2012 Annual Report

In the past year, Abano has continued to grow. The Board’s ongoing focus is to ensure the Company is well positioned to take advantage of opportunities which will strengthen our business, achieve our growth targets and enhance shareholder value.

In FY12, we initiated a number of strategic investments which will have a significant benefit for the long term development of our company. This has continued into FY13. The growth initiatives have predominantly been funded by debt, leading to an increase in the New Zealand ASB facility from $40 million to $50 million in August 2012. As we continue to invest, our need for investment funding will increase. The Board carefully monitors the Company’s debt to debt + equity ratio, and believes the levels are currently appropriate for this stage of the Company’s development and the economic environment we operate in.

DIVIDEND

We are pleased to confirm an annual dividend of 21 cents per share for the year ended 31 May 2012. While maintained at the same level for the fourth year in a row, this year’s dividend slightly exceeds our underlying earnings and demonstrates the Board’s confidence in the underlying growth of NPAT from Abano’s emerging dental and radiology businesses and the steady improvement of our audiology joint venture.

While we remain committed to maintaining annual dividends, our ability to pay fully imputed dividends in future years will be limited. This is because an increasing portion of our tax paid profits will be generated overseas, particularly in Australia, which does not have a tax regime in which we can attach imputation credits for New Zealand resident shareholders.

OUTLOOK

We have not seen any significant or lasting improvements in the economic conditions in either New Zealand or Australia. Abano has focused on growth and extracting value from the market position of the Company, an example being the very successful Lumino The Dentists promotional campaign over the past 12 months.

We are well down the track to rebuilding earnings following the sale of our New Zealand audiology business in FY10. We are starting to enjoy the growing returns from our dental networks in Australia and New Zealand, and our radiology group now holds significant potential following the investments made over the past two years. Our investment into the long term development of our audiology network continues and we expect audiology to break even in two to three years’ time, with positive earnings contributions thereafter.

The continued success of Abano is due to the efforts of our senior management team, in particular, managing director Alan Clarke, and chief operating officer and chief financial officer, Richard Keys. They are supported by an experienced group of business leaders in each of our business units, and on behalf of the Board, I would like to thank them all and record our appreciation for their efforts over the past year.

Following the appointment of Ted van Arkel during FY12, the Abano Board currently consists of five independent directors and two executive directors. As previously announced, we will farewell long standing director, Alison Paterson, at the 2012 Abano annual meeting.

Alison has been involved with the Abano Board since 2002 and was chair from 2006 until 2011. During this time, our business grew strongly, expanded into Australia and South East Asia and returned $66.8 million in capital to shareholders. Under her stewardship, the Company received a number of Awards, including Top 200 Best Growth Strategy in 2008, Company of the Year in 2009, and in 2010, Alison was honoured as the Chairman of the Year. She leaves with our sincere thanks and recognition for her very valuable contribution to Abano’s success.

On behalf of the Board, thank you for your support of Abano Healthcare Group.

Trevor Janes, Chairman

OUR FIVE YEAR PLAN IS ON TRACK: 2011 - 2016

  • To meet our shareholder expectations as a high growth professional services Company
  • To continue to provide attractive and growing investment returns for all our shareholders and partners by accessing the $60 billion New Zealand, Australian and Asian medical service markets
  • To attract and retain leading professionals that are supportive of, and aligned with, the financial objectives of the Company, while ensuring we maintain the highest clinical and ethical standards
  • To grow underlying Revenue and and EBITDA by an average of 20% pa through acquisition and organic expansion in targeted growth sectors, while maintaining margins in our hold and maintain businesses
  • By 2015, over 70% of Abano’s income will be generated outside of New Zealand