Cochlear boss looks to COVID bounce-back, warns of second wave risks

In an address to the AGM, Mr Howitt told investors while 2020 had been financially challenging, the company had not changed its strategy and would continue to invest in research and development for growth into the coming years.

“With rapid changes in the operating landscape during March to May, we are scaling up our connected care efforts even more,” he said.

This R&D spend will be made possible in part by the $1.1 billion in capital Cochlear raised through a placement to institutional and retail shareholders at the start of the pandemic.

That raising was in the spotlight during the AGM, with shareholder activist Stephen Mayne making a tilt for a Cochlear board position, arguing the placement lacked fairness for retail shareholders who were offered $220 million in shares compared with the $880 million institutional placement.

Proxies voted against Mr Mayne’s appointment by 93.7 per cent.

Cochlear chairman Rick Holliday-Smith fielded a number of questions at the meeting about the raising and defended the company’s approach as the best available at the time to ensure a strong financial base for the company.

“Did we raise too much? I think it’s too early to say. We did all we could to ensure a decisive action… we cannot put the financial security of our business at risk,” he said.

Mr Holliday-Smith said there was no doubt the market conditions during the raising were “far from ideal and extremely dangerous”, but Cochlear had seen sales of implants drop immediately by as much as 80 per cent in some markets and an equity raising was the clearest path for the company.

“We believe [it] was balanced and fair,” he said.

Cochlear also celebrated securing a win on the research and development tax incentive, with revisions to the scheme announced on budget night expected to benefit to the company.

The company said that if the changes were applied to last year’s spend, the deductible amount would have jumped from $8.5 million to $16.2 million last year.