2013 Annual Report

Figures for Bay International only. Excludes New Zealand audiology operations and NHC Group Pty Limited.

Bay International is a 50:50 joint venture between Abano and the original founders of Bay Audiology. Bay International owns the Bay Audio businesses in Australia and in South East Asia. These businesses are still in a development phase, with breakeven at EBITDA expected in FY16.

Improving results were delivered from the audiology sector in FY13, particularly in Australia where the business is more mature and operates in a more sophisticated consumer market. Bay Audio is positioned as a high end hearing solutions provider in this country. We have in excess of 4,500 people using our hearing self testing technology every month and our focus is on converting these leads into appointments and sales.

The South East Asia market is a relatively new one for Abano and introduces our retail based model of hearing health service to this region. We have made small seed investments into existing businesses, initially in Hong Kong and Singapore, followed by Malaysia and Taiwan. These small investments have provided us with the opportunity to test our business model and service offering in these markets and assess the potential for growth.

Following a review, we decided to close the three stores in Hong Kong due to the very high costs of suitable retail space. The closure has no impact on the development strategy for our audiology businesses in our other markets in South East Asia. The regional support office will move to Taiwan, which is our largest business in Asia, and the consolidation of resources will realise operational efficiencies and cost savings.

Outlook

The majority of our audiology investment is in Australia, followed by Taiwan. Both these businesses operate in large markets and continue to show improving performance, with the more mature Australian business showing a year on year double digit revenue increase. We will continue to invest into establishing solid platforms for their continued growth, as well as maintain our two smaller audiology businesses in Singapore and Malaysia.