Thank you for standing by, welcome to the Cochlear Limited FY23 Results Analyst and Media Briefing. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the one on your telephone keypad. I would now like to hand the conference over to Dig Howitt, Chief Executive Officer and President. Please go ahead. Thank you. Thanks, all, for joining today. Great to have you with us to talk through our FY2023 results and outlook. Let's get started. As always, we start with our mission that guides all that we do at Cochlear, both our, our strategy and our day-to-day work. Sitting under our, under our mission is our strategy, and there thinking particularly of what's the impact that Cochlear has on, on society, on our customers, on our people, on the environment, and financially, and we talk about our strategy in that context. I'm not going to go through all of the detail on this slide. You can read through it, there's the one point I did want to make is that in helping over 44,000 people hear in the last year, the net societal benefit of that is over AUD 7 billion. Which just shows how cost effective our products are, that we can conservatively create that sort of value with what we do. That comes from healthy outcomes, educational cost savings, and through productivity gains. I'll now step into the, into the results in a, in a bit more detail, I will run through the revenue and each of the revenue lines, then Stu will talk through the P&L and the cash flow and the balance sheet in a bit more detail. Clearly it was a really strong revenue result. We saw double-digit growth in each of our revenue lines, cochlear implants, services, and acoustics, and we saw double-digit growth in each of the regions. We often talk about having a portfolio of geographies and of products. It's rare that we see all of those, growing at this rate at the, at the same time. There was hardly any countries last year where, where we didn't see good growth. I'll talk through each of those revenue lines in a minute, but certainly Nucleus 8, is, is a highlight. In terms of net profit, Stu will talk more to that, AUD 305 million, we took the opportunity with the increase in sales to, choose to increase our investment in R&D and in long-run growth. Something we'll also talk about is we have an incentive system that runs right through the business, which is highly leveraged to above-plan revenue growth. Employees get rewarded for the strong revenue growth in the year it happens, and then we obviously lock that revenue in for the baseline for future growth. We remain in a strong position from a balance sheet perspective. I'll talk to the, the divid- Stu will talk to the dividend, and I'll talk to the outlook at the end of the presentation. Now let's jump into each of the, the revenue lines in more detail. Starting with Cochlear implants, so clearly very strong growth in Cochlear implants, 17% in constant currency. We saw good growth across developed markets and emerging markets. We called out there about 15% in developed markets, about 20% in emerging. We called out the second half growth rate there in developed of 18%, and that's because if you just look at the raw numbers, you'll see a 30% revenue lift in cochlear implants in the second half. That's driven by currency, by the deferred revenue moving from first half to second half. The underlying growth rate, which you can see across all implants and then in developed markets, is very strong, but well under that 30%. What's, what drove that growth? There were four factors. Market growth was there and clearly important. Improved clinical capacity, and that's both the audiology capacity for screening and the hospital surgical capacity. As we've talked about, it's the audiology capacity that is more of a constraint for us now. We gained market share on the back of the strength of our product portfolio and particularly Nucleus 8. There were COVID catch-up surgeries, which we didn't expect at the rate that we saw them. Now, we don't know exactly what each of those four elements contributed to growth. One of the ways we looked at this, we looked at the growth in children in the developed markets. Normally, we would expect children in the developed markets to grow about 1%, which is pretty much in line with the birth rate. We actually had surgery growth of 5% for children in developed markets, and there's things that are driving that, but we don't think will repeat next year. One is market share gains. We, we have gained share, but we don't expect that to continue into, into 2024, just given the, the level that our share is at. The second one, which we saw in children, but it flows through adults as well, is catch-up surgeries. We can see that in the numbers, and we hear that, anecdotally from clinics, that they are seeing some older babies come through, that we're assuming got missed, through the, through the last couple of years of screening. Again, that surprised us to see that come through. We don't expect that to repeat. As we look into next year, we think our growth will be, just driven by market growth. I think one of the very pleasing things on growth is that we are seeing an improvement in the adult surgery rates and in referral rates, but in key markets. That gives us. It's encouraging in terms of the investments we're making in standard of care, which, as we've said, are long-run investments. It's encouraging to see the growth there. We obviously want to see that growth continue for more than just a year to give us r- even more confidence. Emerging markets, strong growth there. We said we expected governments to come back with the restart tender activity. We've seen that. Emerging markets now well above pre-COVID levels, and we expect continued growth there. We had also strong performance in China. On to services. Up, a very strong second half, which we said would happen on the back of Nucleus 8, up 14% in constant currency. We saw growth there across the world. One of the pleasing parts of services, we are seeing increasing growth rates and increasing penetration of upgrades into emerging markets. Upgrades over time has been much more focused on developed markets. It continues to remain largely a developed market source of revenue. We are seeing increases in emerging markets, and I think that's coming from, we've been in emerging markets for longer now. The largely children who get implants, as those children get older and as wealth grows, more of them, either themselves or through governments, are looking to upgrade technology. We're encouraged by the longer run outlook and expect services to keep growing in 2024, given the full year opportunity with Nucleus 8. Then on to acoustics. Again, a strong growth again, 20% in reported currency, 15 in constant currency. Really two factors here. The Osia 2 System continues to go well. We've always said with Osia, this is a long-run program. It's effectively a new therapy. We need to get regulatory approval. We need to get appropriate reimbursement in countries before we will launch. In the countries where we do have that, achieve those two things, we are seeing a strong uptake and strong growth in Osia surgeries. We've now sold over 12,000 systems since that launch, and continue to be very excited by the long-run opportunity. Baha 6 was a strong contributor to growth in the last few years, a lot of that comes from people with the Baha implant upgrading from an earlier generation to Baha 6. We expect that the upgrades for Baha 6 will slow in 2024, therefore, while Osia will grow strongly, we expect slower growth in acoustics overall in 2024, remain very positive on the long-run opportunity here in acoustics. Okay, let me just run quickly through our strategy. There's a lot of information on these slides. I think it's actually very important to articulate our strategy clearly, our strategy is unchanged over the last few years, we continue to execute carefully and clearly on it and invest as we can afford to, to drive this strategy. I'm gonna jump through a few slides. I did want to just pause on this one, the healthy, more productive society, because this is about standard of care. It's about getting, particularly in the developed markets, adults and seniors, and we've made good progress in the last year, not only helping over 44,000 people hear, and that's across all of the world and all of our products. But the development of the Living Guidelines, which was 50 cochlear implant professionals from around the world, collaborating and based on evidence, building out practice guidelines, which are now available and able to be tailored to countries to get more consistent referral, more consistent clinical practice and post surgery care. That's an important part of building standard of care. The ACHIEVE study, which is Frank Lin at Johns Hopkins, has been running for three years, reported just in July. For a long time, it's been very clear evidence of a strong correlation between cognitive decline and hearing loss, and between dementia and hearing loss. This study was looking for, is there a causal link? Does treating hearing loss change the rate of cognitive decline in people with hearing loss? What the study saw, that in the overall cohort, there wasn't a change in three years, but for people with higher risk of cognitive decline, then the study showed the 48. That the rate of decline slowed 48% across the three years for those people who had hearing loss and had it treated versus the that didn't have it treated. That's a very significant result in terms of building the evidence base that shows that hearing loss is a serious and significant medical condition. It can be treated, it should be treated, and treating it has the potential to improve overall health. We expect more evidence to continue to come out over the next few years from this study and others, but all of this helps build that evidence background to towards standard of care. Finally, reimbursement. Very important that reimbursement expands with the effectiveness of the product and to support broader adoption. A good example of that is the CMS expansion of indications in the U.S. from a 40% WRS score to a 60% WRS score. Clearly, that expands the- that matches then in the US insurance reimbursement, CMS matching insurance, and expands the opportunity, as did single-sided deafness a few years ago, and we're seeing that come through now in our sales. Osia funding and then countries, more countries adopting newborn hearing screening and comprehensive programs for newborns. Okay, I'll jump more quickly through the rest. Hearing, Lifetime Hearing Solutions, we have a very strong product pipeline based on our investment in R&D. As we said, with Nucleus 8, a great reception, over 48,000 people upgrading their processor in the last year, up 19% on previous years. As a, as a technology business, we are a knowledge-based business, and our people are critical to our continued success. We have strong engagement throughout the world. We continue to make progress on shaping our culture and our organizational processes to really underpin and support growth. We are planning on continuing to grow and to be a bigger company, and we need to make sure that we build out the infrastructure, the capability, and the processes to support much larger number of customers and underpin our growth. Our culture is central to doing that, as it is to executing our strategy and, and driving growth. We continue to make good progress on building out a diverse and inclusive workplace. Our environmental impacts are we're- look, we're a very small carbon emitter, it is important that we take action, and we are. We have converted our manufacturing sites to renewable energy. Now, 96% of energy used in our manufacturing sites is renewable, the constraint there is actually availability as to why it's not 100. We've had, as a result of that, a significant reduction in our Scope 1 and 2 emissions from our FY19 baseline, down 68%. We've also committed to reducing air travel, both in terms of the number of flights per employee, buying offsets to reduce the overall flight-related emissions. You can see the, the impact there. We continue to work with regulators to reduce the amount of paper that we need to distribute with our products. As we make progress there, not only as an environmental impact, but pretty significant cost impact as well. Finally, on to sustained value, talked about sales. Stu's going to talk about the P&L and the balance sheet. We have started manufacturing a sound processor at our factory in China, so that's an important milestone. We expect the implant approval to come through within the next 18 months. We're making very good progress on our business process and IT platform upgrade, and that with AUD 150 million spending over 4-5 years, and we're a little bit below halfway through that program. Connected Care products remain important, and the cybersecurity certification helps us with implementation in hospitals. We talked a lot and reported a lot on the Oticon Medical acquisition that we're now focused on the Cochlear implant business. Happy to take questions on that, but there's really no new news, new news from our previous updates, but happy to go into that further in Q and A. With that, I'm gonna hand over to Stu to talk about the P&L. Fantastic. Thanks, Dig. Morning, everybody. Well, you've heard a lot already about the strength of the top-line sales result. I'm not gonna add anything more to that. I'll take you to the next line, gross margin. We came in at 75- Please stand by while we reconnect the speaker line. Pardon me, this is Travis. Can you hear me? Yes, Travis, we're just toggling the line. Oh. While we connect the meeting room back in one moment. No problem. I'll just- I've played music, and I've asked people to stand by. Perfect. Thank you. Travis, are you there? Yes, I am. Yeah, they're just actually trying to reboot the, the meeting room. I'm just gonna see if we can use one of their laptop audios instead, because it looks like the meeting room device is actually stopped. Yep, yep, when this comes back on, I'll, I'll- Sorry, folks. If you can now hear me, I'll just wait for. Yep. Confirmation you can hear me. Yep. Stu, we can hear you. We had an IT. Pardon me. Sorry, this is the operator. I'll just join you back through. Yes. One be a moment, please. Yep, just one moment. We'll start the call again, 'cause Travis is just looking at settings. Decided to reset itself. Thanks. I'll just join us back through. When you hear the music pause, that's your cue to restart the conference. Awesome. One moment. Here we go. Thanks, Travis. You are now rejoining the main conference. Okay, sorry about that. I think we're now back on. We're saying gross margin, we are expecting about a half a percent headwind in 2024 as Chengdu moves into production. We are actually making sound processors there now. We'll be expecting to get certification to make implants there within about 18 months. We, we see that headwind increasing for a year or two, then moving to a net positive, a tailwind, as Chengdu goes to full capacity. Moving to sales, marketing, and general, big increase there, 19% year-on-year. Biggest driver of that was investment in growth, that's particularly putting more people out selling in the regions. It's also the sales commissions that went with that, with a very strong year, as Dig's alluded to. It was deliberate investments in growth. That's things like standard of care initiatives, that's things like market access and getting more funding, expanding their funding criteria, and direct-to-consumer, DTC, activity, where we are spending money direct with candidates to try and pull them into clinics to get addressed. R&D, similarly, alongside the selling and marketing, we saw with the strength of the momentum in the business in the second half, we saw the opportunity to accelerate programs within R&D. That saw us land just a fraction above our long-term target of 12% of revenue. We came in at 13% of revenue in R&D, and very happy with the rate of innovation in that team. Admin expenses up 20. That's driven by a couple of things. First off, again, that's where we see some of the bonus and incentive payments coming through off the back of the strong year. It's also where we see the Oticon transaction costs flowing through, and we also took the opportunity to do a small amount of restructuring within the business as well, and that's really completing the integration of our acoustics business and our services business into the main group. That saw us land at the absolute top of guidance, and with some very deliberate investment choices, given the strength of the revenue result. If we jump to the next page, now to the balance sheet. Since on net profit, we delivered 17% ex cloud. We'll keep targeting 18% long term. On the balance sheet, the big movement here is our net working capital line, the AUD 80 million. That's a combination of very strong growth in receivables. That is absolutely driven by the strength of the sales particularly in half 2 and in Q4. Very happy with what we see in terms of debtor levels and recoveries, so that really is indicative of the underlying sales strength. Inventory's slightly up, about AUD 40 million, slightly more in components and raw materials at this point, versus this time a year ago. Again, that's us opportunistically taking the chance to do lifetime buys for componentry and raw materials when those opportunities come up, and it's to make sure that we stay insulated from what is an increasingly tricky supply chain. The guys are doing a fantastic job managing that. Payables is up on year ago. That, that's very much a timing thing. It, it swings ±AUD 20 million based on weekly payments. On to the cash flow. The underlying EBIT result was, was strong, again, indicative of the strong results, and you can see we earned more interest sitting on that large cash balance that we have. The big change, or the biggest change to call out here, is that income tax paid line. Now this is a hopefully the last of some big swings and differences between cash tax versus tax due, where we had a small refund in 2023. We had a much, much bigger refund in 2022. That meant that our cash tax expense in 2023 was AUD 50 million higher. That's what's driven the operating cash flow to be slightly lower. We expect those big swings to have really flushed through the business now. We expect that to be more consistent from 2024 and ongoing. In terms of the effective tax rate, we've got a couple of permanent benefits in terms of the increase on R&D that's allowed to be claimed against. We had some one-off benefits in terms of annual adjustments, so we're sitting at about 24% effective tax rate in 2023. We think 25 is about right going forward. CapEx, up to just under AUD 96 million there. That includes a, the beginning of a pretty significant overhaul of the Lane Cove facility. Dig alluded to the solar panels going on the roof there. We've also. Phase one of that is the solar panels and all of the communal areas, the lunchroom, the reception area, trying to make it a nicer environment for the staff. The next phase of that will be about actually expanding the production capacity as well. In terms of looking forward, somewhere between that, where we landed in 2022 and 2023 on CapEx is about right. Somewhere in that sort of 70-90 range. Lastly here, the other net investments to AUD 29.8, that's us putting additional money into Precisis, Nyxoah, and Epi-Minder. It's hard to be very precise about that looking forward, but that sort of AUD 30 million range feels about right to us. It's a good balance of enough to be putting stakes into interesting growth opportunities and IP, but also not so great that it risks becoming a distraction. The next slide. The dividend, the full year dividend is gonna be AUD 1.75. That's up 21% on this time year ago, that reflects the strength we see underlying in the business. That gives us a full year payout ratio of 71%, just 1% ahead of our long-term target. And with- on the. It'll be 70% franked. We expect it to be 100% franked in 2024 and beyond, and that's again, those historic losses just washing through the business and trailing off. Last but not least, the share buyback. We announced that at the half. We said we'd aim to reduce our cash balance gradually over time, over a number of years. For the first 12 months, we were targeting AUD 75 million buyback. We're about four months into that. We've spent AUD 30 million. We're on glide path to achieve that AUD 75 million, and we'll be updating you again at the half on what the spend for the next 12 months will be. We absolutely expect that program to be ongoing over a number of years, and obviously maintaining that 70% dividend payout ratio at the same time. With that, and apologies for the IT glitch, I'll hand it back to Dig for the outlook. Thanks, Stu, and, yeah, apologies from me, too, for losing connectivity in the middle there. Onto the outlook. Obviously, a net profit guidance range of AUD 355 million-AUD 375 million, and that anticipates revenue growth and improved net profit margin, so getting our net profit margin back towards the 18%. As I said earlier, actually working out all of the factors that impacted growth this year is difficult to do in a, in a highly analytical way. As we look forward, we do expect to see high single-digit growth rates in Cochlear implants, driven by this improving trend in adult referrals in developed markets and obviously continued growth in emerging markets. We don't expect that the share gains we achieved this year and the COVID related backlog of surgeries that came through, we don't expect them to repeat in 2024. Full year of upgrades with Nucleus 8, we expect to drive the, the service number with strong growth, and as I said earlier, with acoustics, continue to see strong and long-run growth for Osia, but lower growth rates from Baha 6, as we just moved to later in the, in the upgrade cycle, slowing the, the rate of acoustics growth from the level we've seen in the last few years. We continue to. Our strategy, I said, is unchanged. It is a long-run strategy, and we will continue to invest both in our product portfolio and strengthen it, continuing to strengthen that portfolio and improve hearing outcomes for our customers. Investing in standard of care for adults and seniors in the developed market and building out the evidence, the referral paths, the awareness, and the, and the funding. As we talked about in the past, that's where we really believe in building a clear and consistent referral path. We are building an asset, and it makes sense for us to invest in that asset as fast as we can justify, and can manage from a capacity perspective, because that underpins our long-run growth. You can see there, cloud computing. We've also put currency rates in and compared those to 2023, because you know, we can see that our net profit is growing faster than revenue. That comes part from currency. It also comes part from expanding the net profit margin. We expect to maintain 70% payout ratio. We have not included anything from Oticon Medical. We do still anticipate closing in December, but conscious that we are in the hands of the regulators on the process there and the timing, so we haven't factored any costs of the acquisition and integration into our FY2024 outlook. I'm going to stop there and hand over to questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from David Low from JP Morgan. Please go ahead. Thank you very much for taking my questions. Could we just start with the audiologist capacity expansion that you talked about? That's certainly a topic that we hear from particularly U.S. centers, that is a bit of a challenge. I was just wondering if you could talk to what you've seen and what you expect going forward, as in how much that might be a constraint to future growth, please. Yeah, David, thank you, and a good, a really good question. It, it is, particularly in the U.S., one of the constraints on growth, and we were pleased to see, obviously, the volumes that came through this year. Now, we are working. The, the key to expanding audiology capacity is to reduce the amount of audiological time spent post-surgery, where there is an opportunity, both, with evidence, to reduce the number of appointments, and to use tools like Connected Care, to significantly reduce the face-to-face clinical time, and therefore, use that audiology time up front on screening and diagnosis. We're working with a number of the leading clinics in the U.S. to trial new models and build the evidence that supports those models, and obviously, integrating our technology into the delivery of those models. We're confident over time that we can continue to expand that capacity. Certainly in the, in the shorter run, and at the bigger clinics, delays in getting an audiological assessment for a new candidate is one of the constraints on growth. Certainly with, you know, that's where we were pleased to see that the volume come through this year because it's an indicator that clinics are making progress in dealing with that bottleneck. Delays at the bigger clinics are effectively the norm for the moment? Certainly in some of them. I mean, it, it, it varies. Some of those clinics are moving faster than others, in producing the post-surgery appointments, and therefore freeing up capacity. It's just, just by weight of numbers, it's more likely to be in a, in a bigger clinic, than a smaller clinic. What we're seeing is that the smaller clinics are, not surprisingly, growing faster than the, the bigger clinics because they don't have, that load of patients. Also, typically, the smaller clinics have come into cochlear implant more recently, and they are adopting, less intensive practices, in their, their post-surgery care, which enables them to grow faster, too. Great. Thank you. Just one other for me. I, I was looking at slide 10, where it talks about having helped 48,000 prior generation Cochlear implants, up 19%. Can I back calculate from that, that it's seven odd thousand, seven or 8,000 that were added with the upgrades that were done this year? Same question, can you talk about the penetration rates that you're seeing there, please? 48,000 is the number of upgrades done in the year, and that's 19% higher than the prior year. In, in terms of penetration, as we talk about the last few years, we now think about this as a, an annual number, of the number of people who are eligible and what proportion of those people are actually getting an upgrade. Now, we haven't put those numbers out there, because we're still trying to get our own comfort with them. As we see growth in emerging markets, we think through how does that change the calculation. Before we put something out, we want to actually make sure it's meaningful. I think the, the sort of short way around that is we are seeing some improvements in, in penetration, which is, which is very encouraging. Thank you. The next question comes from Steve Wheen from Jarden. Please go ahead. Sorry, the next question comes from Mathieu Chevrier from Citi. Please go ahead. Hi. Good morning. Can you hear me okay? Yeah, can. Yes, thank you. Excellent. Just wanted to just dig a bit deeper in the growth in, in developed markets that you've been seeing in developing markets. Could you give us a sense of what you think is a normal kind of market growth rate in developed and in emerging markets? What we're, what we're forecasting for 2024 is we see high single digits in our Cochlear implant unit growth. We think that that is pretty much the market growth number, and that we don't expect the sort of, as I said, the abnormal increase in, w ell, not abnormal, but we don't expect an increase in share. We don't expect COVID catch-up. In that, typically, we'd see a little bit higher growth in emerging markets than developed overall. That's, that's remembering that in developed, around about 30% of the surgeries are in children. We expect sort of 1% growth there, and obviously then a higher double-digit rate of growth in the adults and seniors. Yeah, just on that, that topic of growth in adults and seniors, do you see yourself increasing that, sales and marketing expenses perhaps a bit more than, than you thought, just a little while ago, given the response that you seem to be seeing from the market point? Look, we, we, we continue to watch that carefully, and you saw that, you know, as we said, we did lift our spending there this year as we saw more revenue come, come in. That's, as I said, it's on the basis that, you know, we're, we're building this referral path, which, which we think of as an asset, therefore it makes sense to sort of build that asset, asset faster if we can afford to. The things that, therefore, constrain the rate of growth, we do want to make sure that we deliver appropriate and growing profitability. Secondly, just our organizational capacity. We want to make sure that we don't take on more than we can execute effectively. Understood. Thank you. Thanks, Mathieu. Thank you. The next question comes from Steve Wheen from Jarden. Please go ahead. Yeah, good morning, Dig. Can you hear me? Yes, please, can do. Yep. Yeah, yeah. Oh, yeah. Cool. Yeah, I just wanted to pick up on that, the processor upgrades, obviously, a very strong launch into the second half, which seasonally is not that. Well, historically, that's not normally where you'd be as strong. Just wondering what the potential looks like for next half as everyone starts to burn through their deductibles. I mean, is it, is it your expectation that that surges again from here? Into that half? We, we certainly expect to see strong growth in upgrades this year. Largely, that's just the full year potential. Your point on deductibles is particularly relevant for, obviously, for the U.S. With people on an annual calendar year deductible, we often do see more in upgrades in the U.S., sort of in Q4 than we do in the earlier quarters, as people have used their deductible and therefore don't have to pay out of pocket for an upgrade. I think that has some impact, but, you know, with the growth in emerging market numbers of upgrades, that impact of sort of seasonality in the U.S. is more muted on the total. Full year Nucleus 8, expect good numbers. We, and we don't have Nucleus 8, like, we don't have Nucleus 8 approved in Japan just yet, for example. There's still some approvals to, w e're largely there, but we've still got a few approvals to come through, which we think will, you know, help support that good growth. Yeah, great. Secondly, from me, just, I just noticed a bit of a change in your commentary, particularly around the expansion of the eligibility criteria. Previously, you seemed to think that that was probably a little bit more elongated, certainly from channel checks that we've seen, it sounds like you're starting to see a lot more coming to the funnel, maybe through the audiology clinics in the first instance. Is, is that, is that what we're hearing with your commentary now, that that is starting to open up that adult channel a lot more? We're, we're, we're certainly seeing a good rate, an increased rate of adult referrals. As you would have seen, heard on, on channel checks or checks with clinics, single-sided deafness is a, is a part of that. That change, you know, in, in funding is two years ago. I think the more recent change on the CMS funding will take a little bit, will, will still take some time to come through. What we're seeing is it's, t hat's why we want to see these, these referrals run for longer. As I said, we're, we're encouraged, we want to see it run for longer. This has always been a multifaceted problem to solve in, in, in, increasing referrals. It's not just indications, it's not just hearing aid clinic awareness. It's not just funding. It's all of these pieces working together. It is hard to sort of disaggregate them and work out what's contributing what, but we're, we're certainly pleased with what we're seeing. Do want to see this, the increase in referrals sustained over time. It does give us more confidence that increasing confidence that the path we're on with our strategy and the investments we're, we're making are having an impact. Great. Thanks, Stu. Thanks, Steve. Thank you. The next question comes from Andrew Goodsall from MST Marquee. Thanks very much for taking my question. Just asking to be a bit more granular on the growth that that you saw and where you got some of that market share. Just I guess, specifically asking around Oticon and the gains you might have taken in both CI and Baha. Also, we did note a couple of markets were a bit slower in their recovery, like Germany, and just whether they've now kicked in or whether that'll be more of a 2024 event. Yeah, Andrew, good, good questions. Certainly on market share, it's been the, the growth there we've seen pretty much across the board in certainly in developed countries. A little- it's always a little bit patchier in, in emerging countries for a whole range of reasons. We have seen, you know, the good- the biggest growth over the last couple of years has been in France. A- and certainly that's on the back of the Oticon Medical recall and, and our commitment to support their, their customers. That certainly helped our share in, in France. We have seen share growth across a whole range o- of countries. You know, small, small amounts, but obviously they, they all add up, and it's all, all important. From a growth, we, we saw, as I said, good growth across just about all of the developed markets last year. You know, some of them were coming from, you know, lower bases or higher bases, depending on how well they'd gone the previous year and how low they went in, in COVID. Pretty much all of them have recovered very well and are well above pre-COVID levels. I think part of the context for that is, is, you know, back to our strategy of in every market, the clinical opportunity is huge. Our penetration is low, and we have the opportunity, you know, with the right strategy and good execution, to increase that over time. You know, I think COVID's put a lot of noise in the system. We hope we're, we're getting through that and can get back to more consistent and predictable revenue outcomes. Okay, that's great. Just a quick one for Stu, just on the NRIs in both 2023 and 2024. I think you flagged a, j ust trying to get a bit more granular on restructure costs and then Oticon costs in 2023. If you can talk to Oticon in 2024. I know you've excluded that from guidance, but just a bit more color on that. Yeah, sure. Thanks a lot, Andrew, and good to, good to hear you. A couple of one-offs in 2023. We had about AUD 5 million more uplift in Oticon transaction expenses relative to 2022. And sort of similar level of non-Oticon-related restructuring charges. As I said, that was the, the tail end of us integrating our own acoustics business fully and the services business fully into the group. Going forward on Oticon, as Dig said, we're expecting that to complete in quarter two by the end of the calendar year. We're still in discussion with Demant and trying to find a happy landing that meets the needs of the CMA, and then through the European regulators and the ACCC as well. I, I think the, the numbers we've put out there in terms of the potential impacts in the first 12 months of acquisition haven't really changed. We're still in that AUD 30-AUD 60 range, and we'll update as soon as we know more. Okay, got it. Thank you. Thank you. The next question comes from Saul Hadassin from Barrenjoey. Please go ahead. Good morning, Dig. Good morning, Stu. Can you hear me? Yeah, Saul, good to hear you. Thank you. Dig, just following up on that discussion around processor upgrades. I know historically, the company has spoken to maybe a, a target, penetration rate globally of around 50%, and potentially being able to move that higher. I'm just wondering if you're willing to give us a sense of where you think with this N8, cycle, you think that penetration might ultimately get to? Yes, look, a couple of ways to look at it. One is that, yeah, we, we used to look at it that way, talking about sort of penetration over the cycle got more complicated when we launched off-the-ear processors, because some people go. That's where we started to look at an annual basis, which, as I said, we just haven't put the numbers out yet, 'cause we're just trying to, w e wanna make sure that they're meaningful. As we, we are looking at this in different ways internally, and we do see that we've seen small lifts in, in penetration. You know, that's what we'd hope to see, 'cause we're, we're investing in, you know, the Cochlear family or in building out a connectivity with customers, so that they're more aware of the opportunity to upgrade. We continue to, y ou know, Nucleus is absolutely a standout product. It delivered on the three dimensions of improvement in a sound processor. It's smaller, it's better connected, and has better signal processing, which gives better hearing outcomes. You know, we, we have, you know, kicked goals in each of those three dimensions, and customers appreciate that, and they're, they're taking it up. Thanks for that, Saul. I'm just interested, Dig, your comments around, you know, no expectations for additional market share gains into 2024 for Cochlear implants. I mean, on the basis that you're presumably outspending your competitor significantly in both R&D and SG&A, just wondering why you think that, that ceding of share will slow down into 2024? Yeah, look, it's, it's. I mean, we've got. Good question. We've got very strong competitors, yeah, and they, they fight hard for share, which, which is good to see. People want a competitive market, and, and wanna make sure that there are other, other players alongside us. We think there's probably, you know, there, there's a limit on how much share we can gain. It's also about, you know, how do we, how do we invest? We wanna weight our investment to market growth, 'cause that's the, that's the driver of our overall revenue, rather than weighting it, it towards market share and trying to eke out another percentage share. We'd rather put that amount of money into, into growth and, and hopefully get more than 1% out of it. Thanks, Dig. That's all I had. No worries. Thanks, Saul. Thank you. The next question comes from Chris Cooper from Goldman Sachs. Please go ahead. Morning. Thanks for taking the questions. I just wanted to follow up on a previous answer. I kind of share the view that you're sounding a lot more positive on the adult referral rates in developed markets. Dig, you mentioned you'd need to see a bit more evidence of that before calling it a trend. Could you ask what you would need to see? Whether that's sort of time or a bit more sort of referral coming through. Maybe just to push you a little bit on quantifying this. I mean, as you say yourself, it's unusual for each segment to be growing double digits here. How much of the growth you've seen in implants would you say is, is a function of the referral rates, as opposed to sort of COVID backlog and, and market share gains that you've also called out? Yeah. On the first one of what will give us more confidence, it really is time, because I think there has been, with COVID, quite a bit of noise in demand, or variability in demand over the last few years, off a, you know, off a low in 2020. Through that time, we've continued to invest in standard of care, you know, in, in building the funnel pipeline of adults and seniors. We see over the last year, and even a bit longer than that, we've seen good increases in that funnel and the quality of candidates coming through. We still wanna see that trend continue for longer, so it's more about time than it is about increasing the rate. As I said, in our outlook, we've, we've said high single digits on cochlear implants, driven by market growth. As I said earlier, you know, Think about that from what's that mean for adults and seniors in developed markets is probably like, you know, it's in the, in the double digits, given that we expect children about 1%. That's, that, that's what we're, what we're, what we've seen. You know, as I said, it's very hard to back out last year, how much was, was share and referrals, but the best that, you know, on our best analysis or estimates of that, we'd, we'd see that high single digit overall, which probably means low double digit for, for adults and seniors. Okay, thank you. Second one. You've obviously sort of taken the decision here, based on the strength of the top line, to, to put a bit more into growth initiatives. Are, are you able to split that out for us in some way? Can, can you give us a sense of how much of that additional cost where we saw in the second half was sort of I guess, discretionary as opposed to the normal run rate? I mean, we've got, we've got a lot of discretionary spending. Of the, of the extra, as Stu said, there was choices to invest a bit more in R&D, choice to invest a bit more in growth. Also as we've said, our incentive program is highly leveraged to above-plan revenue growth. So there's a, there's a good chunk of the extra, which is going to employees as a reward for delivering the sales growth. You know, that's a, that's a great one-off for them, and now we've got a higher base as we look towards 2024 to grow from. Okay. Just, just a quick one on the cognitive decline data, published in The Lancet, a couple of months ago. I, I know we've got to be careful making cross-trial comparisons here, but in order. We're at higher risk of, of decline, you did seem to show quite a meaningful benefit or not you, but the study showed a meaningful- Yeah Benefit in, in decline. Somewhere above where the pharmaceutical guys are currently, you know, purporting their product to be. I just wanted to ask, I mean, is, is there something that can be done here that you perhaps could be leading, to perhaps increase that referral rate further? I think it's the building out of evidence of the importance of hearing loss to healthy aging, a very important part of that overall referral. I mean, that's been the sort of the fundamental issue with hearing loss forever, is it's hasn't been seen as a medical condition. People accept it as a natural part of aging. What this shows, and others starts to show, is that not only is hearing loss obviously treatable, but actually treating it improves overall health. You know, I think that's, that's what gets people to get up and take action on their health, is a sort of a fear that something else could be wrong. I mean, look, people go and get their blood tested for cholesterol now routinely, not because they enjoy blood tests, but because they, they wanna know what the outcome is because of the consequence. You know, I think what we'd like to see over time is that people, once they get past a certain age, they get their hearing checked regularly, because people often don't know they're losing their hearing. Now and, not just as the ACHIEVE study, but other studies are increasingly showing that treating hearing loss has important medical, and health, sorry, health benefits, beyond just being able to hear better. I think it's a very important study. We think more data will, will come. You know, this links directly to our strategy of making hearing loss a medical condition and being really clear on the paths for treatment and the effectiveness of our products in providing that treatment. Okay. Thanks for taking the questions. Thanks, Chris. Thank you. The next question comes from Sean Laman, from Morgan Stanley. Please go ahead. Thank you. Good morning, Dig. Good morning, Stu. I hope you're both well. Dig, on the audiologist, bottleneck issue, you know, are you able to give us, a description of your experience with Remote Check so far? Yeah, Sean, good, good question. Remote Check, we continue to roll out. It's been, i t's slower progress than I think we, we anticipated up front. What we've learned out of that is it actually takes quite a bit of work, because there's patient data involved, to get through hospital privacy and cybersecurity screens. That's why we got the ISO 27000 cybersecurity rating, 'cause it, it helps us. Where it has been implemented, it, it definitely cuts down on the need for face-to-face appointments beyond, beyond the first year. That's part of the work we're doing. Part of the, part of the work we're doing is, is not only we've got to get into hospitals, but then you actually gotta change clinical practice. If a clinic is set up to set appointments and put the, the one year follow-up in, unless we actually change the, with the clinic, change the process to put a Remote Check in instead of a one year appointment, it doesn't have an impact. It's the change management piece that, that we're now working through. It's an important step. The other important step, which is significant, is there are still clinics that will do 10 or 12 appointments in the 1st year after surgery, whereas other clinics now are down to three appointments in the 1st year for adults, and demonstrating with evidence, there's no impact on outcomes. Being able to, you know, take seven or nine appointments out of the first year is actually an even bigger impact than Remote Check, which takes an appointment out, one a year, but obviously on a, on a bigger base. It's both of those things have got to work together over time. We'll take. Changing clinical practice takes time, and that-that's certainly one of the things that, I suppose we knew, but it's only once you get into it and are working on it that you, you'll learn, that it really does take time and effort, but the rewards are, are worth it. Thanks, Dig. On the Cochlear Provider Network, what's the sorry, the progress across the U.S. in terms of numbers over the period? Is the program that's still ongoing? How helpful has it been driving penetration into those older demographics? Yeah, so it, it's only one of our sort of the CPN and hearing aid referrals is one of our drivers of growth under the adult and seniors growth strategy under standard of care. It is we are seeing an increasing number of referrals. With the CPN, what we've done, which we've done the last couple of years, is slow down the rate of addition of new CPNs and really work with the ones we've got on the education and on expanding the number of referrals. We, we've seen that they're referring only a very small, a small proportion of the potential. We think we're better off not expanding it, but actually working with them to show them the benefits, how they make money, who's a candidate, and with the expanded CMS. That's where the expanded CMS criteria in the U.S. is, is very helpful, because it, it, it gives us more of a base to for people without insurance to be able to talk to, f or the audiologists, to talk to them about the potential for an implant. In Australia, we're doing a lot of work with, with hearing aid clinics, and seeing definitely an increase in the rates of referrals from that, too. Great. Thanks, Dig. Squeeze one more in, if I can. Yeah. Just remind us, if you haven't disclosed already, the portfolio of products due to come out of Chengdu, how, how different to other manufacturing sites? The, the, the product portfolio in Chengdu will be a subset of our total portfolio. At this stage, they won't be different products, but they'll be products that we're currently making in Sydney, and may move to Chengdu, or more likely, add new capacity. Most of it around the implants will be adding implants that we make in Sydney. We will also, some of them, we'll also make them in Chengdu. Perfect. Thanks for answering my questions. Appreciate it. No worries. Thanks, Sean. Thank you. The next question comes from David Stanton from Jefferies. Please go ahead. Good morning, team, thanks very much for, for taking my question. Look, I've just got one. If it's around Oticon, perhaps it's sort of for Stu. If you do get this closed in December 2023, will you take the expense of it, you know, that AUD 30-AUD 60 you've, you've talked to above the line, or will you treat it as an NRI? What's the thinking at the moment, knowing that that might change in the future? David, good to hear from you. Look, we'd take it below the line. It would absolutely be a cost that we would not be seeing as recurring. As I said, it's early days, right? We're still in discussions with Demant and then obviously with CMA and the other regulators. Yeah, we'd definitely be taking it outside of the underlying result. Understood. Thank you very much. That's it. Thank you. The next question comes from David Bailey from Macquarie. Please go ahead. Yeah, thanks. Morning. I'll also be quick. Just in terms of ASP, looks like there was a bit of a step up in the second half of 2023. Is that all going to mix, or is there some pricing to consider there? Then just for fiscal 2024, 16%-23% growth year-over-year. Just wondering what the benefit of currency looks like, so what that growth rate might look like in constant currency terms? Thanks. Okay, thanks, thanks, David. On the ASP, there was a significant currency piece in the ASP lift. Backing out currency, there was a small increase in developed markets. When we launched Nucleus 8, we said we were trying to put some price increases through where we could, and we've got a modest increase out of that, which is nice to see. Look, in terms of the outlook, we haven't been specific on how much of that's currency, but we have put the direct comparison of the rates we've used for the outlook, and you can see the big, you know, the big differences there in the Euro. It is, you know, part of the revenue growth that part of the reported revenue growth will be driven by currency, and that, given our, our outlook for margin, does help push that profit up a little bit. Certainly the majority of the lift is sales growth and some margin expansion and a little bit of currency. Thanks. Thank you. The next question comes from Susannah Ludwig from Bernstein. Please go ahead. Great, thanks, good morning. I just have one question: Can you talk about how successful your DTC marketing has been so far? I guess just how expensive are you finding it is to sort of bring people in through this direct-to-consumer channel? Yeah, Susannah, good, good question. Again, like the CPN and referrals, DTC is one of the legs of our adults and senior referral strategy, i.e., that it's not one of the multiple things we do. We've been at DTC for quite a while now, and we have learned a lot out of that. We are seeing better uptake or better success with our DTC as we just continue to refine the messages, how we respond to inquiries, what sort of information we provide at each stage of the people's journey. It's, it's improving, you know, and that's the, the goal across all of our, the elements of our strategy, is to take results, to experiment with things, to, to learn as we experiment, and then, when we find something that works, to continue to, build on it and, and spread it across the globe. Okay, great. Thank you. Thank you. The next question comes from Josh Copley from UBS. Please go ahead. For Laura Sutcliffe. You've spoken in the past couple of years about funding for cochlear implants in emerging markets being withdrawn during the pandemic, but now returning. Could you quantify, perhaps in% terms, where funding for cochlear implants in emerging markets is today relative to the pre-pandemic baseline? Also perhaps where you see that funding headed directly, please. Thank you. Yeah. Yeah, Josh, good question. We haven't actually quantified that. We've, t he, the two markets we called out that had the most significant dip, Brazil and India, in both the, the public funding dried up significantly in COVID and has been restored, and in both, and in those markets is above pre-COVID levels. If you look at our emerging market growth rates, the, the funding across the board is certainly above where it was pre-COVID. We haven't quantified it exactly. I think just a reminder on those markets is, we often don't see just linear growth, that, that it can go up and down a bit depending on economic conditions, and there can be steps up to, as another state, for example, in a country adds a, adds a program. Thank you. If I could just squeeze in one more. Is it fair to say that mix was less favorable than usual, looking across FY2023, in terms of gross margin impact? On that basis, could we expect Cochlear to be able to maintain 75% gross margin, even with the Chengdu headwind, next year as mix normalizes? Thank you. Look, thanks, Josh. Broadly, no. We certainly sold a lot of sound processors. We sold a lot, and implants in 2023. We didn't see a massive mix impact on that COGS line. And projecting forward, the bigger impact we do see in 2024 is that headwind as Chengdu comes online. Obviously, there's a bunch of other factors like FX and yield and other things, but that's the one we're calling out for now. Don't anticipate mix being able to offset that. Okay, thank you. That's all for me. Thank you. At this time, we're questions, I'll hand the conference back to Mr. Howitt for any closing remarks. Okay. Just, thanks all for, for joining. I know the CSL call started, we haven't got any people left, for those who are still here, thank you. I'll talk to you again in, next result, if not before.