Abano interim results to 30 November 2006

Media Release

Abano reports half year profit up on forecast

Abano Healthcare Group has reported a 162 percent increase in operating net profit after tax for the six months to 30 November 2006, exceeding the market guidance provided by the company in October 2006.

Abano today released the unaudited interim result for the six month period to 30 November 2006, with a net profit after tax of $2.8 million, compared with $1.1 million for the corresponding period in the prior year (excluding the one off gain on the sale of ElderCare), and exceeding the market guidance previously given of between $1.8 million to $2.1 million.

Revenue for the six month period was $41.4 million ($29.8 million for the corresponding period in 2005), reflecting a full six month contribution from all operating sectors, and the benefit of new acquisitions, including Bay Audiology and the Orthotic Centre (acquired in October 2005) and the dental acquisitions made during the financial period.

Earnings before interest, tax, deprecation and amortisation (EBITDA) for the period were $6.3 million, compared with $2.7 million for the corresponding period in 2005.

Managing director of Abano, Mr Alan Clarke, commented: “It is a very pleasing result and reflects a stronger than expected operational performance across the Group in November, which has lifted the company’s consolidated result over the top end of our guidance provided in October.

“In addition, one off costs expected from the merger and set up of Aotea Pathology in Wellington in November- have come in below expectations”.

He continued: “The Abano Group portfolio continues to expand, as we focus on the growth of our dental, radiology and audiology sectors as well as development and margin improvement opportunities in our other businesses.

“In the first six months of the financial year, we continued to achieve our stated growth target for Lumino Dental of one new practice every two months. Three new practices were acquired – two in Wellington and one in Orewa – with further acquisitions to be announced in the new year. Lumino currently has 22 practices and as the Lumino network expands, the benefits from economies of scale, an advanced IT infrastructure and shared resources are now starting to flow through to the bottom line.

“Bay Audiology also continues to consolidate its position as New Zealand’s only national audiology service, with the opening of three new clinics in Wanganui, Kapiti Coast and Blenheim in the first half of the financial year, and we have a number of additional initiatives in the pipeline.

“During the six month period, we also acquired the remaining 30 percent shareholding in the Orthotic Centre and now hold 100 percent of this business. We believe there is significant opportunity for the growth and development of this business, particularly in the private market, and we have moved to realise this identified potential.

“Our brain injury rehabilitation businesses have also stabilised and are now producing an acceptable return, up on last year. As previously announced, the facility upgrade programme is now well underway, which will aid this sector in attracting a wider range of clients, as we continue with the restructure of our outpatient service”.

Mr Clarke concluded: “Radiology continues to perform well with our new Cardiology joint venture in the advanced 64 slice CT technology performing above expectations. Plans are now also underway for the organic growth of existing services into a second site in the new clinic building adjacent to Ascot Hospital. In addition, we expect to be announcing a further small complementary acquisition in the new year”.

Abano’s chairman, Alison Paterson, commented on the Group’s six month result announcement and the outlook for the full year: “The final results for the six month period have exceeded the market guidance provided by the company in October 2006, and the directors have therefore decided to release the results to the market earlier than expected.

“Abano has made steady progress over the past six months and continued its growth, both organically and through acquisition.

“We worked successfully through the DHB tender process for pathology in Wellington, and we are now managing our way through a number of challenges within the ACC contracting environment. However, with our continued focus on private revenue, we are becoming less reliant on publicly funded revenue streams.

“As shown in previous years, the company’s second half year performance is generally softer compared with the first half year, due to the Christmas, summer and Easter holiday breaks, where historically, there is a reduction in referrals and a reduced demand for healthcare services over these months. While the results for the full year are now expected to be above our previous market guidance given in October, an updated market guidance will be provided in the new year, following the holiday season break when the impact on trading can be fully assessed”.

Abano Healthcare Group will release its half year report for the six months to 30 November 2006 in February 2007.

ABA REL - half year result Dec 06