2016 Annual Report

Our Outlook

We are moving into the 2017 financial year with a very clear focus on our investment sectors and goals. These revolve around four key areas – People, Technology, Customer Service and Growth.

At the heart of all we do are our people, whose expertise, skills and experience allow our businesses to grow and succeed. We will continue to invest into recruiting and retaining the best people for our businesses, enabling them to realise their potential and rewarding them for their efforts. This includes initiatives such as our dental conferences and inhouse training and career development programmes, including mentoring, new graduate and fast track development programmes for new dentists.

Better use of technology will see improved business systems put in place, more effective data analysis and continued enhancements in clinical care. This in turn will lead to operational efficiencies and improved patient experiences. We are also increasingly using digital marketing channels to target and engage with potential and existing customers.

Fundamental to our business’ success is providing our patients with an exemplary experience, ensuring ease of interaction and delivering high levels of patient satisfaction. We have commenced regular surveys of our Lumino customers, and Lumino's current Net Promoter Score is over 62, which is an excellent result. We will be looking to roll out these surveys to our other businesses as we focus on delivering best-in-class patient service.

Finally, we will continue to invest into growth which will be achieved through acquisitions as well as organic growth. Dental remains our primary investment area and we see significant opportunities to build scale in the $11 billion trans- Tasman dental market and deliver medium to long term shareholder value.

We will continue to invest into acquisition and organic growth in both our Australian and New Zealand dental businesses and expect to acquire practices providing a further $30 million in annualised gross revenues. We are focused on driving improving performance, particularly in Australia. Increasing collaboration and closer working relationships between our two dental businesses will provide additional operational, scale and synergy benefits for this business group in the coming months.

In radiology, we will continue to focus on building demand for our existing services, particularly our high end diagnostic technologies such as CT, digital tomosynthesis breast mammography and maternity ultrasound.

As our portfolio changes, so does our revenue generation. For FY17, we expect 95% of our revenue will be derived from our dental group. This revenue will be largely sourced from private payment with less than 2% expected to be derived from government funding. We expect over 52% of our gross revenue will be generated in Australia.

All funding, earnings and expenditures are in local currency and therefore, while there is an impact on the translation of the reported results back into New Zealand dollars, there is very limited cashflow implications from foreign exchange fluctuations.

We are well positioned for the continued growth of our company. By staying focused on what we want to achieve, we are confident we will deliver another year of improved performance and increasing shareholder value.

Richard Keys, Chief Executive Officer