2015 Annual Report

ALAN CLARKE, RETIRING CEO
Great organisations are built with great care, clear values and people who understand where they are going and what the future they are building looks like. Quick and easy wins are rare and success takes time, patience and tenacity.
Abano is an incredible organisation. The talent we have in each business is humbling and every day we take a step towards our shared vision.
I am delighted to be handing over the helm of Abano to Richard Keys. This very special company needs an intelligent and safe pair of hands and Richard has those.
It has been enormous fun and a privilege to work with our talented teams. Abano has a stunning future and I will watch with great pride as this company grows to reach its potential.
My warmest regards and best wishes to you all. 
Alan Clarke
FOR THE PAST 15 YEARS, WE'VE BEEN PLANNING FOR A FUTURE OF INCREASING DEMAND. WE HAVE INVESTED IN PRIVATE HEALTHCARE AND MEDICAL SERVICES BUSINESSES WHERE WE SEE SIGNIFICANT GROWTH POTENTIAL. IN THE LAST YEAR, WE HAVE FOCUSED ON THE OPPORTUNITIES IN THE TRANS-TASMAN DENTAL MARKET, AUDIOLOGY IN AUSTRALIA AND SOUTH EAST ASIA AND RADIOLOGY IN NEW ZEALAND.

The demand for private healthcare services continues to grow. People are living longer as healthier lifestyles and medical advances improve longevity. As people age, they require more healthcare.

People are demanding access to new technologies which can provide better and more accurate diagnosis, and at an earlier stage. They want access to healthcare immediately, not in twelve months’ time when they reach the top of the waiting list, and they want their choice of healthcare provider.

Governments can no longer fund the public appetite and need for all healthcare services and the role of private healthcare providers has become an increasingly important part of the healthcare sector.

We invest into businesses which generate the majority of their income from private payment, either from individuals or their healthcare insurance provider. In FY15, we refocused our investment efforts into dental in New Zealand and Australia, audiology in Australia and South East Asia and radiology in New Zealand.

We have also divested businesses which fall outside our investment criteria. In line with this, in FY15 we divested our pathology and orthotics businesses which were reliant on public funding. The funds received from the sale of these businesses were used to repay debt and will be reinvested into our growth areas.

We will keep investing in our businesses; helping them to grow, building capability and gaining market share. The success of our strategy has been proven a number of times over the last 15 years and we have a track record of increasing shareholder value.

The 2015 financial year was another pleasing year of growth and improving underlying earnings for our company.

Our trans-Tasman dental operations remain our largest revenue earner and in FY15, they provided $211 million in gross revenue and contributed 70% of Abano’s gross revenue. They were also our biggest investment area as we continued to grow our networks through the acquisition of 19 dental practices which are expected to provide approximately $30 million in additional annualised gross revenue, as well as one greenfield location.

Our audiology joint venture, Bay International, turned around its performance and achieved a positive EBITDA for the first time, after eight years of development losses. The Australian audiology business is now performing well with excellent same store growth (22% in local currency) and we opened a further three greenfield stores in FY15.

The very small Bay Audio Asia business is now achieving breakeven at EBITDA, however it is operating in a more challenging marketplace and it will require more time and effort to turn this business around. We have placed it under the management of the Australian team and expect to see improvements in the next financial year.

Insight+Ascot Radiology delivered another year on year steady improvement in both revenue and EBITDA. Revenue continues to grow as demand and referrals increase for the business’ high end imaging modalities and specialist services across its five Auckland clinics.

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