The principal activities and a review of the operations of the Consolidated Entity during the year ended 30 June 2005, and the results of these operations are set out in the CEO/President’s Report and the Financial discussion and analysis.
Other than as discussed in the CEO/President’s Report and the Financial discussion and analysis, there were no significant changes in the nature of those activities during the year ended 30 June 2005 and the results of those operations are set out in the above-mentioned reports.
Consolidated results
The consolidated results for the financial year attributable to the members of the Company are:
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Revenue from ordinary activities
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348,517
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285,836
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Profit from ordinary activities before related income tax expense
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74,864
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47,252
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Net profit attributable to members of the Company
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54,520
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36,761
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Basic earnings per share (cents)
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100.5
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68.2
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Diluted earnings per share (cents)
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100.5
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68.2
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Dividends
Dividends paid or declared by the Company to members since the end of the previous financial year are:
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• As proposed and provided in last year’s report:
Final - ordinary shares
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44.0
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23,831
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23 September 2004
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30%
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• In respect of the current financial year:
Interim - ordinary shares
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35.0
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19,001
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15 March 2005
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30%
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All the dividends paid or declared by the Company since the end of the previous financial year were 100% franked.
The final dividend in respect of the current financial year has not been provided for in the Financial Report as it was not declared until after 30 June 2005. Since the end of the financial year, the directors declared a final 45.0 cents per share dividend 100% franked at the tax rate of 30% amounting to a total of $24,430,265.
Environmental regulations
The Consolidated Entity’s operations are not subject to any significant environmental regulations under either Commonwealth of Australia or State/Territory legislation. However, the Board believes that the Consolidated Entity 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 the Consolidated Entity.
Non-audit services
During the year, KPMG, the Company’s auditor, has performed certain other services in addition to their 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 Committee, and 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 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.
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act is included in this Report.
State of affairs
The significant changes to the state of affairs of the Consolidated Entity during the financial year were as follows:
- on 1 July 2004, Nihon Cochlear Co Limited, a wholly owned subsidiary of the Company, acquired the cochlear implant distribution business from its distributor for consideration, paid in cash, of $3.4 million;
- on 1 July 2004, the Consolidated Entity purchased 100% of the voting shares of Miaki NV, a distributor of Cochlear Limited products, incorporated in Belgium, for consideration, paid in cash, of $11.8 million. At the time of the acquisition, Miaki NV owned 100% of the voting shares of Newmedic NV, which was subsequently renamed to Cochlear Benelux NV;
- on 24 September 2004, the Company issued 72,870 ordinary shares to eligible employees of the Consolidated Entity under the Cochlear Employee Share Plan for $nil consideration;
- on 30 September 2004, the Company issued 54,917 shares in trust to eligible employees of the Consolidated Entity under the Cochlear Executive Long Term Incentive Plan (CELTIP) for $nil consideration;
- on 1 November 2004, the Consolidated Entity acquired 100% of the voting shares of Newmedic International SAS, a distributor of Cochlear Limited products, incorporated in France for consideration, paid in cash, of $6.8 million. Newmedic International SAS was subsequently renamed to Cochlear France SAS;
- on 8 March 2005, the Consolidated Entity acquired 100% of the shares of Entific Medical Systems AB, a company incorporated in Sweden, for consideration, paid in cash of $195.3 million. The acquisition was financed through bank debt. The company designs, manufactures and distributes bone anchored hearing implants;
- the Consolidated Entity incurred capital expenditure of $8.0 million. This comprised of leasehold improvements of $0.6 million, plant and equipment of $4.4 million and the Enterprise Resource Planning System of $3.0 million; and
- from the financial year beginning 1 July 2005, the Consolidated Entity must comply with Australian equivalents to International Financial Reporting Standards (AIFRS) as issued by the Australian Accounting Standards Board. The Consolidated Entity has completed its formal transition project and is in a position to comply with AIFRS from 1 July 2005.
Likely developments
Further information as to likely developments in the operations of the Consolidated Entity and the expected results of those operations in subsequent financial years has not been included in this Directors’ Report because the directors believe, on reasonable grounds, that to include such information would be likely to result in unreasonable prejudice to the Consolidated Entity.
