Abano Healthcare Half Year Results to November 2003

Media release
Abano Healthcare Half Year Results to November 2003

Increasing demand for healthcare provides solid foundation for Abano. Six month results for Abano Healthcare Group Limited to 30 November 2003.

Listed healthcare and medical services provider, Abano Healthcare Group Limited, today announced its unaudited results for the six months to 30 November 2003. The results were in line with the Group’s market guidance for the period and showed improved financial performance and expansion of business operations.

The business grew both organically and through the acquisition of the two new rehabilitation businesses, Burtons Healthcare and Health Partners, as well as the purchase of the 33 percent minority share that remained in Ranworth Healthcare. In addition, significant funds were invested in upgrades, renovations and expansion at three key Aged Care facilities.

The Group funded all acquisitions, expansions and renovations in the period primarily through operational cash flows aided by cash receipts from residual land asset sales from the previous year. The net impact on Group debt was an increase to $35.4 million at 30 November 2003, compared to $34.5 million at 30 November 2002 and $32.2 million at May 31 2003.

The first half-year revenues at $33.74 million were 24.6 percent up on the previous half-year result of $27.09 million. Consolidated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) improved to $4.51 million, up 6.5 percent on the $4.23 million achieved in the same period last year. Following partial utilisation of the deferred tax asset, which was recognised in the last financial year, a non-cash tax expense of $0.41 million was incurred in this period, resulting in a consolidated Net Profit After Tax (NPAT) of $0.31 million, compared with the $0.67 million posted for the same period last year, when no tax expense was incurred.

The managing director of Abano Healthcare Group, Mr Alan Clarke, commented on the result: “Core revenue growth was good in the period, reflecting a continuing demand for our services, however, reduced occupancy and low referrals softened yields resulting in a marginally higher profit performance compared to last year.”

A drop in occupancy rates in the Aged Care sector has continued into January, and although improvements are expected in the second half, the full year performance for the sector will be down on its plan and on last year’s result.

Rehabilitation referrals have also softened in recent months, however Ranworth Healthcare has renegotiated a new in-patient contract with ACC that will impact in the second half of this financial year. The full year’s consolidated result is expected to be ahead of last year’s, however, below its plan.

Diagnostics has agreed a new contract with a key DHB client and has secured additional cytology referral work that will impact from February onwards. Its full year performance is expected to be flat on last year but in line with its plan.

The Dental sector is currently investing in a significant new IT platform, installing the Software of Excellence dental management package, a new billing system and a new payroll system. While expecting a positive EBITDA contribution for the full year, the Dental sector’s second half performance is now expected to be below plan, as management and technology changes settle into place in coming months.

Two new senior general manager appointments were made in January with Robin Cooper appointed in Dental and Karen Schnellar in Rehabilitation. The incumbents Keith Pine and Graham Menary retired and both will be retained in advisory roles for the remainder of the year.

The chairman of Abano Healthcare Group, Mr Jim Syme, said:

“The board now believes that the full year consolidated performance will see revenues in the range of $65 to $67 million. Consolidated core EBITDA performance will be flat on last year’s core result and the core NPAT will now be below last year’s core result, after a full period tax expense is incurred.”

He continued: “The company has doubled in size over the last three years and we are confident that improved trading and margins will be achieved over the medium term, following the consolidation of new businesses, technology investments and with improved referrals and contract certainty with District Health Boards and the ACC in key business areas. Our focus remains on the improvement of bottom line performance and the return for our shareholders.”