Performance
 
Financial Information
 
Governance


 


The business

Bay Audiology is New Zealand’s largest and only national provider of audiological products and services. Bay operates a ‘hub and spoke’ business model, with a network of 40 full-time and satellite clinics in New Zealand, and another nine clinics in Australia through Bay’s Australian subsidiary, Bay Audio Pty Limited. A minority shareholding in Bay Audiology and Bay Audio is held by senior clinicians.

Bay Audiology also owns 40 percent of Dilworth Audiology, which has five permanent clinics across Auckland in equity partnership with prominent ENT specialists.

The single largest area of work carried out by Bay is the diagnosis, fitting and testing of hearing aids for self-referring customers, as well as from referring bodies such as specialists and GPs.

Over 50 percent of the work carried out by Bay is for private paying customers, while third-party funders including ACC, War Pensions and subsidy schemes for the employed and beneficiaries contribute the balance.

Audiology provided approximately 34 percent of the Group’s revenue for the 2007 financial year.

highlights and significant events

  • Consistent growth from existing clinics and contribution from new clinics.
  • Introduction of new-look stores and a high-street presence.
  • Continued development of the referral network through the distribution of Bay’s unique hearing screener device.
  • Expansion of the New Zealand network from 34 to 40 permanent and visiting clinics, including new clinics in Hastings, Kapiti and Blenheim and acquisitions in Wanganui, the Waikato and New Plymouth.
  • Move into the Australian market with the acquisition and opening of clinics in and around Brisbane.

Operational performance

THE MARKET

Approximately one in nine people in New Zealand have some form of hearing loss, with more than a third of people aged over 65 years reporting symptoms of hearing impairment.

Current demographic trends, expanded geographical location and industry consolidation, accompanied by significant improvements in hearing-aid technology, provide significant potential for future growth in the hearing healthcare sector.

The audiology market in New Zealand is predominantly made up of a highly fragmented collection of independent practices, with a limited number of large practices with wider geographical spread.

Bay is helping to shape the audiology industry in New Zealand by influencing consumer trends. The introduction of new-look stores, a high-street presence, a stronger referral base and a price-setting position are helping to change the way consumers think about their audiological needs and the manner in which they access support.

It is widely accepted across the industry that there is a shortage of audiologists, both in New Zealand and abroad. Bay prides itself on employing the best and brightest in the field and is supplementing this industry-wide shortfall through recruiting internationally trained audiologists, developing its relationship with major training institutions to attract new graduates and extending its in-house recruitment and training programme, especially in smaller provincial towns.

Since late 2005, ACC (which accounts for under 50 percent of Bay’s business), has been actively reviewing its funding regime for hearing aids. ACC has now engaged with the industry and supports a self-regulating ‘industry accord’ model to manage costs. Bay works closely with ACC to achieve beneficial results for both parties and has representation on an industry body that regularly meets with ACC to analyse changes and potential impacts on the industry.

Bay’s entry into Australia in the second half of the financial year has established an excellent base from which to expand. The initial four clinics have grown to over nine at the time of this report and Bay Audio now has a growing staff of local professionals who have visited and participated in the Bay New Zealand training and induction programmes. The opportunities to expand the Australian business are significant and progress has been pleasing, with increasing operating synergies being realised and a growing contribution to the consolidated revenue results for Abano’s audiology sector.

THE OUTLOOK

As an organisation, Bay exhibits a strong business model with sound financial performance along with innovative marketing and economies of scale. As a lead player in its sector, Bay has the ability to shape future consumer trends and consolidate the industry in New Zealand and Australia.

Bay will continue its relationships with key suppliers to ensure optimum quality products and level of service as well as cost savings. Revenue is expected to increase as contributions from new and existing clinics increase, both in New Zealand and in Australia. This will be achieved through increasing the efficiencies in marketing campaigns and improving the conversion of prospective clients to purchasing clients.

Bay will continue to follow a strategy of market development through establishing new clinics in new markets, along with expanding popular satellite clinics into full-time sites.

During the 2008 financial year, Bay will continue to implement a new integrated IT system over the existing platform. This IT system will provide clinical, marketing and accounting processes to enhance the operation of the business as it grows throughout Australasia.