Abano Annual Meeting 2003

Media release
Continued Improvement For Abano Healthcare Group

The annual meeting of Abano Healthcare Group Limited (formerly ElderCare NZ Limited) was held today, 27 November 2003, at 2pm in the Pakuranga Hunt Room, Ellerslie Convention Centre, Auckland.

At the meeting, the chairman of Abano Healthcare Group, Mr Jim Syme, reviewed the company’s progress in the last financial year and reflected on the progress made to date, which had seen revenues and operating profits increase by over 40 percent on the previous year.

He also highlighted two key events occurring in the current year – the announcement of the Group’s new name, Abano Healthcare Group Limited, and the acquisition of two new businesses in the Rehabilitation sector.

Commenting on the financial year in review, Mr Syme said: “Our core operating margin, being EBITDA to revenue, has improved for the third year in a row, to 14.6 percent. In addition, our debt to total assets ratio has fallen to 39.8 percent and revenues have grown by 71 percent in the past three years. This trend is expected to continue and improve as all four operating sectors start to contribute to our progress.”

Mr Syme also outlined the board’s current examination of the future capital needs of the company. “There are a number of growth opportunities available to us, and we would like to retain flexibility in completing any capital raising initiatives to facilitate potential acquisitions or improve the financial base of the company during the next year.”

The first step towards raising new capital was taken when Resolution 4 was moved and passed to authorise and approve the issue and allotment by the company of new shares, the equivalent of up to 19.9 percent of the shares in the company, with habitual shareholders.

Mr Syme emphasised that, although standard company policy was to raise new capital from existing shareholders where possible, in some circumstances, for example where certainty is required or there are timing constraints, it was more prudent and efficient to place shares rather than make a pro rata rights issue.

As outlined in a recent letter to shareholders, Mr Syme reiterated that in the event shares were placed during the next six months, under Resolution 4, that were equivalent to more than 15 percent of the company’s shares currently on issue, that the board would provide existing shareholders with the opportunity to subscribe for further shares in the company at a price and on terms no less favourable than that offered under any such placements.

In addition to voting on the placement of shares, voters also elected to re-appoint Alison Paterson and Dr Clinton Teague to the board. PricewaterhouseCoopers were re-elected as external auditors to the company and shareholders agreed to amend the company’s constitution by deleting clause 19.4 (b) which required directors to retire once the reached 72 years of age. The board considered that this clause was no longer appropriate and inconsistent with the Human Rights act 1993.

Chief executive officer, Mr Alan Clarke, discussed the company’s progress in its core operations, with revenues growing by over 200 percent in the last four years from $19 million to $58.3 million.

Commenting on this improvement, he said:

“We have made great progress in the past financial year, with a significant boost to EBITDA operating profits compared to previous years. We expect to see EBITDA performance by sector continue to improve over time, with an improving NPAT result.

“However, we have experienced a softening performance in the first five months of the current financial year, especially in the Aged Care and Rehabilitation sectors. This means our first half performance is expected to be up at EBITDA, but down at NPAT compared to last year’s first half. A stronger second half performance is expected to offset this drop in performance.”

Mr Clarke also reviewed the opportunity in the healthcare market, and concluded that demand for healthcare and medical services would continue to grow due to an ageing and increasing population, with a move towards private payment as the Government finds itself unable to fund its existing contribution of healthcare expenditure into the future.