowance of $50,000 to reflect five trips to Australia to attend Board meetings.
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9.2 NED statutory remuneration
The table below presents the total remuneration for NEDs.
Year
Short-term benefits
Post-employment benefits
Total
Fees
Travel allowance
Superannuation
Non-executive Directors
A Deans (Chair)
FY24
569,380
–
27,399
596,779
FY23
552,242
–
25,292
577,534
G Boreham, AM
FY24
266,008
–
27,350
293,358
FY23
268,049
–
25,292
293,341
M Daniell, KNZM
FY24
268,393
–
27,326
295,719
FY23
263,030
–
25,292
288,322
M del Prado1
FY24
264,992
50,000
–
314,992
FY23
240,737
50,000
–
290,737
C McLoughlin, AM2
FY24
287,652
–
–
287,652
FY23
272,591
–
–
272,591
B Robinson, AC
FY24
242,701
–
26,310
269,011
FY23
252,991
–
24,860
277,851
K Penrose
FY24
278,393
–
27,480
305,873
FY23
244,510
–
24,212
268,722
Former Non-Executive Directors
A Denver
FY24
73,563
–
8,092
81,655
FY23
242,953
–
24,375
267,328
Y Allen, AM
FY24
185,172
–
19,714
204,886
FY23
263,837
–
25,292
289,129
Total
FY24
2,436,254
50,000
163,671
2,649,925
1 M 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 $25,907 was paid over the period from
1 July 2023 to 30 June 2024 as fees in lieu of superannuation guarantee payments which would have been received.
2 C McLoughlin has opted out of receiving superannuation guarantee payments in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth). An equivalent amount of $26,874 was paid over the period from 1
July 2023 to 30 June 2024 as fees.
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information
9.3 Minimum shareholding requirement for NEDs
NEDs are required to hold shares equivalent to the fees (including both Board and committee fees) received in the previous 12 months. The share ownership requirement must be satisfied within three years
of appointment to the Board.
As at 30 June 2024, all NEDs are compliant with the Share Ownership Policy, which allows three years to build their shareholdings. The table below presents Cochlear Limited shareholdings for each NED,
which they have confirmed through the NED disclosures for FY24.
Balance 1 July 2023
Purchases
Sales
Balance
30 June 2024
Policy value of shares as at
30 June 2024 ($)1
% of fees2
Non-executive Directors
A Deans
4,500
–
–
4,500
1,297,710
228%
G Boreham, AM
3,014
–
–
3,014
869,177
343%
M Daniell, KNZM
1,414
200
–
1,614
465,445
173%
M del Prado
582
264
–
846
243,969
100%
C McLoughlin, AM
1,900
250
–
2,150
620,017
227%
B Robinson, AC
1,185
–
–
1,185
341,730
143%
K Penrose
955
268
–
1,223
352,689
127%
Former Non-Executive Directors
A Denver
4,214
–
–
n/a
n/a
n/a
Y Allen, AM
3,714
–
–
n/a
n/a
n/a
1 In line with the Share Ownership Policy, available in the ‘Investors’ 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
($288.38), as at closing on the ASX up to 30 June 2024, times the number of shares.
2 The shareholding requirement has been calculated using annualised contractual policy fees based on Board and Committee membership as at 30 June 2024 (excluding superannuation).
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Financial report
Director’s report
122
Auditor’s independence declaration
125
Income statement
126
Statement of comprehensive income
126
Balance sheet
127
Statement of changes in equity
128
Statement of cash flows
130
Notes to the financial statements
131
Consolidated entity disclosure statement
162
Directors’ declaration
164
Independent auditor’s report
165
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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 2024, 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), G Boreham, AM, Sir M Daniell, KNZM, M del Prado, D Howitt, C McLoughlin, AM, K Penrose,
Prof B Robinson, AC, YA Allen, AM and A Denver.
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.
The company secretaries of the Company at any time during or since the end of the financial year
were R McGrory, K Jo and R Jarman.
Directors’ meetings
The number of directors’ meetings (including meetings of committees of directors) and number of
meetings attended by each of the directors of the Company during the financial year were:
Board of
Directors
Audit and
Risk
Committee
People and
Culture
Committee1
Medical
Science
Committee
Nomination
Committee
Product and
Services Innovation
Committee2
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
A Deans
13
13
–
–
–
–
–
–
3
3
–
–
G Boreham, AM
13
13
4
4
4
4
–
–
3
3
3
3
Sir M Daniell, KNZM 13
13
4
4
–
–
2
2
3
3
3
3
M del Prado1
13
12
–
–
3
3
2
2
3
3
3
3
D Howitt
13
13
–
–
–
–
2
2
–
–
3
3
C McLoughlin, AM
13
12
4
4
4
4
–
–
3
3
3
3
K Penrose
13
13
4
4
4
4
-
-
3
3
3
3
Prof B Robinson, AC2 13
13
–
–
1
1
2
2
3
3
3
3
Y Allen, AM3
11
10
3
3
3
3
–
–
3
3
3
3
A Denver4
5
5
1
1
–
–
1
1
2
2
1
1
1.. M del Prado became a member of the People and Culture Committee from 19 September 2023.
2. Prof B Robinson, AM removed as a member of the People and Culture Committee on 19 September 2023.
3. Y Allen, AM resigned on 31 March 2024.
4. A Denver retired on 17 October 2023.
The Chair of the Board attends committee meetings by invitation as a matter of course. Often
directors also attend meetings of committees of which they are not a member. These attendances
are not reflected in the table above.
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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 71 to 76 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 2024 ordinary
2.00
131.0
70% Franked
15 April 2024
Final 2023 ordinary
1.75
114.7
70% Franked
11 October 2023
Total amount
3.75
245.7
Since the end of the financial year, the directors declared the following dividend:
Final 2024 ordinary
2.10
137.5
80% Franked
10 October 2024
Total amount
2.10
137.5
The financial effect of the 2024 final dividend will be recognised in the subsequent financial year
as it was declared after 30 June 2024.
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 and 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 and 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.
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:
Consolidated
2024
2023
$
$
Audit and assurance services
Auditors of the Company - KPMG:
– audit and review of consolidated financial statements
1,663,200
1,552,259
– audit and review of subsidiary financial statements
817,500
642,016
– other assurance services
19,650
18,715
Total audit and assurance services
2,500,350
2,212,990
Other services
Auditors of the Company - KPMG:
– taxation compliance and advisory services
1,367,248
1,334,339
– other advisory services
54,850
98,407
Total other services
1,422,098
1,432,746
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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 2024 for the Cochlear Limited Board, the CEO & President and other key management
personnel, and changes for the financial year ending 30 June 2025, are included in the
Remuneration report on pages 98 to 120 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 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 secretaries, 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.
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 Consolidated 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 2024, refer above.
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 125 and forms part of the Directors’
report for the financial year ended 30 June 2024.
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 Consolidated financial report
have been rounded off to the nearest one hundred thousand dollars unless otherwise stated.
Dated at Sydney this 15th day of August 2024.
Signed in accordance with a resolution of the directors:
Director
Director
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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 2024 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
Rachel Gatt,
Partner
Sydney, 15 August 2024
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.
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Income statement
Statement of comprehensive income
FOR THE YEAR ENDED 30 JUNE 2024
2024
2023
Note
$m
$m
Revenue
2.2
2,235.6
1,936.1
Cost of sales
2.3
(562.1)
(488.0)
Gross profit
1,673.5
1,448.1
Selling, marketing and general expenses
(685.0)
(606.5)
Research and development expenses
(277.0)
(244.9)
Administration expenses
(212.6)
(203.9)
Other income
2.4
11.0
13.5
Other expenses
2.3
(34.3)
(16.6)
Share of losses on equity-accounted investments
5.5
(0.6)
(0.2)
Results from operating activities
475.0
389.5
Finance income – interest
19.0
16.5
Finance expense – interest
(9.2)
(9.4)
Net finance income
9.8
7.1
Profit before income tax
484.8
396.6
Income tax expense
3.1
(128.0)
(96.0)
Net profit
356.8
300.6
Basic earnings per share (cents)
2.5
544.5
457.0
Diluted earnings per share (cents)
2.5
543.0
456.1
The notes on pages 131 to 161 are an integral part of these consolidated financial statements.
2024
2023
$m
$m
Net profit
356.8
300.6
Other comprehensive income/(loss)
Items that will not be reclassified subsequently to the income
statement:
Defined benefit plan actuarial gain/(loss)
1.4
(3.1)
Financial investments measured at fair value through other
comprehensive income, net of tax
(20.4)
(20.0)
Total items that will not be reclassified subsequently to the
income statement
(19.0)
(23.1)
Items that are or may be reclassified subsequently to the income
statement:
Foreign currency translation differences
1.9
7.3
Effective portion of changes in fair value of cash flow hedges, net
of tax
1.2
(16.3)
Net change in fair value of cash flow hedges transferred to the
income statement, net of tax
15.8
13.7
Total items that are or may be reclassified subsequently to the
income statement
18.9
4.7
Total other comprehensive loss, net of tax
(0.1)
(18.4)
Total comprehensive income
356.7
282.2
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Balance sheet
AS AT 30 JUNE 2024
2024
2023
Note
$m
$m
Assets
Cash and cash equivalents
2.7(a)
513.6
555.5
Trade and other receivables
6.4(b)
490.7
437.5
Forward exchange contracts
7.7
3.7
Inventories
5.1
391.6
311.5
Current tax assets
3.2
11.3
20.0
Prepayments
37.2
33.3
Total current assets
1,452.1
1,361.5
Trade and other receivables
1.3
0.9
Forward exchange contracts
3.5
1.6
Property, plant and equipment
5.2
304.8
276.7
Intangible assets
5.3
451.0
444.1
Investments
5.5
80.5
93.8
Other financial assets
5.5
97.9
90.8
Equity-accounted investments
5.5
2.9
3.5
Deferred tax assets
3.3
138.7
125.3
Right of use assets
5.8
212.4
170.5
Total non-current assets
1,293.0
1,207.2
Total assets
2,745.1
2,568.7
2024
2023
Note
$m
$m
Liabilities
Trade and other payables
303.2
270.4
Forward exchange contracts
8.5
20.6
Current tax liabilities
3.2
17.6
17.5
Employee benefit liabilities
4.2
150.5
146.4
Provisions
5.6
43.4
22.3
Deferred revenue
66.7
61.6
Lease liabilities
6.4(c)
41.6
39.2
Total current liabilities
631.5
578.0
Forward exchange contracts
0.4
6.4
Employee benefit liabilities
4.2
7.8
9.7
Provisions
5.6
35.3
35.1
Deferred tax liabilities
3.3
18.9
18.3
Deferred revenue
8.6
9.8
Lease liabilities
6.4(c)
202.1
162.6
Total non-current liabilities
273.1
241.9
Total liabilities
904.6
819.9
Net assets
1,840.5
1,748.8
Equity
Share capital
1,204.2
1,250.3
Reserves
(31.6)
(56.9)
Retained earnings
667.9
555.4
Total equity
1,840.5
1,748.8
The notes on pages 131 to 161 are an integral part of these consolidated financial statements.
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Statement of changes in equity
FOR THE YEAR ENDED 30 JUNE 2024
$m
Issued
capital
Treasury
share
reserve
Translation
reserve
Hedging
reserve
Fair
value
reserve
Share-based
payment
reserve
Retained
earnings
Total
equity
2024
Balance at 1 July 2023
1,250.3
(13.9)
(56.3)
(15.4)
(66.0)
94.7
555.4
1,748.8
Total comprehensive income/(loss)
Net profit
–
–
–
–
–
–
356.8
356.8
Other comprehensive income/(loss)
Defined benefit plan actuarial gain
–
–
–
–
–
–
1.4
1.4
Financial investments measured at fair value through other comprehensive income, net of tax
–
–
–
–
(20.4)
–
–
(20.4)
Foreign currency translation differences
–
–
1.9
–
–
–
–
1.9
Effective portion of changes in fair value of cash flow hedges, net of tax
–
–
–
1.2
–
–
–
1.2
Net change in fair value of cash flow hedges transferred to the income statement, net of tax
–
–
–
15.8
–
–
–
15.8
Total other comprehensive income/(loss)
–
–
1.9
17.0
(20.4)
–
1.4
(0.1)
Total comprehensive income/(loss)
–
–
1.9
17.0
(20.4)
–
358.2
356.7
Transactions with owners, recorded directly in equity
Shares issued
0.1
–
–
–
–
–
–
0.1
Share options exercised
–
13.5
–
–
–
(13.5)
–
–
Treasury shares acquired
–
(45.8)
–
–
–
–
–
(45.8)
Shares cancelled
(46.2)
46.2
–
–
–
–
–
–
Performance rights vested
–
–
–
–
–
(0.1)
–
(0.1)
Share-based payment transactions
–
–
–
–
–
19.6
–
19.6
Deferred tax recognised in equity
–
–
–
–
–
6.9
–
6.9
Dividends to shareholders
–
–
–
–
–
–
(245.7)
(245.7)
Balance at 30 June 2024
1,204.2
–
(54.4)
1.6
(86.4)
107.6
667.9
1,840.5
The notes on pages 131 to 161 are an integral part of these consolidated financial statements.
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Statement of changes in equity
FOR THE YEAR ENDED 30 JUNE 2024
$m
Issued
capital
Treasury
share
reserve
Translation
reserve
Hedging
reserve
Fair
value
reserve
Share-based
payment
reserve
Retained
earnings
Total
equity
2023
Balance at 1 July 2022
1,276.6
–
(63.6)
(12.8)
(46.0)
76.2
455.3
1,685.7
Total comprehensive income/(loss)
Net profit
–
–
–
–
–
–
300.6
300.6
Other comprehensive income/(loss)
Defined benefit plan actuarial loss
–
–
–
–
–
–
(3.1)
(3.1)
Financial investments measured at fair value through other comprehensive income, net of tax
–
–
–
–
(20.0)
–
–
(20.0)
Foreign currency translation differences
–
–
7.3
–
–
–
–
7.3
Effective portion of changes in fair value of cash flow hedges, net of tax
–
–
–
(16.3)
–
–
–
(16.3)
Net change in fair value of cash flow hedges transferred to the income statement, net of tax
–
–
–
13.7
–
–
–
13.7
Total other comprehensive income/(loss)
–
–
7.3
(2.6)
(20.0)
–
(3.1)
(18.4)
Total comprehensive income/(loss)
–
–
7.3
(2.6)
(20.0)
–
297.5
282.2
Transactions with owners, recorded directly in equity
Shares issued
0.1
–
–
–
–
–
–
0.1
Treasury shares acquired
–
(40.3)
–
–
–
–
–
(40.3)
Shares cancelled
(26.4)
26.4
–
–
–
–
–
–
Share-based payment transactions
–
–
–
–
–
15.9
–
15.9
Deferred tax recognised in equity
–
–
–
–
–
2.6
–
2.6
Dividends to shareholders
–
–
–
–
–
–
(197.4)
(197.4)
Balance at 30 June 2023
1,250.3
(13.9)
(56.3)
(15.4)
(66.0)
94.7
555.4
1,748.8
The notes on pages 131 to 161 are an integral part of these consolidated financial statements.
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Statement of cash flows
FOR THE YEAR ENDED 30 JUNE 2024
2024
2023
Note
$m
$m
Cash flows from operating activities
Cash receipts from customers
2,183.1
1,859.6
Cash paid to suppliers and employees
(1,683.3)
(1,438.5)
Grant and other income received
10.7
13.5
Interest received
19.0
16.5
Interest paid
(9.2)
(9.4)
Income taxes paid
3.1
(131.5)
(79.3)
Net cash provided by operating activities
2.7(b)
388.8
362.4
Cash flows from investing activities
Acquisition of leasehold improvements, plant and equipment and land and buildings
(62.4)
(50.0)
Acquisition of IT systems
(15.6)
(22.5)
Acquisition of other intangible assets
(11.8)
(23.4)
Acquisition of investments and other financial assets
5.5
(15.9)
(29.8)
Net cash used in by investing activities
(105.7)
(125.7)
Cash flows from financing activities
Repayments of borrowings
–
(41.3)
Payments of lease liability principal
(32.4)
(31.4)
Outlay from exercise of share options and performance rights
(2.8)
(10.7)
Proceeds from share issuance
0.1
–
Payments for share buyback
(43.0)
(29.6)
Dividends paid
2.6
(245.7)
(197.4)
Net cash used in financing activities
(323.8)
(310.4)
Net decrease in cash and cash equivalents
(40.7)
(73.7)
Cash and cash equivalents at 1 July
555.5
629.3
Effect of exchange rate fluctuations on cash held
(1.2)
(0.1)
Cash and cash equivalents at 30 June
513.6
555.5
The notes on pages 131 to 161 are an integral part of these consolidated financial statements.
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Notes to the financial statements
FOR THE YEAR ENDED 30 JUNE 2024
1. Basis of preparation
This section sets out the Company’s accounting policies that relate to the financial statements as a
whole. Where a material 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 2024 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 consolidated financial statements are general purpose financial statements which have 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 15 August 2024.
(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 is
discussed further in Notes 5.5 and 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.
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 and Risk Committee the development, selection and
disclosure of Cochlear’s critical accounting policies and estimates and the application of these
policies and estimates.
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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 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 5.8 – 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 instruments.
(f) Basis of consolidation
Controlled entities
Cochlear 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.
(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.
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 Chief Executive Officer
and President, who is also the chief operating decision maker.
Information about reportable segments
Americas
EMEA1
Asia
Pacific
Corporate
and other
Total
Profit or loss
$m
$m
$m
$m
$m
2024
Revenue
1,140.7
745.6
371.9
(22.6)2
2,235.6
EBIT
642.4
349.7
102.2
(619.3)
475.0
Net finance income
9.8
Profit before income tax
484.8
Depreciation and amortisation
11.7
8.5
5.7
59.0
84.9
Write-down in value of inventories
1.2
3.5
4.2
13.1
22.0
Equity accounted losses
–
–
–
0.6
0.6
2023
Revenue
978.3
639.4
338.0
(19.6)2
1,936.1
EBIT
523.8
292.5
104.9
(531.7)
389.5
Net finance expense
7.1
Profit before income tax
396.6
Depreciation and amortisation
13.0
7.3
5.7
54.9
80.9
Write-down in value of inventories
1.9
1.4
0.3
1.7
5.3
Equity accounted losses
–
–
–
0.2
0.2
1 Europe, Middle East and Africa.
2 Foreign exchange (loss)/gain on hedged sales
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Americas
EMEA
Asia
Pacific
Corporate
and other
Total
Assets and liabilities
$m
$m
$m
$m
$m
2024
Assets
396.5
431.4
222.2
1,695.0
2,745.1
Liabilities
195.3
127.5
83.8
498.0
904.6
Acquisition of non-current assets
5.9
19.4
3.0
81.1
109.4
2023
Assets
392.9
357.9
213.7
1,604.2
2,568.7
Liabilities
199.7
122.1
68.5
429.6
819.9
Acquisition of non-current assets
2.1
6.7
1.0
129.6
139.4
Cochlear Limited is domiciled in Australia and earns less than 5% of its sales revenue from external
customers in Australia. Cochlear Limited has $439.6 million (2023: $385.1 million) of non-current
assets (excluding financial instruments and deferred tax) in Australia, including Australian based
manufacturing facilities.
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 Cochlear’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).
The following table disaggregates revenue by product type:
Revenues
2024
2023
$m
$m
Cochlear implants
1,329.6
1,131.4
Services (sound processor upgrades and other)
672.3
584.4
Total cochlear implants
2,001.9
1,715.8
Acoustics
256.3
239.9
Sales revenue
2,258.2
1,955.7
Foreign exchange loss on hedged sales
(22.6)
(19.6)
Revenue
2,235.6
1,936.1
The following table disaggregates revenue by sales type:
2024
2023
$m
$m
Sale of goods before hedging
2,222.7
1,921.0
Foreign exchange loss on hedged sales
(22.6)
(19.6)
Revenue from sale of goods
2,200.1
1,901.4
Rendering of services
35.5
34.7
Total revenue
2,235.6
1,936.1
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2.3 Expenses
2024
2023
Note
$m
$m
(a) Cost of sales
Carrying amount of inventories recognised as an expense
532.5
476.1
Write-down in value of inventories
22.0
5.3
Other
7.6
6.6
Total cost of sales
562.1
488.0
(b) Other expenses
Integration costs
28.2
–
Net foreign exchange loss
4.8
10.2
Fair value change in investments through profit or loss
5.5
1.3
6.4
Total other expenses
34.3
16.6
Cochlear incurred integration costs of $28.2 million in the current year related to the Business
Combination set out in Note 5.4 and primarily relate to the restructuring costs described in Note
5.6.
Foreign exchange losses are recognised in accordance with the accounting policy at Note 1.2(d).
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.
2024
2023
Note
$m
$m
Grant received or due and receivable
2.0
2.2
Gain on business combination
5.4
0.3
–
Other income
8.7
11.3
Total other income
11.0
13.5
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:
2024
2023
Net profit attributable to equity holders of the parent entity
$356,847,000
$300,559,000
Weighted average number of ordinary shares (basic):
Issued ordinary shares at 1 July (number)
65,671,649
65,775,339
Effect of options, performance shares and performance rights
exercised (number)
1,051
4,803
Effect of shares issued under Employee Share Plan (number)
337
238
Effect of shares cancelled from share buy-back (number)
(136,329)
(16,378)
Effect of shares purchased and held as treasury stock
–
(1,559)
Weighted average number of ordinary shares (basic) at 30 June
65,536,708
65,762,443
Basic earnings per share (cents)
544.5
457.0
Diluted earnings per share
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:
2024
2023
Net profit attributable to equity holders of the parent entity
$356,847,000
$300,559,000
Weighted average number of ordinary shares (diluted):
Weighted average number of shares (basic) (number)
65,536,708
65,762,443
Effect of options, performance shares and performance rights
unvested (number)
183,941
134,410
Weighted average number of ordinary shares (diluted) at
30 June
65,720,649
65,896,853
Diluted earnings per share (cents)
543.0
456.1
At 30 June 2024, 58,805 options (2023: 136,622) were excluded from the diluted weighted average
number of ordinary shares calculation because their effect would have been antidilutive.
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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:
2024
Interim 2024 ordinary
2.00
131.0
70% Franked
15 April 2024
Final 2023 ordinary
1.75
114.7
70% Franked 11 October 2023
Total amount
3.75
245.7
2023
Interim 2023 ordinary
1.55
102.0
35% Franked
14 April 2023
Final 2022 ordinary
1.45
95.4
40% Franked 17 October 2022
Total amount
3.00
197.4
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 2024 ordinary
2.10
137.5
80% Franked 10 October 2024
Total amount
2.10
137.5
The financial effect of the 2024 final dividend will be recognised in the subsequent financial year as
it was declared after 30 June 2024.
Dividend franking account
2024
2023
$m
$m
Total franking account balance at 30%
11.7
7.4
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.
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 3.90% (2023: 2.84%) per annum.
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(b) Reconciliation of net profit to net cash provided by operating activities
2024
2023
$m
$m
Net profit
356.8
300.6
Add item classified as investing activities:
Loss on disposal of property, plant and equipment
0.5
0.8
Add/(less) non-cash items:
Depreciation and amortisation
84.9
80.9
Gain on business combination
(0.3)
–
Fair value change in investments measured at fair value
through profit or loss
1.3
6.4
Equity settled share-based payment transactions
19.6
15.9
Share of losses on equity-accounted investments
0.6
0.2
Net cash provided by operating activities before changes
in assets and liabilities
463.4
404.8
Changes in assets and liabilities:
Change in trade and other receivables
(53.6)
(89.0)
Change in inventories
(80.1)
(41.3)
Change in prepayments
(3.9)
(4.6)
Change in deferred tax assets/liabilities
(12.8)
(14.8)
Change in trade and other payables
32.8
37.7
Change in current tax assets/liabilities
8.8
24.2
Change in employee benefit liabilities
2.2
46.1
Change in provisions
21.3
1.5
Change in deferred revenue
3.9
8.9
Effect of movements in foreign exchange
6.8
(11.1)
Net cash provided by operating activities
388.8
362.4
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
2024
$m
2023
$m
Current income tax expense
Current year
142.8
110.8
Adjustment for prior years
(0.4)
(2.2)
Total current income tax expense
142.4
108.6
Deferred income tax expense
Origination and reversal of temporary differences
(13.7)
(9.5)
Net utilisation/(recognition) of tax losses
0.9
(2.3)
Current year deferred income tax expense
(12.8)
(11.8)
Adjustment for prior years
(1.6)
(0.8)
Total deferred income tax expense
(14.4)
(12.6)
Total income tax expense recognised in the Income statement
128.0
96.0
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Consolidated Entity – Numerical reconciliation between profit before income
tax and income tax expense
2024
$m
2023
$m
Profit before income tax
484.8
396.6
Tax at the Australian tax rate of 30% (2023: 30%)
145.4
119.0
(Less)/add adjustments for:
Research and development allowances
(21.9)
(21.1)
Net non-deductible items
4.8
5.6
Effect of tax rates in foreign jurisdictions
(5.4)
(4.5)
122.9
99.0
Integration costs
7.1
–
Other adjustment for prior years
(2.0)
(3.0)
Income tax expense on profit before income tax
128.0
96.0
Income tax recognised in Statement of changes in equity
Note
2024
$m
2023
$m
Income tax on:
Fair value losses on investments
3.3
(0.4)
(3.0)
Cash flow hedges
3.3
7.3
(1.1)
Share-based payments
(6.9)
(2.6)
Total income tax recognised in Statement of
changes in equity
–
(6.7)
Consolidated Entity – Numerical reconciliation between income tax expense
and cash taxes paid
2024
$m
2023
$m
Income tax expense on profit before income tax
128.0
96.0
Timing differences recognised in deferred tax
13.7
9.5
Net (utilisation)/benefit of tax losses recognised in deferred tax
(0.9)
2.3
Current year tax instalments payable next year
(9.4)
(4.5)
Prior year tax instalments paid/(received) this year
0.1
(24.0)
Cash taxes paid per statement of cash flows
131.5
79.3
Cochlear Limited’s Australian tax consolidated group – Numerical reconciliation
between profit before income tax and income tax expense
2024
2023
$m
$m
Profit before income tax (excluding dividends from wholly-owned
foreign subsidiaries)
355.5
272.2
Add: Dividends from wholly-owned foreign subsidiaries
87.3
23.1
Profit before income tax
442.8
295.3
Tax at the Australian tax rate of 30% (2023: 30%)
132.8
88.6
(Less)/add adjustments for:
Research and development allowances
(20.2)
(20.0)
Net non-deductible items
4.2
5.9
Controlled foreign company income
1.5
0.7
Exempt foreign sourced dividends from wholly-owned
subsidiaries
(26.2)
(6.9)
92.1
68.3
Integration costs
1.1
–
Adjustment for prior years
0.3
(4.0)
Income tax expense on profit before income tax
93.5
64.3
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3.2 Current tax assets and liabilities
The current tax assets for Cochlear of $11.3 million (2023: $20.0 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
Cochlear of $17.6 million (2023: $17.5 million) represent the amount of income taxes payable in
respect of current and prior financial years.
3.3 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.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse. 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
at each reporting date and are reduced if it is no longer probable that the related tax benefit will be
realised.
Unrecognised deferred tax liabilities
At 30 June 2024, a deferred tax liability of $7.1 million (2023: $2.5 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.
International tax reform - Pillar Two model rules
The Organisation for Economic Co-operation and Development’s OECD/G20 Inclusive Framework
on Base Erosion and Profit Shifting (BEPS) published the Pillar Two model rules to address the tax
challenges arising from the digitalisation of the global economy. The BEPS Pillar Two model rules
seek to apply a 15% global minimum tax to individual jurisdictions across the globe. Pillar Two
legislation has been enacted or substantively enacted in certain jurisdictions Cochlear operates in.
The legislation will be effective for Cochlear’s financial year beginning 1 July 2024.
Cochlear is in scope of the Pillar Two model rules and has performed an assessment of its potential
exposure to Pillar Two income taxes. Based on the assessment derived from information for the
year ended 30 June 2024, Cochlear does not expect a material exposure to Pillar Two income taxes.
Cochlear has applied the mandatory temporary exception under AASB 2023-2 Amendments to
Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules issued by the
Australian Accounting Standards Board in June 2023. The amendments provide a temporary
mandatory exception to recognising and disclosing information about deferred tax assets and
liabilities related to the BEPS Pillar Two model rules.
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Movement in deferred tax balances
2024
Opening balance
Recognised in
the Income
statement
Recognised in
other
comprehensive
income
Recognised in
equity
Closing balance
Deferred tax
assets
Deferred tax
liabilities
Property, plant and equipment
2.8
0.8
–
–
3.6
5.8
(2.2)
Intangible assets
(10.9)
1.0
–
–
(9.9)
2.6
(12.5)
Inventories
49.4
2.7
–
–
52.1
52.1
–
Provisions
36.6
5.2
–
–
41.8
41.8
–
Deferred revenue
7.6
2.2
–
–
9.8
9.8
–
Forward exchange contracts
6.6
–
(7.3)
–
(0.7)
-
(0.7)
Tax losses and offsets carried forward
2.3
(0.9)
–
–
1.4
1.4
–
Other
12.6
1.8
0.4
6.9
21.7
36.7
(15.0)
Deferred tax assets/(liabilities) before set-off
107.0
12.8
(6.9)
6.9
119.8
150.2
(30.4)
Set-off of tax
(11.5)
11.5
Net tax assets/(liabilities)
138.7
(18.9)
2023
Opening balance
Recognised in
the Income
statement
Recognised in
other
comprehensive
income
Recognised in
equity
Closing balance
Deferred tax
assets
Deferred tax
liabilities
Property, plant and equipment
1.5
1.3
–
–
2.8
5.7
(2.9)
Intangible assets
7.2
(18.1)
–
–
(10.9)
2.2
(13.1)
Inventories
53.6
(4.2)
–
–
49.4
49.4
–
Provisions
33.4
3.2
–
–
36.6
36.6
–
Deferred revenue
5.4
2.2
–
–
7.6
7.6
–
Forward exchange contracts
5.5
–
1.1
–
6.6
6.6
–
Tax losses and offsets carried forward
–
2.3
–
–
2.3
2.3
–
Other
(12.9)
25.1
3.0
(2.6)
12.6
27.2
(14.6)
Deferred tax assets/(liabilities) before set-off
93.7
11.8
4.1
(2.6)
107.0
137.6
(30.6)
Set-off of tax
(12.3)
12.3
Net tax assets/(liabilities)
125.3
(18.3)
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4. Employee benefits
4.1 Employee expenses
2024
2023
$m
$m
Salaries and wages
698.9
624.2
Contributions to superannuation plans
50.9
42.6
Increase in leave liabilities
6.7
5.2
Equity settled share-based payment transactions
19.6
15.9
Total employee expenses
776.1
687.9
4.2 Employee benefit liabilities
Wages, salaries and annual leave
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
Cochlear has defined benefit plans that cover, in aggregate, 169 employees in 3 countries (2023: 81
employees in 2 countries). Cochlear contributed cash of $2.0 million (2023: $1.9 million) to defined
benefit plans in the year ended 30 June 2024 and expects to contribute $2.1 million in the year
ending 30 June 2025.
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.
2024
2023
$m
$m
Current
Provision for long service leave
18.9
15.7
Provision for annual leave
47.7
43.9
Provision for short-term incentives and sales commissions
83.9
86.8
Total current employee benefit liabilities
150.5
146.4
Non-current
Provision for long service leave
6.5
6.8
Defined benefit plan
1.3
2.9
Total non-current employee benefit liabilities
7.8
9.7
Total employee benefit liabilities
158.3
156.1
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4.3 Share-based payments
Since 1 July 2013, the Company has granted 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 2024,
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
Exercise
price of
options
Number of
options
Number of
performance
rights
Contractual
life
October 20201
$206.06
54,731
12,332
5 years
October 20211
$232.52
69,135
16,929
5 years
September 20222
N/A
–
33,313
2 years
October 20221
$216.33
67,487
21,357
7 years
September 20223
N/A
–
5,863
2 years
October 20231
$257.69
58,805
20,606
7 years
September 20232
N/A
–
40,794
2 years
September 20233
N/A
–
6,984
2 years
Total
250,158
158,178
1 Options and performance rights offered under long-term incentives.
2 Performance rights offered under deferred short-term incentives.
3 Services rights offered under the CEIP.
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.
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 over four years against the ASX 100 with a minimum TSR at the
50th percentile assigned to 40% of grant.
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The grant date fair value of options and performance rights was measured based on the Black-Scholes-Merton pricing model. Gross contract value is discounted 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:
18 October 2023
(4 years)
18 September 2023
19 October 2022
(4 years)
29 September 2022
TSR-based
conditions
EPS
performance-
based
conditions
Deferred STI
service-based
conditions
Rights
service-based
conditions
TSR-based
conditions
EPS
performance-
based
conditions
Deferred STI
service-based
conditions
Rights
service-based
conditions
Fair value of options at grant date
$81.44
$90.32
N/A
N/A
$54.08
$64.39
N/A
N/A
Fair value of performance rights at grant date
$182.37
$254.45
$260.25
$260.25
$130.71
$203.44
$209.11
$209.11
Share price at valuation date
$266.15
$266.15
$266.15
$266.15
$214.85
$214.85
$214.85
$214.85
Option exercise price
$257.69
$257.69
n/a
n/a
$216.33
$216.33
N/A
N/A
Expected volatility1
30.14%
30.14%
26.03%
26.03%
29.81%
29.81%
26.68%
26.68%
Option/right life (years)
4 - 7
4 - 7
2
2
4 - 7
4 - 7
2
2
Expected dividend yield
1.13%
1.13%
1.13%
1.13%
1.37%
1.37%
1.37%
1.37%
Risk free interest rate2
3.91%
3.91%
3.91%
3.91%
3.28%
3.28%
3.28%
3.28%
1 Measure captures the characteristics of fluctuations in the share price.
2 Based on government bonds.
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The number, and weighted average exercise prices of, options are as follows:
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
Number of
options
2024
2024
2023
2023
Outstanding at 1 July
$218.82
243,155
$219.76
204,279
Forfeited
$217.28
(38,279)
$219.61
(28,611)
Exercised
$218.82
(13,523)
–
–
Granted
$257.69
58,805
$216.33
67,487
Outstanding at 30 June
$228.28
250,158
$218.82
243,155
Exercisable at 30 June
$206.06
54,731
$217.28
51,802
13,523 were exercised in 2024 (2023: no options were exercised). The weighted average market
share price on the ASX at date of exercise was $279.20 (2023: Nil). The weighted average remaining
contractual life of options outstanding at the end of the year is three years (2023: three years).
ShareWave Employee Share Plan
In 2021, Cochlear launched ShareWave, replacing the previous 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 service conditions and the employee retaining the purchased shares up to the vesting
date of the matching benefit. A maximum value of $1,000 or $1,500 applies to ShareWave,
depending on the eligibility of the participating employee.
During the 2024 financial year, the 2021 ShareWave Matching Rights plan vested and 9,562 shares
were purchased on market to satisfy the employees share allocation.
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), G Boreham, AM, Sir M Daniell, KNZM, M del Prado, C McLoughlin, AM, K Penrose
and Prof B Robinson, AC.
Former Non-Executive directors
YA Allen, AM1
A Denver2
Executive KMP
D Howitt, J Janssen and S Sayers.
1 Resigned on 31 March 2024.
2 Retired on 17 October 2023.
Key management personnel disclosures
The KMP compensation is included in employee expenses as follows:
Short-term
employee
Post-
employment
Other long-term
benefits
Share-based
payments
Total
$
$
$
$
$
2024
9,122,557
245,868
(66,862)
4,915,080
14,216,643
2023
9,715,096
273,366
34,212
3,755,925
13,778,599
Information regarding individual KMP remuneration and some equity instruments disclosures as
permitted by section 300A of the Corporations Act 2001 is provided in the Remuneration report of
this Annual Report on pages 98 to 120.
The KMP have not received any loans from Cochlear and there have been no other related party
transactions with any of Cochlear’s KMP.
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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
Work in
progress
Finished
goods
Total
inventories
$m
$m
$m
$m
2024
198.1
46.3
147.2
391.6
2023
126.4
37.5
147.6
311.5
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
1 to 15 years, plant and equipment between 3 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 expense 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.
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.
Leasehold
improvements
Plant and
equipment
Land and
buildings
Total
2024
$m
2023
$m
2024
$m
2023
$m
2024
$m
2023
$m
2024
$m
2023
$m
At cost
84.4
77.6
441.2
388.6
73.8
73.9
599.4
540.1
Accumulated
depreciation
(51.1)
(44.7)
(238.8)
(215.1)
(4.7)
(3.6)
(294.6)
(263.4)
Net book value
33.3
32.9
202.4
173.5
69.1
70.3
304.8
276.7
Reconciliations of the carrying amounts are:
Opening balance
32.9
32.6
173.5
154.7
70.3
72.9
276.7
260.2
Additions
7.3
5.8
57.5
45.2
–
0.3
64.8
51.3
Addition through
business
combination
–
–
0.6
–
–
–
0.6
–
Disposals
–
–
(0.5)
(0.7)
–
–
(0.5)
(0.7)
Depreciation
(6.8)
(6.4)
(27.4)
(24.7)
(1.1)
(1.1)
(35.3)
(32.2)
Effect of
movements in
foreign exchange
(0.1)
0.9
(1.3)
(1.0)
(0.1)
(1.8)
(1.5)
(1.9)
Net book value
33.3
32.9
202.4
173.5
69.1
70.3
304.8
276.7
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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 systems
IT systems 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 systems between 2 to 7 years, acquired technology,
patents and licences between 4 to 15 years, customer relationships up to 31 years and capitalised
development expenditure between 4 to 10 years.
Amortisation is recognised in the Income statement from the date the assets are available for use
unless their lives are indefinite. Amortisation expense 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.
Goodwill and intangible assets with an indefinite useful life are systematically tested for impairment
annually.
Intangible
assets with
indefinite
useful life
Intangible assets with
finite useful life
Intangible
assets
Goodwill IT systems
Acquired
technology,
patents and
licences
Other
intangible
assets
Total
$m
$m
$m
$m
$m
2024
At cost
257.7
151.0
210.3
58.6
677.6
Accumulated amortisation
and impairment losses
–
(95.8)
(94.2)
(36.6)
(226.6)
Net book value
257.7
55.2
116.1
22.0
451.0
Reconciliations of the carrying amounts are:
Opening balance
256.1
46.6
120.0
21.4
444.1
Additions
–
15.6
3.3
3.0
21.9
Disposal
–
(0.1)
–
(0.3)
(0.4)
Amortisation
–
(7.0)
(7.4)
(2.1)
(16.5)
Effect of movements in
foreign exchange
1.6
0.1
0.2
–
1.9
Net book value
257.7
55.2
116.1
22.0
451.0
2023
At cost
256.1
136.3
206.8
48.1
647.3
Accumulated amortisation
and impairment losses
–
(89.7)
(86.8)
(26.7)
(203.2)
Net book value
256.1
46.6
120.0
21.4
444.1
Reconciliations of the carrying amounts are:
Opening balance
257.1
33.0
79.2
23.2
392.5
Additions
–
22.5
46.4
1.4
70.3
Amortisation
–
(9.0)
(5.4)
(4.0)
(18.4)
Effect of movements in
foreign exchange
(1.0)
0.1
(0.2)
0.8
(0.3)
Net book value
256.1
46.6
120.0
21.4
444.1
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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 the higher of its value in use and its fair value less costs of disposal.
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.
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 group of CGUs are:
Americas
EMEA
Asia Pacific
Total
$m
$m
$m
$m
2024
177.7
70.5
9.5
257.7
2023
176.9
69.8
9.4
256.1
The recoverable amount of each CGU is based on value-in-use calculations. 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.
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.
Revenue is based on near-term forecasts and Cochlear’s expectation of medium and long-term
growth rates. Cost of sales, R&D investment and net margin are based on long-term expectations.
Year 1 cash flows are based on Cochlear’s budget for the year ending 30 June 2025, which is aligned
with Cochlear’s outlook statement.
Cash flows for year six onwards are extrapolated using a terminal growth rate of 3.0% (2023: 3.0%)
per annum which is consistent with long-term growth rates. The pre-tax discount rate for each CGU
is as follows: Americas 8.8% (2023: 9.4%), EMEA 8.7% (2023: 9.3%) and Asia Pacific 9.1% (2023:
9.7%).
The key assumptions and the approach to determining their value in the current year are:
Assumption
Approach
Discount rate
Based on weighted average cost of capital reflecting current market
assessments of the time value of money and risks specific to the CGU.
EBIT growth rate
Based on a five-year cash flow projection taking into account historical
growth rates and product lifecycle.
Terminal value growth
Based on long-term growth rates.
rate
The recoverable amount of each CGU including allocated 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.
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5.4 Business combination
On 21 May 2024, Cochlear acquired Demant’s cochlear implant business by purchasing 100% of the
shares in Neurelec S.A.S and Oticon Medical Maroc from Demant A/S, a Danish company. Cochlear
acquired the business to provide ongoing support to the customer base of implant recipients
following Demant’s decision to exit its hearing implant business. The acquisition was completed for
‘nil’ consideration.
The net profit impact of the acquired business, which is loss making, is not considered material for
either the period since the acquisition or if Cochlear had acquired the business at the start of the
financial year. The acquisition-related costs incurred are not material and are included as
Integration cost in Other expenses.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed
at the date of acquisition:
Note
Total
$m
Trade and other receivables
9.9
Inventories
6.4
Property, plant and equipment
5.2
0.6
Right of use assets
5.8
4.2
Trade and other payables
(5.0)
Employee benefit liabilities
(6.1)
Lease liabilities
(4.2)
Provisions
5.6
(5.5)
Fair value of net assets/(liabilities) acquired
0.3
The acquisition accounting has been performed on a provisional basis and will be finalised on
completion of the final valuations and working capital and net debt adjustments expected to occur
in FY25. A gain on acquisition has arisen from the provisional acquisition accounting as outlined
below:
Total
$m
Consideration transferred
–
Fair value of (net assets)/liabilities acquired
(0.3)
Gain on business combination
0.3
The gain is treated as non-assessable income for tax purposes and has been recognised as Other
income in the Income statement.
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,
EpiMinder, Seer Medical and Precisis. As these investments are held for strategic purposes, Cochlear
elects to fair value these 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.
Investments measured 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.
Investments
Other
financial
assets
Equity-
accounted
investments
$m
$m
$m
Balance at 1 July 2023
93.8
90.8
3.5
Additions
7.5
8.4
–
Fair value loss in investments measured at fair
value through profit or loss
–
(1.3)
–
Fair value through other comprehensive income
(before tax)
(20.8)
–
–
Share of losses on equity-accounted investments
–
–
(0.6)
Balance at 30 June 2024
80.5
97.9
2.9
At 30 June 2024, $110.9 million (2023: $103.8 million) of Investments and Other financial assets are
measured at fair value through profit or loss. The remaining $67.5 million (2023: $80.8 million) is
measured at fair value through other comprehensive income and includes Nyxoah $59.1 million
(2023: $59.2 million) and Seer Medical $6.2 million (2023: $19.6 million).
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Valuation of Level 3 investments and other financial assets
Cochlear’s strategic investments in Saluda Medical, EpiMinder, Seer Medical and Precisis are
classified as Level 3 financial instruments. Level 3 financial instruments in the fair value hierarchy
uses unobservable inputs when measuring fair value (refer to section 6.4 for further details).
At 30 June 2024, Saluda Medical, Seer Medical, Precisis and EpiMinder were valued using a Market
comparison technique. For these investments, the fair values are based on the latest market price
per latest fundraising values and using the price per share from the latest financing round which are
considered unobservable inputs. The estimated fair value would increase (decrease) if the prices
per the latest financing round were higher (lower).
The following table summarises the movement in Level 3 investments during the period:
Investments
Other
financial
assets
$m
$m
Balance at 1 July 2023
34.3
90.8
Additions
–
8.4
Fair value loss in investments measured at fair value through
profit or loss
–
(1.3)
Fair value through other comprehensive income (before tax)
(13.5)
–
Balance at 30 June 2024
20.8
97.9
At 30 June 2024, $110.9 million (2023: $103.8 million) of Level 3 investments and Other financial
assets are measured at fair value through profit or loss and $7.8 million (2023: $21.3 million)
measured at fair value through other comprehensive income.
A 10% increase/(decrease) in the fair value of Level 3 valuations would have a fair value gain/(loss)
of $11.1 through profit or loss and $0.8 million 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.
2024
Warranties
Restructuring
Legal and
insurance
Product
recall
Make good
lease costs
Total
$m
$m
$m
$m
$m
$m
Opening balance
40.7
–
5.8
7.3
3.6
57.4
Provision made
14.4
21.9
1.6
–
0.3
38.2
Addition through
business
combination
4.8
–
0.7
–
–
5.5
Provision used
(17.4)
(3.7)
(0.2)
(0.9)
(0.1)
(22.3)
Effect of
movements in
foreign exchange
(0.1)
–
–
–
–
(0.1)
Total provisions
42.4
18.2
7.9
6.4
3.8
78.7
Represented by:
Current
17.3
18.2
7.7
0.2
–
43.4
Non-current
25.1
–
0.2
6.2
3.8
35.3
Total provisions
42.4
18.2
7.9
6.4
3.8
78.7
Warranties
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 from 2 to 10 years.
Restructuring
The restructuring provision relates to redundancy payments required to be paid in relation to the
business combination described in Note 5.4. The restructure commenced prior to closing of the
acquisition and allowed the cochlear implant business to be separated from the business that was
retained by the seller.
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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 has a present obligation
and can reliably estimate future costs related to these proceedings, including legal fees, a provision
is recognised.
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 2024.
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 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. The outcome of these discussions are not expected to result in a significant adverse
outcome for Cochlear.
Product liability claims
Cochlear is currently, and/or is likely from time to time to be, involved in claims and litigation
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 litigation 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 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 payment claims and tax, customs, and other regulatory reviews, audits,
investigations, and litigation by governments, authorities and regulators. These matters may result
in additional tax, customs or other liabilities (including interest and penalties). 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, which comprises the initial
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amount of the lease liability adjusted for any lease payments made at or before the commencement
date less any lease incentives received.
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. The lease liability includes the lease of Cochlear Global
Headquarters in Sydney, Australia until 2035.
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 2024, lease interest was $7.2 million (2023: $6.7 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 $39.6 million for the year ended 30 June 2024 (2023: $38.5 million).
The following table shows movements in the right of use assets during the year:
Land and
buildings
Other
assets
Total
$m
$m
$m
Balance at 1 July 2023
160.1
10.4
170.5
Additions
9.0
4.4
13.4
Addition through business combination
4.2
–
4.2
Remeasurement
58.1
–
58.1
Depreciation expense
(28.0)
(5.1)
(33.1)
Effect of movements in foreign exchange
(0.8)
0.1
(0.7)
Balance at 30 June 2024
202.6
9.8
212.4
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.
Cochlear commenced a progressive on-market share buyback program in March 2023 with the aim
of reducing the cash balance over a number of years. This program complements the existing
dividend policy which targets a 70% payout of underlying net profit.
A progressive buy-back program aligns with the interests of our shareholders by reducing shares on
issue, providing gradual accretion in earnings per share and dividends per share over the long term.
The Board undertakes an annual review to assess whether the buyback and cash target continue to
be appropriate and whether the capital management structure is appropriate to meet Cochlear’s
medium and long-term strategic requirements.
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.
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6.2 Capital and reserves
Share capital
The Company does not have authorised capital or par value in respect of its issued shares.
Total number of issued shares
2024
2023
On issue 1 July – fully paid
65,671,649
65,775,339
Issued under Employee Share Plan
516
450
Issued from exercise of APAC Equity Plan
–
1,195
Issued from the exercise of performance rights
1,202
4,665
Shares cancelled from share buy-back
(179,206)
(110,000)
On issue 30 June – fully paid
65,494,161
65,671,649
For the FY20-23 LTI plan, 26.12% vested based on the performance over 4 years period (FY20-FY23),
as result of it, 51,312 shares were purchased under the plan with 6,654 in 2024 financial year and
44,658 shares purchased and held in Trust in 2023 financial year.
The on-market share buy-back commenced on 8 March 2023. For the financial year ended 30 June
2024, 165,206 shares were bought back on market (2023: 124,000) and 179,206 shares were
cancelled (2023: 110,000).
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.
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.
Treasury shares reserve
The reserve comprises the cost of the Cochlear Limited’s shares held by Cochlear.
When shares recognised as equity are repurchased, the amount of the consideration paid, including
directly attributable costs, are recognised as a deduction from equity. Repurchased shares are
classified as treasury shares and are presented in the treasury share reserve.
When treasury shares are cancelled, the consideration paid is transferred to share capital. When
treasury shares are issued to employees to satisfy vesting of employee share plans the consideration
paid is transferred to the share-based payment reserve.
At 30 June 2024, the group did not hold any Cochlear Limited shares (2023: 58,658).
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. As at 30 June 2024, Cochlear has no borrowings.
Debt establishment costs are capitalised and an amount of $1.1 million (2023: $1.5 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.
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2024
2023
$m
$m
Cash
Cash and cash equivalents
513.6
555.5
Total cash
513.6
555.5
Less: Total borrowings
Current
–
–
Total borrowings
–
–
Net cash
513.6
555.5
Gearing ratio
2024
$m
2023
$m
Total borrowings
–
–
Total equity
1,840.5
1,748.8
Gearing ratio1
0.0%
0.0%
1 Gearing ratio = Total borrowings/Total equity.
Financing arrangements
Multi-option bank facilities
Other credit facilities
Unsecured
bank loan
Bank
guarantees2
Unsecured
bank
overdrafts
Unsecured
bank loan
Bank
guarantees2
$m
$m
$m
$m
$m
2024
Utilised at reporting date1
–
14.9
–
–
8.5
Not utilised at reporting date
350.0
5.1
3.0
–
4.3
Total facilities
350.0
20.0
3.0
–
12.8
2023
Utilised at reporting date1
–
15.0
–
–
9.1
Not utilised at reporting date
350.0
5.0
3.0
–
3.7
Total facilities
350.0
20.0
3.0
–
12.8
1 Excludes the amount of $1.1 million (2023: $1.5 million) in relation to unamortised loan establishment fees.
2 Bank guarantees include standby letters of credit.
Multi-option bank facilities – Unsecured bank loan
During the year ended 30 June 2024, Cochlear restructured its bank loan facilities as follows:
Facility type
<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
Committed debt
including guarantees
–
–
100.0
150.0
100.0
20.0
370.0
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.
Bank guarantees/Standby letters of credit
As at 30 June 2024, Cochlear had additional facilities denominated in US dollar (USD), Euros (EUR),
Sterling (GBP), Indian rupees (INR), New Zealand dollars (NZD) and Moroccan Dirham (MAD) totaling
AUD 12.8 million (2023: AUD 12.8 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 - interest.
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6.4 Financial risk management
The activities of Cochlear are exposed to a variety of risks, including market risk (comprising
currency, interest rate and equity price 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
Standard. 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 and Risk Committee on a regular basis.
The Audit and Risk Committee oversees how management monitors compliance with Cochlear’s
Risk Management Standard, 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 Management
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, Japanese yen (JPY),
Swedish Krona (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 Management 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 2024 was as follows, based upon notional amounts:
Amounts in foreign
currency/millions
CHF
CNY
EUR
GBP
JPY
SEK
USD
2024
Trade receivables
0.7
200.5
48.7
6.9 1,301.1
8.3
122.6
Trade payables
(3.8)
(56.6)
(44.3)
(3.4) (227.3)
(56.0)
(51.0)
Balance sheet exposure
(3.1)
143.9
4.4
3.5 1,073.8
(47.7)
71.6
2023
Trade receivables
1.0
41.1
70.6
4.0 1,098.7
0.6
110.4
Trade payables
(1.2)
(44.4)
(28.3)
(7.7)
(60.4)
(64.9)
(25.7)
Balance sheet exposure
(0.2)
(3.3)
42.3
(3.7) 1,038.3
(64.3)
84.7
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 2024, 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.
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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 2024, 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:
Amounts
In AUD
Weighted average
rate
<1 year
$m
1-2 years
$m
2024
Buy CHF
0.565
(32.4)
–
Sell EUR
0.605
148.0
75.9
Sell GBP
0.532
42.0
22.8
Sell JPY
90.285
17.7
8.9
Buy SEK
6.891
(34.8)
–
Sell USD
0.666
354.6
184.1
Total
495.1
291.7
2023
Buy CHF
0.611
(31.5)
–
Sell EUR
0.625
112.7
82.4
Sell GBP
0.554
29.5
18.5
Sell JPY
85.643
17.9
9.3
Buy SEK
7.095
(36.6)
–
Sell USD
0.690
313.3
154.8
Total
405.3
265.0
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 2024 after tax by approximately AUD 13.2 million (2023: increased
profit by AUD 10.8 million) and decreased Cochlear’s equity by AUD 56.0 million (2023: decrease by
AUD 65.7 million). A 10% weakening of the foreign currencies would have decreased Cochlear’s
profit for the year ended 30 June 2024 after tax by approximately AUD 11.7 million (2023: decreased
profit by AUD 9.8 million) and increased equity by AUD 49.3 million (2023: increase by AUD 26.4
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:
Average rate
Reporting date spot rate
AUD 1 =
2024
2023
2024
2023
CHF
0.584
0.632
0.596
0.595
CNY
4.738
4.698
4.813
4.798
EUR
0.607
0.644
0.620
0.609
GBP
0.522
0.558
0.525
0.524
JPY
98.135
92.632
106.775
95.900
SEK
6.990
7.110
7.060
7.181
USD
0.656
0.675
0.662
0.662
Interest rate risk
Interest rate risk is managed through the management of net debt, interest expense and cost of
finance. Cochlear is exposed to movements in the Australian interest rates in relation to corporate
debt, leases and cash.
At the reporting date, the interest rate profile of Cochlear’s interest-bearing financial instruments
is financial assets of $513.6 million (2023: $555.5 million) and financial liabilities of $0.0 million
(2023: $0.0 million).
Interest rate risk – Sensitivity analysis
At 30 June 2024, Cochlear was in a net financial asset position. A one percent increase in interest
rates would have increased Cochlear’s profit after income tax and equity by approximately $1.6
million (2023: increased profit by $3.0 million). A one percent decrease in interest rates would have
decreased Cochlear’s profit after income tax and equity by approximately $2.3 million (2023:
reduced profit by $2.1 million).
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(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. In determining concentrations of credit risk, management
assesses the characteristics of customers which include governments, government-supported
universities, clinics, major hospital chains and distributors. Concentrations of credit risk are
determined by assessing different geographical locations of customers and the political and
economic environments they are subject to, which may affect the timely recovery of certain
receivables. The timing of government tenders and distributor sales directly impacts the
concentration risk and management may obtain a letter of credit to minimize the risk. At 30 June
2024 the carrying amount of the receivable from Cochlear's most significant customer was $19.0
million (2023: $23.9 million).
The maximum exposure to credit risk for trade receivables at the reporting date by geographic
region was:
Americas
EMEA
Asia Pacific
Total
$m
$m
$m
$m
2024
125.6
216.8
82.9
425.3
2023
129.8
178.7
79.9
388.4
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.
The group uses an allowance matrix to measure Lifetime Expected Credit Losses of trade receivables
from individual customers. Loss rates are calculated using a 'roll rate' method based on the
probability of a receivable progressing through successive stages of ageing to write-off. Roll rates
are calculated separately for exposures in different segments based on the following credit risk
characteristics - geographic region, political and economic environments, and whether receivables
are covered by a letter of credit. The movement in the allowance for impairment loss during the
current year comprises of $0.6 million in allowance utilised and $3.2 million in net remeasurement.
The ageing of Cochlear’s trade receivables and allowance for impairment loss, are as follows:
Trade receivables
Allowance for
impairment losses
Trade receivables
net of allowance for
impairment losses
2024
2023
2024
2023
2024
2023
$m
$m
$m
$m
$m
$m
Trade receivables
Not past due
348.4
309.8
(2.6)
(3.7)
345.8
306.1
Past due 1 - 60 days
43.3
44.8
(1.6)
(1.5)
41.7
43.3
Past due 61 - 180 days
20.8
28.8
(3.1)
(2.6)
17.7
26.2
Past due 181 - 360 days
13.2
9.8
(5.4)
(2.5)
7.8
7.3
Past due 361 days and over
17.4
10.4
(5.1)
(4.9)
12.3
5.5
443.1
403.6
(17.8)
(15.2)
425.3
388.4
Other receivables – current
65.4
49.1
–
–
65.4
49.1
Trade and other receivables
508.5
452.7
(17.8)
(15.2)
490.7
437.5
Credit risk management – Cash deposits, term deposits and forward exchange
contracts
The majority of Cochlear’s cash 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.
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Non-derivative liabilities
Contractual maturities of non-derivative financial liabilities, including estimated interest payments
and excluding the impact of netting agreements, are as follows:
Effective
interest
rate
Carrying
amount
Contractual
cash flows
<1
year
1-2
years
2-5
years
>5
years
Per
annum
$m
$m
$m
$m
$m
$m
2024
Trade and other payables
–
303.2
303.2 303.2
–
–
–
Lease liabilities
–
243.7
287.9
41.0
36.1
93.3 117.5
Total
546.9
591.1 344.2
36.1
93.3 117.5
2023
Trade and other payables
–
270.4
270.4 270.4
–
–
–
Lease liabilities
–
201.8
233.9
35.9
31.9
68.7
97.4
Total
472.2
504.3 306.3
31.9
68.7
97.4
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:
Carrying
amount
Contractual
cash flows
<1 year
1-2 years
$m
$m
$m
$m
2024
Assets
11.2
11.6
7.9
3.7
Liabilities
(8.9)
(9.1)
(8.7)
(0.4)
Total
2.3
2.5
(0.8)
3.3
2023
Assets
5.3
5.4
3.7
1.7
Liabilities
(27.0)
(28.3)
(21.2)
(7.1)
Total
(21.7)
(22.9)
(17.5)
(5.4)
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.
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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.
7. Other notes
7.1 Auditors’ remuneration
2024
2023
$
$
Audit and assurance services
Auditors of the Company - KPMG:
– audit and review of consolidated financial statements
1,663,200
1,552,259
– audit and review of subsidiary financial statements
817,500
642,016
– other assurance services
19,650
18,715
Total audit and assurance services
2,500,350
2,212,990
Other services
Auditors of the Company - KPMG:
– taxation compliance and advisory services
1,367,248
1,334,339
– other advisory services
54,850
98,407
Total other services
1,422,098
1,432,746
7.2 Commitments
Capital expenditure commitments
As at 30 June 2024, Cochlear entered into contracts to purchase property, plant and equipment for
$23.4 million (2023: $21.1 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
Country of
incorporation/
formation
2024
2023
%
%
Company
Cochlear Limited
Australia
Controlled entities
Cochlear AG
100
100
Switzerland
Cochlear Americas
100
100
USA
Cochlear Arabia Regional Headquarter LLC
100
100
Saudi Arabia
Cochlear Austria GmbH
100
100
Austria
Cochlear Benelux NV
100
100
Belgium
Cochlear Bone Anchored Solutions AB
100
100
Sweden
Cochlear Boulder LLC
(i)
–
100
USA
Cochlear Brasil Ltda
100
100
Brazil
Cochlear Canada Inc
100
100
Canada
Cochlear Clinical Services LLC
100
100
USA
Cochlear Colombia SAS
100
100
Colombia
Cochlear Deutschland GmbH & Co KG
100
100
Germany
Cochlear Employee Share Trust
100
100
Australia
Cochlear Employee Share Plan Trust
100
100
Australia
Cochlear Europe Finance GmbH
100
100
Germany
Cochlear Europe Limited
100
100
UK
Cochlear Finance Pty Limited
100
100
Australia
Cochlear France SAS
100
100
France
Cochlear German Holdings Pty Limited
100
100
Australia
Cochlear Incentive Plan Pty Ltd
100
100
Australia
Cochlear Investments Pty Ltd
100
100
Australia
Cochlear Investments (No. 2) Pty Ltd
100
100
Australia
Cochlear Investments (No. 3) Pty Ltd
(ii)
100
–
Australia
Cochlear Italia SRL
100
100
Italy
Cochlear Korea Limited
100
100
Korea
Cochlear Labs Pty Limited
100
100
Australia
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Interest held
Country of
incorporation/
formation
2024
2023
%
%
Cochlear Latinoamerica S.A.
100
100
Panama
Cochlear Malaysia Sdn. Bhd.
100
100
Malaysia
Cochlear Manufacturing Corporation
100
100
USA
Cochlear Medical Device (Beijing) Co., Ltd
100
100
China
Cochlear Medical Device (Chengdu) Co Ltd
100
100
China
Cochlear Medical Device Company India
Private Limited
100
100
India
Cochlear Mexico SA de CV
100
100
Mexico
Cochlear Middle East FZ-LLC
100
100
UAE
Cochlear Nordic AB
100
100
Sweden
Cochlear Norway AS
100
100
Norway
Cochlear NZ Limited
100
100
New Zealand
Cochlear Research and Development
100
100
UK
Cochlear Russia LLC
100
100
Russia
Cochlear Shared Services S.A.
100
100
Panama
Cochlear Sweden Holdings AB
100
100
Sweden
Cochlear Taiwan Limited
100
100
Taiwan
Cochlear Tibbi Cihazlar ve Saglik Hizmetleri
Limited Sirketi
100
100
Turkey
Cochlear Verwaltungs GmbH
100
100
Germany
Cochlear (HK) Limited
100
100
Hong Kong
Cochlear (Thailand) Limited
100
100
Thailand
Cochlear (UK) Limited
(iii)
100
100
UK
Medical Insurance Pte Limited
100
100
Singapore
Neurelec S.A.S
(iv)
100
–
France
Nihon Cochlear Co Limited
100
100
Japan
Oticon Medical Maroc
(iv)
100
–
Morocco
Sichuan Keli ShuangChuang Technology Co
51
51
China
Sycle, LLC
100
100
USA
Sycle.Net Technologies (Canada)
100
100
Canada
(i) Deregistered 5 September 2023.
(ii) Incorporated 19 April 2024.
(iii) Dormant.
(iv) Acquired on 21 May 2024.
7.4 Parent entity disclosure
At, and throughout the financial year ended, 30 June 2024, the parent company of Cochlear was
Cochlear Limited.
2024
2023
$m
$m
Result of the parent entity
Net profit
335.5
238.8
Other comprehensive income/(loss)
15.8
(2.3)
Total comprehensive income
351.3
236.5
Financial position of the parent entity at year end
Current assets
1,320.1
1,275.5
Total assets
2,152.9
2,045.3
Current liabilities
363.9
358.4
Total liabilities
511.1
480.4
Total equity of the parent entity comprising:
Share capital
1,204.2
1,250.3
Treasury share reserve
–
(3.2)
Hedging reserve
1.7
(15.3)
Share-based payment reserve
107.7
94.7
Profit reserve
438.8
349.0
Accumulated losses
(110.6)
(110.6)
Total equity
1,641.8
1,564.9
Dividends will be paid from the profit reserve of Cochlear Limited, as the parent of the Consolidated
Entity. Dividend income from subsidiaries are 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
Contingent liabilities.
Parent entity capital commitments for acquisition of plant and equipment
As at 30 June 2024, the parent entity entered into contracts to purchase plant and equipment for
$21.0 million (2023: $19.6 million).
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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 on 17 April 2019,
as amended from time to time (the Deed). 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;
Cochlear Investments (No. 3) Pty Ltd; and
Cochlear Labs Pty Limited.
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 2024 and 30 June 2023:
Income statement
2024
2023
$m
$m
Revenue
1,469.1
1,247.8
Cost of sales
(535.8)
(447.5)
Gross profit
933.3
800.3
Selling, marketing and general expenses
(91.6)
(86.3)
Research and development expenses
(175.9)
(149.8)
Administration expenses
(214.7)
(200.2)
Other income
93.6
39.0
Other expenses
(111.8)
(117.9)
Share of losses on equity accounted investments
(0.6)
(0.2)
Results from operating activities
432.3
284.9
Finance income – interest
21.0
20.3
Finance expense – interest
(10.4)
(9.8)
Net finance expense
10.6
10.5
Profit before income tax
442.9
295.4
Income tax expense
(93.5)
(64.4)
Net profit
349.4
231.0
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Statement of comprehensive income
2024
2023
$m
$m
Net profit
349.4
231.0
Financial investments measured at fair value
through other comprehensive income, net of tax
(20.3)
(19.1)
Foreign currency translation differences
–
(0.1)
Effective portion of changes in fair value of cash
flow hedges, net of tax
1.2
(16.3)
Net change in fair value of cash flow hedges
transferred to the Income statement, net of tax
15.8
13.7
Total comprehensive income
346.1
209.2
Retained earnings at beginning of year
297.2
263.9
Net profit
349.4
231.0
Dividends recognised
(245.7)
(197.4)
Defined benefit plan actuarial loss
–
(0.3)
Retained earnings at end of year
400.9
297.2
Balance Sheet
2024
2023
$m
$m
Assets
Cash and cash equivalents
351.8
455.9
Trade and other receivables
687.7
595.8
Forward exchange contracts
7.7
3.6
Inventories
250.9
191.2
Current tax assets
–
9.5
Prepayments
25.9
23.3
Total current assets
1,324.0
1,279.3
Forward exchange contracts
3.5
1.6
Property, plant and equipment
156.2
129.9
Intangible assets
157.6
153.6
Investments
80.5
93.6
Other financial assets
102.0
90.8
Equity-accounted investments
2.9
3.5
Loans and borrowings – internal
217.7
83.6
Investments in subsidiaries
524.6
502.6
Deferred tax assets
50.4
49.0
Right of use assets
119.1
94.9
Total non-current assets
1,414.5
1,203.1
Total assets
2,738.5
2,482.4
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2023
$m
$m
Liabilities
Trade and other payables
255.9
209.0
Forward exchange contracts
8.4
20.6
Loans and borrowings – internal
191.6
190.5
Current tax liabilities
5.7
1.5
Employee benefit liabilities
75.4
73.7
Provisions
17.8
18.3
Deferred revenue
1.2
21.5
Lease liabilities
16.8
15.2
Total current liabilities
572.8
550.3
Forward exchange contracts
0.4
6.4
Loans and borrowings – internal
382.3
243.4
Employee benefit liabilities
4.0
3.7
Provisions
20.1
12.6
Deferred tax liabilities
16.2
17.1
Lease liabilities
122.8
99.5
Total non-current liabilities
545.8
382.7
Total liabilities
1,118.6
933.0
Net assets
1,619.9
1,549.4
Equity
Share capital
1,204.2
1,250.3
Reserves
14.8
1.9
Retained earnings
400.9
297.2
Total equity
1,619.9
1,549.4
7.6 New standards and interpretations not yet adopted
Cochlear adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2) from 1 January 2023. The amendments require the disclosure of ‘material’, rather than
‘significant’, accounting policies. The amendments did not result in changes to the accounting
policies or the accounting policy information disclosed.
A number of new standards, amendments to standards and interpretations are effective for
financial years beginning after 1 July 2023 and have not been applied in preparing these
consolidated financial statements. AASB 18 Presentation and Disclosure in Financial Statements will
replace AASB 101 Presentation of Financial Statements and is effective for the year ending 30 June
2028. This is expected to result in changes in presentation when adopted. Other new standards are
not expected to have an effect on the consolidated financial statements of Cochlear.
7.7 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 these consolidated financial statements, 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 2024, see Note 2.6.
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Consolidated entity disclosure statement
Section 295 (3A) of the Corporation Acts 2001 requires that the tax residency of each entity which is included in the Consolidated Entity Disclosure Statement be disclosed. In the context of an entity which was
an Australian resident, "Australian resident" has the meaning provided in the Income Tax Assessment Act 1997. The determination of tax residency involves judgment as the determination of tax residency is
highly fact dependent and there are currently several different interpretations that could be adopted, and which could give rise to a different conclusion on residency.
In determining tax residency, the Consolidated Entity has applied the following interpretations:
•
Australian tax residency - Current legislation and judicial precedent, including having regard to the Commissioner of Taxation’s public guidance in Taxation Ruling TR 2018/5.
•
Foreign tax residency - Current legislation and guidance in the determination of foreign tax residency.
Australian tax law does not contain specific residency tests for trusts. Generally, these entities are taxed on a flow-through basis so there is no need for a general residence test. There are some provisions
which treat trusts as residents for certain purposes, but this does not mean the trust itself is an entity that is subject to tax.
Entity Name
Type
% of share capital held
directly or indirectly by the
Company in the body
Australian or Foreign
tax resident
Jurisdiction for foreign
tax resident
Place incorporated
/ formed
Cochlear Limited (the Company)
Body Corporate
Australian
N/A
Australia
Cochlear German Holdings Pty Limited
(i)
Body Corporate
100%
Australian
N/A
Australia
Cochlear Incentive Plan Pty Ltd
Body Corporate
100%
Australian
N/A
Australia
Cochlear Employee Share Trust
Trust
N/A
Australian
N/A
Australia
Cochlear Employee Share Plan Trust
Trust
N/A
Australian
N/A
Australia
Cochlear Finance Pty Limited
Body Corporate
100%
Australian
N/A
Australia
Cochlear Investments Pty Ltd
(i)
Body Corporate
100%
Australian
N/A
Australia
Cochlear Investments (No. 2) Pty Ltd
Body Corporate
100%
Australian
N/A
Australia
Cochlear Investments (No. 3) Pty Ltd
Body Corporate
100%
Australian
N/A
Australia
Cochlear Labs Pty Limited
Body Corporate
100%
Australian
N/A
Australia
Cochlear Austria GmbH
Body Corporate
100%
Foreign
Austria
Austria
Cochlear Benelux NV
Body Corporate
100%
Foreign
Belgium
Belgium
Cochlear Brasil Ltda
Body Corporate
100%
Foreign
Brazil
Brazil
Cochlear Canada Inc
Body Corporate
100%
Foreign
Canada
Canada
Sycle.Net Technologies (Canada)
Body Corporate
100%
Foreign
Canada
Canada
Cochlear Medical Device (Beijing) Co., Ltd
Body Corporate
100%
Foreign
China
China
Cochlear Medical Device (Chengdu) Co Ltd
Body Corporate
100%
Foreign
China
China
Sichuan Keli ShuangChuang Technology Co Ltd
Body Corporate
51%
Foreign
China
China
Cochlear Colombia SAS
Body Corporate
100%
Foreign
Colombia
Colombia
Cochlear France SAS
Body Corporate
100%
Foreign
France
France
Neurelec SAS
Body Corporate
100%
Foreign
France
France
Cochlear Deutschland GmbH & Co KG
Partnership
N/A
Foreign
Germany
Germany
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Entity Name
Type
% of share capital held
directly or indirectly by the
Company in the body
Australian or Foreign
tax resident
Jurisdiction for foreign
tax resident
Place incorporated
/ formed
Cochlear Europe Finance GmbH
Body Corporate
100%
Foreign
Germany
Germany
Cochlear Verwaltungs GmbH
Body Corporate
100%
Foreign
Germany
Germany
Cochlear (HK) Limited
Body Corporate
100%
Foreign
Hong Kong
Hong Kong
Cochlear Medical Device Company India Private Limited
Body Corporate
100%
Foreign
India
India
Cochlear Italia SRL
Body Corporate
100%
Foreign
Italy
Italy
Nihon Cochlear Co Limited
Body Corporate
100%
Foreign
Japan
Japan
Cochlear Korea Limited
Body Corporate
100%
Foreign
Korea
Korea
Cochlear Malaysia Sdn. Bhd.
Body Corporate
100%
Foreign
Malaysia
Malaysia
Cochlear Mexico SA de CV
Body Corporate
100%
Foreign
Mexico
Mexico
Oticon Medical Maroc
Body Corporate
100%
Foreign
Morocco
Morocco
Cochlear NZ Limited
Body Corporate
100%
Foreign
New Zealand
New Zealand
Cochlear Norway AS
Body Corporate
100%
Foreign
Norway
Norway
Cochlear Latinoamerica S.A.
Body Corporate
100%
Foreign
Panama
Panama
Cochlear Shared Services S.A.
Body Corporate
100%
Foreign
Panama
Panama
Cochlear Russia LLC
Body Corporate
100%
Foreign
Russia
Russia
Cochlear Arabia Regional Headquarter LLC
Body Corporate
100%
Foreign
Saudi Arabia
Saudi Arabia
Medical Insurance Pte Limited
Body Corporate
100%
Foreign
Singapore
Singapore
Cochlear Bone Anchored Solutions AB
Body Corporate
100%
Foreign
Sweden
Sweden
Cochlear Nordic AB
Body Corporate
100%
Foreign
Sweden
Sweden
Cochlear Sweden Holdings AB
Body Corporate
100%
Foreign
Sweden
Sweden
Cochlear AG
Body Corporate
100%
Foreign
Switzerland
Switzerland
Cochlear Taiwan Limited
Body Corporate
100%
Foreign
Taiwan
Taiwan
Cochlear (Thailand) Limited
Body Corporate
100%
Foreign
Thailand
Thailand
Cochlear Tibbi Cihazlar ve Saglik Hizmetleri Limited
Body Corporate
100%
Foreign
Turkey
Turkey
Cochlear Middle East FZ-LLC
Body Corporate
100%
Foreign
UAE
UAE
Cochlear Europe Limited
Body Corporate
100%
Foreign
UK
UK
Cochlear Research and Development Limited
Body Corporate
100%
Foreign
UK
UK
Cochlear (UK) Limited
Body Corporate
100%
Foreign
UK
UK
Cochlear Americas
Body Corporate
100%
Foreign
USA
USA
Cochlear Clinical Services LLC
Body Corporate
100%
Foreign
USA
USA
Cochlear Manufacturing Corporation
Body Corporate
100%
Foreign
USA
USA
Sycle, LLC
Body Corporate
100%
Foreign
USA
USA
(i) Cochlear German Holdings Pty Limited and Cochlear Investments Pty Limited are partners in Cochlear Deutschland GmbH & Co KG.
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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 2024 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;
c)
the consolidated entity disclosure statement as required by section 295(3A) of the Corporations Act 2001 and set out on pages 162 to 163 is true and correct as at 30 June 2024; and
d)
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 2024.
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 15th day of August 2024.
Director
Director
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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).
In our opinion, the accompanying
Financial Report of the Company
gives a true and fair view,
including of the Consolidated
Entity’s financial position as at 30
June 2024 and of its financial
performance for the year then
ended, in accordance with the
Corporations Act 2001, in
compliance with Australian
Accounting Standards and the
Corporations Regulations 2001.
The Financial Report comprises:
•
Balance Sheet as of 30 June 2024
•
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 material
accounting policies
•
Consolidated entity disclosure statement and
accompanying basis of preparation as at 30
June 2024
•
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 these requirements.
Key Audit Matters
The Key Audit Matters
we identified are:
•
Recoverability of
trade receivables
•
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 $425.3 million
Refer to Note 6.4(b) Financial risk management, credit risk
The key audit matter
How the matter was addressed in our audit
Recoverability of trade
receivables was considered a
key audit matter due to:
•
The varying characteristics
of customers which include
governments, government-
supported universities,
clinics, major hospital chains
and distributors;
•
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;
Our procedures included:
•
Understanding the Consolidated Entity’s credit
control process and key controls including:
•
management review and approval of new
customer credit limits within the
Consolidated Entity’s credit limit policies;
•
the system configuration for enforcing
credit limits;
•
management’s review of trade receivables
ageing and trade receivables past due for
identification of receivables with greater
credit risk to be included in the expected
credit loss model;
•
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
and for certain customers by selecting a sample
of significant overdue customer balances with
indicators of credit deterioration. We:
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.
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•
The inherent subjectivity
involved in the Consolidated
Entity making forward-
looking judgements in
relation to the recovery of
credit risk exposures; and
•
The use of an expected
credit loss model required
by AASB 9 Financial
Instruments.
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.
•
compared management’s assumptions to
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;
•
evaluated other evidence including
customer correspondence; and
•
questioned the Consolidated Entity’s
knowledge of future conditions which may
impact expected customer receipts and
checked consistency of the results to the
procedures performed above.
•
Challenging the Consolidated Entity’s expected
credit loss modelling for customers without a
specific risk by comparing assumptions to
historical patterns of credit losses and
evaluating those assumptions against changes
in general economic conditions in significant
locations.
•
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 $42.4 million
Refer to Note 5.6 Provisions
The key audit matter
How the matter was addressed in our audit
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;
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,
•
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
•
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;
•
The ratio of repairing to
replacing failed products;
•
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.
Given the dependence on manually
developed calculations, we involved
our data analytics specialists to
supplement our senior team
members in addressing this key
audit matter.
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;
•
Assessing the integrity of the model for the
warranty provision. This included checking
the accuracy of the formulas within the
model using data analytic techniques;
•
Comparing the forecast claim rates of a
sample of products to actual warranty
claims for that product or actual warranty
claims of previous generations of similar
products;
•
Comparing the forecast proportion of
claims that can be repaired and associated
repair costs to historical repair
performance;
•
Comparing the forecast replacement cost
to actual manufacturing costs and
challenging forward-looking assumptions
used in the model;
•
Enquiring of management responsible for
product design and quality attributes and
the product repair function regarding
product reliability and repairability,
especially in relation to recently launched
products, to challenge the forward-looking
assumptions used in the model;
•
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.
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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
and the Sustainability data subject to assurance and our related assurance conclusion.
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 in accordance with the Corporations Act 2001,
including giving a true and fair view of the financial position and performance of the
Consolidated Entity, and in compliance with Australian Accounting Standards and the
Corporations Regulations 2001
•
implementing necessary internal control to enable the preparation of a Financial
Report in accordance with the Corporations Act 2001, including giving a true and fair
view of the financial position and performance of the Consolidated Entity, and that is
free from material misstatement, whether due to fraud or error
•
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 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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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
2024, 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 98 to 120 of the Directors’
report for the year ended 30 June 2024.
Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
KPMG
Rachel Gatt,
Partner
Sydney, 15 August 2024
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Additional
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Kevin and Alexa,
Nucleus System recipients
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Sustainability data
Sustainability approach
170
Sustainability governance
170
Materiality
171
Climate-related metrics
172
Potential climate-related risks and opportunities
173
Our people
174
GRI Content Index
175
Assurance
180
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Sustainability approach
Sustainability is embedded in our business strategy, recognising the importance of social, environmental and governance
outcomes for our long-term success.
Our approach
Our sustainability approach aligns with our value creation
model. It reinforces our focus on creating positive social
impact at individual and societal levels, while minimising our
environmental impact. It helps guide our strategic priorities,
manage risk and improve performance.
Our approach is informed by our materiality assessment
and business priorities as well as the Global Reporting
Initiative (GRI) framework, the United Nations Sustainable
Development Goals (SDGs) and the United Nations Global
Compact (UNGC) Principles.
We have been a signatory to the UNGC since 2022 and
support the Ten Principles in the areas of human rights, labour,
environment and anti-corruption.
Sustainability governance
The Board is responsible for ensuring sustainability matters are
incorporated into strategy, decision-making, risk management
and accountability reporting.
The Audit and Risk Committee assists the Board to discharge
its responsibilities in monitoring sustainability performance and
overseeing the implementation of sustainability initiatives and
commitments and reviewing the assessment, management and
response to these risks and opportunities.
The Executive team has responsibility for the implementation
of sustainability strategy, integrating sustainability into
business strategy and operations and reporting progress to the
Audit and Risk Committee. The Executive Risk Management
Committee is responsible for identifying, assessing and
appropriately managing risks throughout Cochlear. Key risks
are reported to the Audit and Risk Committee. The Global
sustainability team provides regular updates to the committee
on sustainability topics.
The Global sustainability team reports to the Chief Financial
Officer and is responsible for defining our sustainability
framework, supporting all parts of the business to deliver on
the framework, leading or coordinating key sustainability-
related activities and developing external reporting.
Group Risk and Assurance is responsible for maintaining
the enterprise risk framework which includes sustainability
and climate-related risks. All employees and contractors are
responsible for compliance with policy and procedure controls
to manage risk.
Sustainability governance framework
Board
Oversight of sustainability and initiatives
Audit and Risk Committee
Monitor and review sustainability performance
and sustainability initiatives
Executive team
Implementation of sustainability strategy
Global sustainability team
Driving sustainability activities
across the business
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Sustainability approach
Materiality
Our material topics focus on the positive social impact our solutions deliver to
society and reflect our business strategic priorities.
We regularly assess the most significant sustainability topics for our business and
our stakeholders, and our materiality process is aligned to the GRI Standards. Our
materiality assessment, conducted in 2022, was informed by a market scan of
key sustainability trends, benchmarking against industry peers and stakeholder
engagement. In 2023, we expanded our assessment by surveying implant
recipients to include their perspectives.
This year, we reviewed the topics in line with the upcoming mandatory
sustainability disclosures, leading to the inclusion of a new topic: sustainability
governance. Next year, we will perform a double materiality assessment in
accordance with the Corporate Sustainability Reporting Directive (CSRD). This
process will consider both the sustainability impacts and the financial materiality.
Our contribution to the United Nations Sustainable
Development Goals
The United Nations Sustainable Development Goals (SDGs) are a set of 17
universal goals adopted by all United Nations Member States in 2015. The goals
are a global call to action on sustainable development that aim to end poverty,
protect the planet and ensure all people enjoy healthy lives, peace and prosperity
by 2030. They are applicable to all countries at all stages of development and are
predicated on all sectors of society being involved in their achievement.
The World Health Organization’s first World Report on Hearing highlights the
relevance of action on hearing care to achieving SDGs. We support the objectives
of the SDGs and recognise their relevance to our business.
We believe that our greatest contributions relate to SDGs 3: good health and
well-being, 4: quality education, 5: gender equality, 8: decent work and economic
growth, 9: industry, innovation and infrastructure, 10: reduced inequalities and
13: climate action. This year we continued to address our priority SDGs which are
also reflected in our material topics.
Material topics
Information about how we are
addressing the topic
SDGs
Product quality, safety and reliability
A lifetime of hearing solutions
3, 9
Access and affordability
A healthier and more productive society
3, 4, 8, 10
Health outcomes and socioeconomic
enablement
A healthier and more productive society
3, 4, 8, 10
Data privacy and cyber security
Sustained value
8, 9
Awareness and education
A healthier and more productive society
A lifetime of hearing solutions
3, 9
Customer-centric approach
A lifetime of hearing solutions
3, 9
Research and innovation
A lifetime of hearing solutions
3, 9
Energy, emissions and climate resilience
Environmental responsibility
13
Employee value proposition
Thriving people
4, 5, 9
Ethical and sustainable supply chain
Sustained value
8, 9, 10
Diversity, equity and inclusion
Thriving people
5, 8
Sustainability governance
Sustained value
5, 8, 13
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Climate-related metrics
Since 2019, we have been tracking Scope 1 and 2 emissions along with business flights. We have consistently improved our
processes for monitoring and managing direct and indirect greenhouse gas emissions and have submitted this data for external
assurance.
Scope 1
• Gasoline and natural gas for our fleet and operations.
• Our Scope 1 emissions have increased compared to the
baseline due to the use of natural gas at our new facility in
China. However, this has already begun to decrease as we
gradually phase out the use of natural gas.
Scope 2
• Purchased electricity for our manufacturing and other
facilities.
• We have reduced our Scope 2 emissions by over 75% compared
to the FY19 baseline through increased renewable energy use at
our manufacturing sites.
Scope 3
• We are reporting on business flights only. We purchase
carbon credits to offset the majority of our business flight
emissions.
• Our net business flight emissions have decreased by 84%
compared to the FY19 baseline.
• The number of flights per FTE has reduced by 40% in
comparison to the FY19 baseline.
• We have completed our first comprehensive inventory in
line with the GHG Protocol, using FY23 as a baseline. We are
refining the accounting methodology and plan to disclose the
emissions for each relevant category in the next financial year.
• The largest emission sources are upstream transport &
distribution and business travel.
GHG emissions
Unit
FY24
FY23
FY22
FY21
FY20
FY19
Total Scope 11
tCO2e
856
916
251
474
559
409
Total Scope 22
tCO2e
2,183
2,401
8,693
11,793
9,115
9,825
Total Scope 1 & 2
tCO2e
3,040
3,316
8,945
12,267
9,674
10,234
Emission intensity per unit
KgCO2e/unit
12
14
41
68
66
66
Emission intensity per mAUD
KgCO2e/revenue
1.4
2
5
8
8
8
Total Scope 3 (business flights)3
tCO2e
14,418
10,950
2,196
186
4,774
18,630
Carbon offsets4
tCO2e
11,422
7,941
1,150
0
0
0
Net Scope 3 emissions5
tCO2e
2,997
3,009
1,046
186
4,774
18,630
Total Scope 1, 2 & 36
tCO2e
6,036
6,326
9,991
12,453
14,448
28,864
Energy
Unit
FY24
FY23
FY22
FY21
FY20
FY19
Direct purchased electricity7
MWh
23,112
23,158
22,943
22,857
15,638
17,806
Direct purchased natural gas
+ petrol8
MWh
4,736
5,433
2,066
1,904
1,201
5,371
Total direct purchased energy
MWh
27,847
28,591
25,009
24,761
16,839
23,177
Energy intensity per unit
MWh/unit
0.11
0.12
0.11
0.13
0.11
0.11
Energy intensity per mAUD
MWh/revenue
13
15
14
15
13
13
1. Includes emissions from gasoline used in company-owned cars and natural gas used in our operations.
2. Includes emissions from electricity consumption from our sites, calculated using the ‘market-based’ approach in accordance with the GHG Protocol Scope 2
Guidance.
3. Includes emissions from business flights only. Scope 3 emissions in FY23 presented in the 2023 Annual Report were adjusted to reflect the correct amount due to
process improvements.
4. Certified carbon credits generated from renewable energy, forest protection and industrial process improvements.
5. Includes emissions from business flights excluding carbon offsets. The Scope 3 emissions for FY23, disclosed in the 2023 Annual Report, were adjusted to reflect
the correct amount.
6. Total Scope 1, 2 & 3 emissions is the sum of Total Scope 1 & 2 and Net scope 3 emissions. The Scope 1, 2 & 3 emissions for FY23, disclosed in the 2023 Annual
Report, were adjusted to reflect the correction in the Scope 3 emissions explained in item 5.
7. Total electricity purchased, including non-renewable and renewable electricity.
8. Includes the volumes of natural gas and petrol purchased, converted to their energy equivalent amount in megawatt-hour.
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Potential climate-related risks and opportunities
We have assessed a wide range of climate-related risks and opportunities across three time horizons - short-term, middle-
term and long-term - under both high emissions and low emissions climate scenarios. The results of this qualitative scenario
analysis are detailed in the table below.
Cochlear principal business risks
Type
Climate risk
Interruption to product supply
Physical and Transition risk
Temporary, extended, or chronic supply chain disruption for Cochlear's direct suppliers and its supply chain.
Interruption to product supply
Physical risk
Extreme (acute) climate-related events may cause damage to Cochlear’s assets and/or inventory (e.g., flooding and
landslides (Australia, China, Malaysia).
Market access
Physical and Transition risk
Acute climate change linked events causing prolonged strain to the healthcare system (e.g., novel zoonotic diseases)
which may disrupt access to elective surgery for customers.
Geopolitical risk
Transition risk
Geopolitical tensions arising from climate may impact Cochlear’s international operations.
Credit and currency
Physical and Transition risk
Credit risk arising from climate change and impacts to funding models.
Market access
Physical risk
Extreme (acute) climate related events may pose a health and safety risk to employees and cause disruptions to
Cochlear’s business operations, heat waves (Australia), flooding and inundation events in coastal urban centres
(Australia, Japan), and bushfire/smoke pollution in fire prone regions (Australia, USA).
Pandemics
Physical risk
Pandemics may increase due to chronic physical climate effects, posing health and safety risks to employees and
impacting Cochlear’s ability to deliver products and services. These effects include rising global temperatures, shifting
rain patterns in water-stressed regions, leading to drought (e.g., China, Australia, Turkey), and sea level rise impacting
coastal urban centres (e.g., Japan, Sweden).
Market access
Transition risk
Healthcare models remove or deprioritise elective surgeries, which may reduce funding available for Cochlear
candidates.
Talent management
Transition opportunity
Transition to green buildings may improve amenity leading to additive benefits to employees from well-designed
workspaces, and to Cochlear from reputational improvements.
Geopolitical risk
Transition opportunity
Adoption of renewable energy in operations may enhance energy security and reduce operating costs.
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Our people
Employees by
category
FY24
FY23
FY22
Female
Male
Female
Male
Female
Male
%
Number
%
Number
%
Number
%
Number
%
Number
%
Number
Senior leaders1
43%
172
57%
231
43%
168
57%
227
41%
157
59%
225
Management2
49%
486
51%
503
49%
457
51%
475
48%
406
52%
444
Operational
53%
1,976
47%
1,787
55%
1,882
45%
1,564
55%
1,763
45%
1,451
Total
51%
2,634
49%
2,521
53%
2,507
47%
2,266
52%
2,326
48%
2,120
Employees by
type and gender
FY24
FY23
FY22
Female
Male
Female
Male
Female
Male
%
Number
%
Number
%
Number
%
Number
%
Number
%
Number
Permanent
51%
2,634
49%
2,521
53%
2,508
47%
2,267
52%
2,327
48%
2,120
Temporary
42%
59
58%
81
57%
83
43%
63
63%
94
37%
56
Full-time
50%
2,495
50%
2,501
51%
2,392
49%
2,275
51%
2,229
49%
2,137
Part-time
66%
198
34%
101
78%
199
22%
55
83%
192
17%
39
Total
51%
2,693
49%
2,602
53%
2,591
47%
2,330
53%
2,421
47%
2,176
Engagement
FY24
FY23
FY22
Employee turnover
8.3%
8.2%
11%
Engagement score
80%
80%
80%
Total hours of employee formal training
28.5
28.5
24.3
Safety and wellbeing
FY24
FY23
FY22
Severity rate
389
263
281
Injury Frequency
TRIFR4
3.6
3.3
2.5
LTIFR5
2.1
2.3
1.6
1. Senior leaders are defined as all employees in Bands 1, 2 and 3; the three most senior levels with Band 1 being the Executive team
2. Management are employees in Band 4
3. We started tracking employees by age from FY24.
4. Total Recordable Injury Frequency Rate (TRIFR) refers to the total number of recordable injuries occurring in a workplace per million hours worked. Recordable injury indicates both minor and major injuries and illnesses that required medical treatment,
lost workdays, or duties other than those normally undertaken by the individual.
5. Total Lost Time Injury Frequency Rate (LTIFR) refers to the number of lost time injuries occurring in a workplace per 1 million hours worked.
Employees
by age3
(in years)
FY24
Female
Male
%
Number
%
Number
Under 30
43%
338
57%
454
30 - 50
52%
1,644
48%
1,503
Over 50
54%
652
46%
564
Total
51%
2,634
49%
2,521
Gender
diversity in
leadership
FY24
FY23
FY22
Women on the
Board
38%
40%
40%
Women in Senior
Leadership
43%
43%
43%
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creation
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performance
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and risk
Financial
statements
Additional
information
GRI Content Index
Cochlear Limited has reported the information cited in this GRI content index for the period from 01 July 2023 to 30 June 2024 with reference to the GRI Standards.
GRI used: GRI 1: Foundation 2021. No sector guidelines apply.
GRI Disclosures
Location
SDGs
UNGC
GRI 2: General Disclosures 2021
2-1 Organizational details
About Cochlear - page 5
2-2 Entities included in the organization’s sustainability reporting
About this report - page 1
Acquisition of Demant’s cochlear implant business - page 18
2-3 Reporting period, frequency and contact point
About this report - page 1
16
2-4 Restatements of information
Climate-related metrics - page 172 - Scope 3 emissions in FY23 presented in the
2023 Annual Report was adjusted to reflect the correct amount due to process
improvements.
16
2-5 External assurance
Independent limited assurance report - page 180
2-6 Activities, value chain and other business relationships
Responsible supply chain - page 68
16
2-7 Employees
Our people - page 174
16
2-8 Workers who are not employees
Our people - page 174
16
2-9 Governance structure and composition
Governance - pages 78 - 86
16
2-10 Nomination and selection of the highest governance body
Governance - pages 78 - 86
16
2-11 Chair of the highest governance body
Board of directors - pages 90 - 96
16
2-12 Role of the highest governance body in overseeing the
management of impacts
Sustainability governance - page 170
16
1, 7
2-13 Delegation of responsibility for managing impacts
Sustainability governance - page 170
Board skills matrix - page 80
16
1, 7, 10
2-14 Role of the highest governance body in sustainability reporting
Sustainability governance - page 170
16
1, 7
2-15 Conflicts of interest
Cochlear Global Code of Conduct
16
10
2-16 Communication of critical concerns
Cochlear Global Code of Conduct
16
10
2-17 Collective knowledge of the highest governance body
Sustainability governance - page 170
16
2-18 Evaluation of the performance of the highest governance body
Sustainability governance - page 170
16
2-19 Remuneration policies
Remuneration report - page 98
8
1, 7, 10
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Governance
and risk
Financial
statements
Additional
information
GRI Disclosures
Location
SDGs
UNGC
GRI 2: General Disclosures 2021
2-20 Process to determine remuneration
Remuneration report - page 98
8
2-21 Annual total compensation ratio
Information currently not disclosed.
16
2-22 Statement on sustainable development strategy
Year in review – page 11
16
1, 7
2-23 Policy commitments
Our pathway to net-zero emissions - page 60
Cochlear Global Code of Conduct
Cochlear Modern Slavery Statement
16
1, 7, 8, 10
2-24 Embedding policy commitments
Cochlear Global Code of Conduct
16
2-25 Processes to remediate negative impacts
Managing our climate-related sustainability risks - page 61
Environmetal management - page 62
Sustainability approach - pages 170 - 173
Cochlear Global Code of Conduct
16
7, 8, 9
2-26 Mechanisms for seeking advice and raising concerns
Cochlear Global Code of Conduct
16
10
2-27 Compliance with laws and regulations
Lawful, ethical and responsible behaviour - page 85
16
1, 2, 8
2-28 Membership associations
Sustainability approach - pages 170 - 171
All SDGs
2-29 Approach to stakeholder engagement
Materiality - page 171
16
2-30 Collective bargaining agreements
Cochlear Global Code of Conduct
8
3
GRI 3: Material Topics 2021
3-1 Process to determine material topics
Materiality - page 171
17
3-2 List of material topics
Materiality - page 171
17
1, 2, 7, 8
3-3 Management of material topics
Sustainability approach - page 170
Materiality - page 171
1, 2, 7, 8, 10
GRI 201: Economic Performance 2016
201-1 Direct economic value generated and distributed
Cochlear at a glance - page 6
Financial report - page 121
3, 8, 10
201-2 Financial implications and other risks and opportunities due to
climate change
Managing our climate-related sustainability risks - page 61
Potential climate-related risks and opportunities - page 173
13
7, 8, 9
201-3 Defined benefit plan obligations and other retirement plans
Defined benefit plans - page 140
16
201-4 Financial assistance received from government
Other income - page 134
16
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and risk
Financial
statements
Additional
information
GRI Disclosures
Location
SDGs
UNGC
GRI 205: Anti-corruption 2016
205-2 Communication and training about anti-corruption policies and
procedures
Creating value responsibly - page 68
3, 16
10
GRI 207: Tax 2019
207-1 Approach to tax
Tax transparency - page 69
1, 10, 17
GRI 302: Energy 2016
302-1 Energy consumption within the organization
Climate-related metrics - page 172
13
7, 8, 9
302-2 Energy consumption outside of the organization
Climate-related metrics - page 172
13
8, 9
302-3 Energy intensity
Climate-related metrics - page 172
13
7, 8, 9
302-4 Reduction of energy consumption
Climate-related metrics - page 172
13
8, 9
303-5 Water consumption
Resource efficiency - page 63
12
8, 9
GRI 305: Emissions 2016
305-1 Direct (Scope 1) GHG emissions
Climate-related metrics - page 172
13
8, 9
305-2 Energy indirect (Scope 2) GHG emissions
Climate-related metrics - page 172
13
8, 9
305-3 Other indirect (Scope 3) GHG emissions
Climate-related metrics - page 172
13
8, 9
305-4 GHG emissions intensity
Climate-related metrics - page 172
13
8, 9
305-5 Reduction of GHG emissions
Climate-related metrics - page 172
13
8, 9
GRI 306: Waste 2020
306-2 Management of significant waste-related impacts
Resource efficiency - page 63
12
8, 9
GRI 308: Supplier Environmental Assessment 2016
308-1 New suppliers that were screened using environmental criteria
Responsible supply chain - page 68
8, 9, 10, 13
8
308-2 Negative environmental impacts in the supply chain and actions
taken
Responsible supply chain - page 68
8, 9, 10, 13
8
GRI 401: Employment 2016
401-1 New employee hires and employee turnover
Engagement - page 174
3, 8
GRI 403: Occupational Health and Safety 2018
403-1 Occupational health and safety management system
Supporting the wellness and safety of our teams - page 57
3, 8
403-3 Occupational health services
Supporting the wellness and safety of our teams - page 57
3, 8
403-4 Worker participation, consultation, and communication on
occupational health and safety
Supporting the wellness and safety of our teams - page 57
3, 8
403-5 Worker training on occupational health and safety
Supporting the wellness and safety of our teams - page 57
3, 8
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company
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Financial
performance
Governance
and risk
Financial
statements
Additional
information
GRI Disclosures
Location
SDGs
UNGC
GRI 403: Occupational Health and Safety 2018
403-6 Promotion of worker health
Supporting the wellness and safety of our teams - page 57
3, 8
403-7 Prevention and mitigation of occupational health and safety
impacts directly linked by business relationships
Supporting the wellness and safety of our teams - page 57
3, 8
403-8 Workers covered by an occupational health and safety
management system
Supporting the wellness and safety of our teams - page 57
3, 8
403-9 Work-related injuries
Safety and wellbeing - page 174
3, 8
403-10 Work-related ill health
Safety and wellbeing - page 174
3, 8
GRI 404: Training and Education 2016
404-1 Average hours of training per year per employee
Engagement - page 174
8
404-2 Programs for upgrading employee skills and transition
assistance programs
Attract, develop and retain world-class talent - pages 55-56
8
GRI 405: Diversity and Equal Opportunity 2016
405-1 Diversity of governance bodies and employees
Our diversity, equity and inclusion strategy - pages 52 - 55
5
6
GRI 408: Child Labor 2016
408-1 Operations and suppliers at significant risk for incidents of child
labor
Responsible Supply Chain - 68
Cochlear Global Code of Conduct
Cochlear Modern Slavery Statement
8
5
GRI 409: Forced or Compulsory Labor 2016
409-1 Operations and suppliers at significant risk for incidents of
forced or compulsory labor
Responsible Supply Chain - 68
Cochlear Global Code of Conduct
Cochlear Modern Slavery Statement
8
4
GRI 411: Rights of Indigenous Peoples 2016
411-1 Incidents of violations involving rights of indigenous peoples
Reconciliation Action Plan
1, 8, 10
1
GRI 413: Local Communities 2016
413-1 Operations with local community engagement, impact
assessments, and development programs
Cochlear Foundation
3, 4, 8, 10
GRI 414: Supplier Social Assessment 2016
414-1 New suppliers that were screened using social criteria
Responsible Supply Chain - 68
8, 9, 10, 13
1, 3, 4, 5
414-2 Negative social impacts in the supply chain and actions taken
Responsible Supply Chain - 68
8, 9, 10, 13
1, 3, 4, 5
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performance
Governance
and risk
Financial
statements
Additional
information
GRI Disclosures
Location
SDGs
UNGC
GRI 415: Public Policy 2016
415-1 Political contributions
Public policy engagement - page 70
In FY24, we contributed a total of $2,995 to political organisations, solely as a payment
for attendance at events and briefings. These payments complied with our Cochlear
Global Code of Conduct (1.10 and 1.11).
In compliance with the Code, we did not make any cash donations to political parties
or make direct campaign funding donations to either individuals or political parties.
3, 16
10
GRI 416: Customer Health and Safety 2016
416-1 Assessment of the health and safety impacts of product and
service categories
Leading on product quality and reliability - page 37
3, 9, 12
GRI 417: Marketing and Labeling 2016
417-1 Requirements for product and service information and labeling
Leading on product quality and reliability - page 37
In addition, our Quality Management System is intended to be compliant with the
following quality management standards, regulations and directives:
• EN ISO 13485:2016
• ISO 13485:2016
• CFR Title 21 Part 820 (US)
• Medical Device Regulation (EU) 2017/745 : 2017
• Active Implantable Medical Device Directive 90/385/EEC
• Therapeutic Good Act 1989
• Therapeutic Goods (Medical Device) Regulations 2002 (Australia)
• Canadian Medical Device Regulation (SOR/98-282)
• MHLW Ministerial Ordinance no. 169 (Japan)
• Medical Device Act (South Korea)
• Good Manufacturing Practices RDC National Health Surveillance Agency (ANVISA)
• 665/2022 (Brazil)
• NMPA (2014) China No. 64 Order of Good Manufacturing Practice for Medical
Devices.
3, 9, 12
GRI 418: Customer Privacy 2016
418-1 Substantiated complaints concerning breaches of customer
privacy and losses of customer data
Cyber security - page 69
Data privacy - page 69
16
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and risk
Financial
statements
Additional
information
To the directors of Cochlear Limited
Conclusion
Based on the evidence we obtained from the procedures performed, we are not aware of
any material misstatements in the Information Subject to Assurance, which has been
prepared by Cochlear Limited (“Cochlear”) in accordance with Cochlear’s Sustainability
Definition (“the Criteria”) for the period end 30 June 2024.
Information Subject to Assurance
The Information Subject to Assurance comprised the following data as presented in the
2024 Annual Report, and as included in the table below:
Information Subject to Assurance
Reported Value
•
Total Scope 1 GHG Emissions
856 tCO2-e
•
Total Scope 2 (market-based) GHG Emissions
2,183 tCO2-e
•
Net Scope 3 GHG Emissions (business flights only)
2,997 tCO2-e
•
Directly Purchased Electricity
23,112 MWh
•
Directly Purchased Natural Gas + Petrol
4,736 MWh
•
Emission Intensity per Unit
12 kgCO2-e/unit
•
Emission Intensity per Revenue (mAUD)
1.4 kgCO2-e/revenue
•
Energy Intensity per Unit
0.11 MWh/unit
•
Energy Intensity per Revenue (mAUD)
13 MWh/revenue
•
Total Recordable Injury (TRI) Frequency Rate
3.6
•
Loss Time Injury (LTI) Frequency Rate
2.1
•
Diversity: “Our Workforce” tables; FY24 values for “Employees by category”,
“Employees by type and gender”, and “Gender diversity in leadership” as
presented on page 174 of the 2024 Annual Report.
Criteria Used as the Basis of Reporting
The methodologies used by Cochlear management to measure the Information Subject to
Assurance (“the criteria”) are described in the 2024 Annual Report.
Basis for Conclusion
We conducted our work in accordance with Australian Standard on Assurance
Engagements ASAE 3000 (Standard). In accordance with the Standard we have:
•
used our professional judgement to plan and perform the engagement to obtain
limited assurance that we are not aware of any material misstatements in the
Information Subject to Assurance, whether due to fraud or error;
•
considered relevant internal controls when designing our assurance procedures,
however we do not express a conclusion on their effectiveness; and
•
ensured that the engagement team possess the appropriate knowledge, skills and
professional competencies.
Summary of Procedures Performed
Our limited assurance conclusion is based on the evidence obtained from performing the
following procedures:
•
enquiries with relevant Cochlear personnel to understand the internal controls,
governance structure and reporting process used to collect the Information Subject
to Assurance;
•
reviews of relevant documentation including, but not limited to, relevant Frameworks
and policies;
•
analytical procedures over the Information Subject to Assurance;
•
walkthroughs of the Information Subject to Assurance to source documentation on a
sample basis;
•
evaluating the appropriateness of the Criteria with respect to the Information Subject
to Assurance; and
•
reviewed the 2024 Annual Report in its entirety to ensure it is consistent with our
overall knowledge of assurance engagement.
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.
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information
How the Standard Defines Limited Assurance and Material Misstatement
The procedures performed in a limited assurance engagement vary in nature and timing
from, and are less in extent than for a reasonable assurance engagement. Consequently
the level of assurance obtained in a limited assurance engagement is substantially lower
than the assurance that would have been obtained had a reasonable assurance
engagement been performed.
Misstatements, including omissions, are considered material if, individually or in the
aggregate, they could reasonably be expected to influence relevant decisions of the
Directors of Cochlear.
Use of this Assurance Report
This report has been prepared for the Directors of Cochlear for the purpose of providing
an assurance conclusion on the Information Subject to Assurance and may not be
suitable for another purpose. We disclaim any assumption of responsibility for any
reliance on this report, to any person other than the Directors of Cochlear, or for any
other purpose than that for which it was prepared.
Management’s responsibility
Management are responsible for:
•
determining that the criteria is appropriate to meet their needs and the needs of the
directors;
•
preparing and presenting the Information Subject to Assurance in accordance with the
criteria; and
•
establishing internal controls that enable the preparation and presentation of the
Information Subject to Assurance that is free from material misstatement, whether due
to fraud or error.
Our responsibility
Our responsibility is to perform a limited assurance engagement in relation to the
Information Subject to Assurance for the period end 30 June 2024, and to issue an
assurance report that includes our conclusion.
Our Independence and Quality Management
We have complied with our independence and other relevant ethical requirements of the
Code of Ethics for Professional Accountants (including Independence Standards) issued
by the Australian Professional and Ethical Standards Board, and complied with the
applicable requirements of Australian Standard on Quality Management 1 to design,
implement and operate a system of quality management.
KPMG
Sydney, NSW
15 August 2024
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statements
Additional
information
References
FY24 highlights – page 10
1.
Cochlear estimates based on the published economic model
findings of Neve et al 2021 (Neve OM, Boerman JA, van
den Hout WB, Briaire JJ, van Benthem PPG, Frijns JHM.
Cost-benefit Analysis of Cochlear Implants: A Societal
Perspective. Ear Hear. 2021 Sep/Oct;42(5):1338-1350. doi:
10.1097/AUD.0000000000001021. PMID: 33675588; PMCID:
PMC8378541). Dollar amount relates to all recipients implanted
with a cochlear implant in FY24 across the developed markets.
Year in review – pages 11-19
1.
Lin FR et al. Hearing intervention versus health education control
to reduce cognitive decline in older adults with hearing loss in the
USA (ACHIEVE): a multicentre, randomised controlled trial. The
Lancet. [ePub ahead of print] DOI: https://doi.org/10.1016/S0140-
6736(23)01406-X. Available at https://www.thelancet.com/journals/
lancet/article/PIIS0140-6736(23)01406-X/fulltext
2. Sarant J, Harris D, Busby P, Maruff P, Schembri A, Dowell R, Briggs
R. The Effect of Cochlear Implants on Cognitive Function in Older
Adults: Initial Baseline and 18-Month Follow Up Results for a
Prospective International Longitudinal Study.
3. Cochlear estimate for cochlear and acoustic implants
4. Briggs, R., O ’Leary, S., Birman, C., Plant, K., English, R., Dawson, P.,
Risi, F., Gavrilis, J., Needham, K., & Cowan, R. (2020). Comparison of
electrode impedance measures between a dexamethasone-eluting
and standard CochlearTM Contour Advance
® electrode in adult
cochlear implant recipients. Hearing Research, 390. https://doi.
org/10.1016/j.heares.2020.107924
5. Kelsall, D. A 12-Month Evaluation of the First Randomized Controlled
Trial of the Novel Dexamethasone Eluting Slim Modiolar Electrode
(CI632D): Efficacy and Safety Outcomes in a Newly Implanted
Adult Population with Bilateral Moderate to Profound Sensorineural
Hearing Loss, Conference Presentation, American Cochlear Implant
Alliance, Vancouver, July 10-13, 2024.
6. Cochlear estimates based on the published economic model findings
of Neve et al 2021 (Neve OM, Boerman JA, van den Hout WB, Briaire
JJ, van Benthem PPG, Frijns JHM. Cost-benefit Analysis of Cochlear
Implants: A Societal Perspective. Ear Hear. 2021 Sep/Oct;42(5):1338-
1350. doi: 10.1097/AUD.0000000000001021. PMID: 33675588;
PMCID: PMC8378541). Dollar amount relates to all recipients
implanted with a cochlear implant in FY24 across the developed
markets.
7.
Lin FR et al. Hearing intervention versus health education control to
reduce cognitive decline in older adults with hearing loss in the USA
(ACHIEVE): a multicentre, randomised controlled trial. The Lancet.
8. Sarant J, Harris D, Busby P, Maruff P, Schembri A, Dowell R, Briggs
R. The Effect of Cochlear Implants on Cognitive Function in Older
Adults: Initial Baseline and 18-Month Follow Up Results for a
Prospective International Longitudinal Study.
Growth opportunity – pages 23-24
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. a. Mohr et al., 2000.
b. CPI Inflation Calculator (http://www.in2013dollars.com).
c. Estimated from Mohr et al., 2000.
4. The Ear Foundation (2018). Spend2Save Report (2nd Edition).
5. WHO 2021 World Report on Hearing (https://www.who.int/
activities/highlighting-priorities-for-ear-and-hearing-care).
6. Lin FR et al. Hearing intervention versus health education control
to reduce cognitive decline in older adults with hearing loss in the
USA (ACHIEVE): a multicentre, randomised controlled trial. The
Lancet. [ePub ahead of print] DOI: https://doi.org/10.1016/S0140-
6736(23)01406-X. Available at https://www.thelancet.com/journals/
lancet/article/PIIS0140-6736(23)01406-X/fulltext
7.
Fact 5. Deafness and hearing loss. World Health Organization
[Internet]. [cited July 2018]. Available from: http://www.who.int/
features/factfiles/deafness/en/.
8. 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.
9. a. 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.
b. 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.
c. Barnett S. A hearing problem. American Family Physician [serial on
the Internet]. (2002, Sep 1), [cited July 3, 2018]; 66(5): 911.
10. a. 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.
b. 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.
11. a. 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.
b. 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.
c. 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.
Key market segments – pages 25-26
1.
WHO 2021 World Report on Hearing (https://www.who.int/
activities/highlighting-priorities-for-ear-and-hearing-care).
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company
Review of
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Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
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.
A lifetime of hearing solutions – pages 29-39
1.
a. Related to the implant when used in accordance with product
labelling.
b. Profile Plus. As of 30 December 2022, no complaints in relation to
the device when undergoing MRI have been received.
2. Cochlear Limited. D1619303 Software History Timeline. Data on file.
3. Dillon H, James A, Ginis J. Client Oriented Scale of Improvement
(COSI) and its relationship to several other measures of benefit and
satisfaction provided by hearing aids. J Am Acad Audiol. 1997, Feb
(1)8:27‐43. 2.
4. International Standard ISO 5841-2. Implants for Surgery — Cardiac
Pacemakers — Part 2: Reporting of Clinical Performance of
Populations of Pulse Generators or Leads. Geneva (Switzerland):
International Organization for Standardization.
5. European Consensus Statement on Cochlear Implant Failures and
Explantations. Otol Neurotol. 2005 Nov;26(6):1097-9.
6. ANSI/AAMI CI86. Cochlear implant systems: Requirements for
safety, functional verification, labelling and reliability reporting (2017).
Arlington, VA: American National Standards Institute.
7.
Based on comparable implant generations released by Cochlear,
MED-EL and Advanced Bionics using each manufacturer’s first
published CSP data at 7 and 15 years.
8. Kelsall, D. A 12-Month Evaluation of the First Randomized Controlled
Trial of the Novel Dexamethasone Eluting Slim Modiolar Electrode
(CI632D): Efficacy and Safety Outcomes in a Newly Implanted
Adult Population with Bilateral Moderate to Profound Sensorineural
Hearing Loss, Conference Presentation, American Cochlear Implant
Alliance, Vancouver, July 10-13, 2024.
9. Briggs RJ, Eder HC, Seligman PM, Cowan RS, Plant KL, Dalton
J, Money DK, Patrick JF. Initial clinical experience with a totally
implantable cochlear implant research device. Otol Neurotol. 2008
Feb;29(2):114-9. doi: 10.1097/MAO.0b013e31814b242f. PMID:
17898671.
A healthier and more productive society –
pages 40-46
1.
Market penetration estimate based on Cochlear sourced data.
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[Internet]. [cited July 2018]. Available from: http://www.who.int/
features/factfiles/deafness/en/.
3. Unilateral Cochlear Implants for Severe, Profound, or Moderate
Sloping to Profound Bilateral Sensorineural Hearing Loss. A
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Head Neck Surg. doi:10.1001/jamaoto.2020
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gov/pmc/articles/PMC3277836/
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JCIH%20Position%20Statement.pdf
Cochlear Limited Annual Report 2024
183
Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Shareholder information
Additional information required by Australian Securities Exchange Listing Rules and not
disclosed elsewhere in this report. The information presented is as at 26 July 2024.
Substantial shareholders
Investor
Number of ordinary shares
%
BlackRock Inc
4,730,850
7.2
State Street Corporation
4,442,349
6.8
ABP (Algemen Burgerlijk PSF)
3,596,513
5.5
The Vanguard Group, Inc
3,425,792
5.2
Total
16,195,504
24.7
Distribution of shareholders
Number of shares held
Number of ordinary shareholders
% shares
1 - 1,000
39,288
9.43
1,001 - 5,000
2,277
6.65
5,001 - 10,000
101
1.06
10,001 - 100,000
51
2.16
100,001 and over
18
80.70
Total
41,735
100.00
Non-marketable parcels – 189 shareholders held less than a marketable parcel of ordinary
shares, based on the closing market price on 26 July 2024 of $339.87.
On-market share buyback
The on-market share buyback has ended in March 2024. A total of $43.0 million in shares have
been repurchased in financial year 2024 (FY23: $29.6m).
Twenty largest shareholders
Shareholder
Number of
ordinary shares
% of issued
capital
1
HSBC Custody Nominees (Australia) Limited
28,724,005
43.86
2
J P Morgan Nominees Australia Pty Limited
10,419,733
15.91
3
Citicorp Nominees Pty Limited
7,185,958
10.97
4
National Nominees Limited
1,260,072
1.92
5
BNP Paribas Noms Pty Ltd
1,248,618
1.91
6
BNP Paribas Nominees Pty Ltd
1,234,623
1.89
7
HSBC Custody Nominees (Australia) Limited
473,902
0.72
8
Australian Foundation Investment Company Limited
324,174
0.49
9
Netwealth Investments Limited
322,512
0.49
10
BNP Paribas Nominees Pty Ltd
311,198
0.48
11
Citicorp Nominees Pty Limited
257,130
0.39
12
HSBC Custody Nominees (Australia) Limited-GSCO
ECA
250,716
0.38
13
Mr Christopher Graham Roberts
172,387
0.26
14
HSBC Custody Nominees (Australia) Limited - A/C 2
166,930
0.25
15
Custodial Services Limited
148,099
0.23
16
HSBC Custody Nominees (Australia) Limited
146,653
0.22
17
BNP Paribas Nominees Pty Ltd
131,365
0.20
18
HSBC Custody Nominees (Australia) Limited
125,730
0.19
19
UBS Nominees Pty Ltd
95,069
0.15
20
IOOF Investment Services Limited
72,784
0.11
Total
53,071,658
81.02
The 20 largest shareholders held 81.02% of the ordinary shares of the Company.
Cochlear Limited Annual Report 2024
184
Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
Directory
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 Cochlear’s share registry 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
Auditor
KPMG
Level 38, Tower Three, International Towers Sydney
300 Barangaroo Avenue
Sydney, NSW, 2000
Telephone: +612 9335 7000
Website: www.kpmg.com.au
Calendar of events*
25 October 2024
Annual general meeting
14 February 2025
HY25 results announced
15 August 2025
FY25 results announced
* Indicative dates only and subject to change.
Company secretary
Rob McGrory
Kristy Jo
Annual general meeting
The annual general meeting of Cochlear Limited will be
held on 25 October 2024 at 10.00am. Further details will be
provided in the Notice of Meeting, which will be provided to
shareholders in mid-September 2024. The Notice of Meeting
will also be available on the ASX Market Announcements
Platform and the website, www.cochlear.com.
Cochlear Limited Annual Report 2024
185
Contents
Our
company
Review of
FY24
Strategy and value
creation
Financial
performance
Governance
and risk
Financial
statements
Additional
information
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 follow the directions for use. Not all
products are available in all countries. Please contact your local Cochlear representative for product information.
ACE, Advance Off-Stylet, AOS, Ardium, AutoNRT, Autosensitivity, Baha, Baha SoftWear, BCDrive, Beam, Bring Back the Beat, Button, Carina, Cochlear, 科利耳, コクレア, 코클리어, Cochlear SoftWear, Contour, コントゥア, Contour Advance, Custom
Sound, DermaLock, Freedom, Hear now. And always, Hugfit, Human Design, Hybrid, Invisible Hearing, Kanso, LowPro, MET, MP3000, myCochlear, mySmartSound, NRT, Nucleus, Osia, Outcome Focused Fitting, Off-Stylet, Piezo Power, Profile,
Slimline, SmartSound, Softip, SoundArc, True Wireless, the elliptical logo, Vistafix, Whisper, WindShield and Xidium are either trademarks or registered trademarks of the Cochlear group of companies.
© Cochlear Limited 2024. D2226248 V1 2024-08
www.cochlear.com
Cochlear Ltd (ABN 96 002 618 073) 1 University Avenue, Macquarie University, NSW 2109, Australia T: +61 2 9428 6555
Hear now. And always
Cochlear is dedicated to helping people with moderate to profound hearing loss experience a world full of hearing.
As the global leader in implantable hearing solutions, we have helped more than 700,000 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 next generation technologies. We
collaborate with leading clinical, research and support networks to advance hearing science and improve care.
That’s why more people choose Cochlear than any other hearing implant company.