Annual Report 2010/11 - Sonova

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24 hearing loss can benefit from the resulting clear intelligibility. Teachers can save their voice, as they no longer have to speak loudly to be understood by all the children. DISTRIBUTION CHANNELS Hearing instruments are generally distributed through specialized retailers and institutions such as hospitals, hearing clinics and other primary care facilities. The retail channel includes players that range in size from small shops with one or two locations to international chains with more than 100 outlets. More than 80% of hearing instruments are sold through private retailers, mainly through hearing care professionals with special training in fitting hearing instruments. New private distribution channels for hearing instruments aimed at people with mild hearing loss have evolved in recent years. However, fitting hearing instruments for severe hearing loss is highly complex and remains the purview of specialists. Some manufacturers operate their own retail stores. Wholesale of hearing instruments is Sonova’s core business. However, the Group owns retail outlets in selected countries such as, for example, Hansaton in Austria and Lapperre in Belgium. By operating these stores, Sonova gains direct access to end customers, allowing it to learn more about their preferences. Government-controlled subsidized distribution happens through hospitals, public institutions or similar channels. The key public contracts at the international level are with the National Health Service (NHS) in the UK, the Australian Health Services (AHS), and the Department of Veterans Affairs (VA) in the USA. Government-controlled distribution makes up somewhat less than 20% of the total global market, though the exact figure varies considerably between countries. In the USA about 20% of unit sales are accounted for by the VA contract, while the NHS contract in Great Britain covers around 80% of the market. Sonova is one of the main suppliers to the VA, whereas sales to the AHS and NHS are limited and in both cases include pediatric solutions and niche products. LYRIC – A REVOLUTIONARY PRODUCT CONCEPT OVERCOMES ENTRY BARRIERS Sonova added a promising new product category to its range from the previous financial year through the acquisition of InSound Medical Inc., a manufacturer of medical equipment based in Newark, California. Lyric is the first hearing instrument system in the world that sits invisibly deep in the ear canal and can be worn continuously for up to four months without interruption. The total transaction price comprised an up-front cash consideration, which mainly covers past R&D expenses incurred by InSound Medical, and earn-out payments which depended on InSound Medical’s financial performance going forward and respective products. In February 2011, all earn-out obligations to date were settled with a one-time payment. Thanks to this change to the agreement, it is possible to integrate InSound Medical, which had been operated separately due to the variable purchaseprice share, into Phonak’s US sales strategy, allowing the company to tap the potential of the US market more effectively in the future. Capturing untapped market potential The mild-to-moderate-hearing-loss segment, in which Lyric features as a premium solution, accounts for the largest share of the overall market: 95% of all people with hearing loss fall into this group. At the same time, this segment has the lowest penetration rate: only 10% of people in this group wear a hearing instrument. With Lyric, Sonova is now targeting people with mild to moderate hearing loss who had previously rejected wearing a hearing instrument, largely for esthetic reasons, allowing it to tap enormous market potential. In the USA alone there are around 36 million people with mild to moderate hearing loss who still do not wear a hearing instrument; some 14 million of them are potential Lyric wearers. Introduction in other markets There are excellent growth opportunities for Lyric in markets outside the USA. In financial year 2010/11, Sonova introduced Lyric in Germany, France, the UK, Canada, and Austria, and the market launch of Lyric is imminent in Switzerland and Belgium.
Sonova is investing heavily in the global market launch and is supporting hearing care professionals during the introduction of Lyric with multi-day training programs that teach them how to fit, sell, and market this new product group. Comprehensive PoS material and a broadly based marketing and PR campaign are designed to raise awareness in the target group. Creating sustainable value Besides opening up new markets and regions, Sonova sees great potential in the further development of the Lyric product concept. A number of projects are already underway to further improve the product and realize synergies between the existing skills of InSound Medical and the research & development activities of the Sonova Group. Among other things, the development team aims to increase the service life of the instruments and achieve further miniaturization in order to make Lyric accessible to even more people. Through investment and new opportunities created by the full integration under the Phonak brand, Sonova plans to continue to tap the potential of the target market for Lyric in the coming years. HEARING INSTRUMENTS 25
Page 1 and 2: THE HEARING CARE COMPANY All the So
Page 3 and 4: highLightS & Key figureS - New sale
Page 5 and 6: 02 Foreword 06 Sonova Group 16 Hear
Page 7 and 8: from 2002 to 2004 and subsequently
Page 9 and 10: eaKinG barrierS - with talent and t
Page 11 and 12: ON THE WAY TO BECOMING A GLOBAL HEA
Page 13 and 14: and a global distribution network e
Page 15 and 16: THE SONOVA GROUP No hearring loosss
Page 17 and 18: Better hearing for people with norm
Page 19 and 20: StraiGHt From real liFe - cowboy ha
Page 21 and 22: THE HEARING INSTRUMENT MARKET - CON
Page 23 and 24: THE PHONAK SPICE GENERATION - THE S
Page 25 and 26: WIDE RANGE OF HEARING INSTRUMENTS T
Page 27: LYRIC - THE “CONTACT LENS FOR THE
Page 31 and 32: Eight years later, Evelyn almost co
Page 33 and 34: THE HEARING IMPLANTS SEGMENT In the
Page 35 and 36: The considerable strategic importan
Page 37 and 38: ABOUT ADVANCED BIONICS Advanced Bio
Page 39 and 40: worKinG - and communicating safely
Page 41 and 42: EMPLOYEES FOCUS ON PEOPLE One of th
Page 43 and 44: ISO 9001:2000 and 13485:2003 certif
Page 45 and 46: The key environmental data shown in
Page 47 and 48: ENVIRONMENTAL MANAGEMENT AT THE ST
Page 49 and 50: CAMBODIA - BETTER OPPORTUNITIES FOR
Page 51 and 52: Better hearing - better success at
Page 53 and 54: in critical moments. As a consequen
Page 55 and 56: CrOSS-SHArEHOLDInGS Sonova Holding
Page 57 and 58: BOArD Of DIrECTOrS The primary duty
Page 59 and 60: Andy rihs Co-founder, non-executive
Page 61 and 62: onald van der Vis non-executive mem
Page 63 and 64: AuDIT COMMITTEE The members of the
Page 65 and 66: Alexander Zschokke Interim CEO, GVP
Page 67 and 68: Dr Hans Leysieffer GVP research & D
Page 69 and 70: COmPenSatiOn and SharehOldingS - co
Page 71 and 72: The shares/rSus have a blocking per
Page 73 and 74: COMPEnSATIOn TO MEMBErS Of THE MAnA
Page 75 and 76: SHArEHOLDInGS Of MEMBErS Of THE BOA
Page 77 and 78: The following table shows the detai
Page 79 and 80:
CHAnGES Of COnTrOL AnD DEfEnSE MEAS
Page 81 and 82:
COMPEnSATIOn rEPOrT inveStOrS at SO
Page 83:
develOPing SPeeCh CaPaBilitieS - mo
Page 86 and 87:
82 Financial Review - setting the c
Page 88 and 89:
84 SALES in CHF m EBITA in CHF m 1,
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86 SUBSTANTIAl INVESTMENTS IN INNoV
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88 AdVANCEd BIoNICS RESUMES SAlES I
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90 5 year key Figures (Consolidated
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92 Consolidated Income Statements 1
Page 98 and 99:
94 Consolidated Cash Flow Statement
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96 NoTeS To THe CoNSoLIdATed FINANC
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98 INveSTMeNTS IN JoINT veNTuReS In
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100 LeASING Assets that are held un
Page 106 and 107:
102 SeGMeNT RePoRTING operating seg
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104 3.5 derivative financial instru
Page 110 and 111:
106 3.7 Restatement of prior year
Page 112 and 113:
108 Consolidated Changes in Equity
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110 5. segment information segment
Page 116 and 117:
112 6. other expenses, net 1,000 ch
Page 118 and 119:
114 Deferred tax assets and (liabil
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116 11. cash and cash equivalents 1
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118 14. other receivables and prepa
Page 124 and 125:
120 the increase in property, plant
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122 1,000 cHf 31.3.2010 Cost Goodwi
Page 128 and 129:
124 20. Provisions 1,000 cHf 31.3.2
Page 130 and 131:
126 23. non-current financial liabi
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128 foreign currency sensitivity an
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130 the following table summarizes
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132 caPital RisK manaGement it is t
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134 the annual General shareholders
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136 28. Related party transactions
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138 Amounts recognized in the incom
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140 30. Employee share option and s
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142 The fair value of options/warra
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144 Changes in outstanding shares/R
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146 36. list of significant consoli
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148 REPORT OF THE STATuTORY AuDITOR
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150 Income Statements 1,000 CHF Not
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152 NOTES TO THE FINANCIAL STATEmEN
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154 Executive Equity Award Plan The
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156 Compensation to the management
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158 The following table shows the d
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160 Warrants EEAP 10 2) Warrants/ o
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162 Company name Activity Domicile
Page 168 and 169:
164 Appropriation of Available Earn
Page 170 and 171:
166 REPORT OF THE STATUTORy AUDITOR
Page 173 and 174:
Disclaimer This report contains for
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Annual Report 2010/11 - Sonova

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