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Directors’ letter to Shareholders 12 November 2007

Revised offer from Masthead Portfolios Limited – the Abano board reiterate “Don’t Sell” advice

Dear Shareholder

REVISED OFFER FROM MASTHEAD PORTFOLIOS LIMITED – THE BOARD REITERATE “DON’T SELL” ADVICE

Your directors wish to reiterate their “Don’t Sell” advice on the revised Masthead Portfolios Ltd offer of $5.00 per Abano share.

The offer remains a partial offer for control which, if successful, has in the view of the board the potential to significantly disadvantage remaining shareholders. The partial nature of the offer was a material consideration in our earlier rejection to the initial offer from Masthead and the increase in price does not overcome our significant reservations.

In respect of the increased price offered by Masthead, while the board are pleased that Masthead had more fully recognised the merits of the current growth strategy, the revised offer is still at the lowest point of the valuation range in the Independent Appraisal Report by Ferrier Hodgson which identified a value range of $5.00 – $5.80 your shares with a mid point of $5.40. Furthermore this is a price for 100% of the company.

The Board has previously indicated that it believes that the benefits of the current strategy are just starting to emerge and higher values than indicated in the Independent Appraisal Report will be achievable if the company is successful in implementing its strategic plans and capitalising on the market opportunities it perceives. This was covered in more detail at our Annual Meeting held on Friday the 9th of November, and we enclose a summary from this meeting.

Moreover, the Board is still in discussions with other interested parties who see value in Abano and its strategy, which may see alternative propositions being offered to shareholders.

The Board would also remind shareholders that once they accept the Masthead offer, they cannot withdraw that acceptance to consider other offers, should they emerge.

Given these factors, the Board strongly advises shareholders to TAKE NO ACTION and DO NOT ACCEPT THE MASTHEAD OFFER.

Yours sincerely

Alison Paterson
Chairman
ABANO HEALTHCARE GROUP LIMITED

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