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Abano Half Year Results Above Forecast

Abano today released unaudited half year results for the six months to 30 November 2007, which are above forecast and indicate another record performance in the period.

ABANO HALF YEAR RESULTS ABOVE FORECAST
Board provides notice of intention of an interim dividend

Abano today released unaudited half year results for the six months to 30 November 2007, which are above forecast and indicate another record performance in the period.

The 2008 interim result, based on unaudited management accounts, show revenues for the six months ended 30 November 2007 of $59.2 million, over 42% up on the $41.4 million posted for the first six months of the 2007 financial year.

Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) is $11.0 million, up over 74% on the $6.3 million posted in the previous corresponding six months and Net Profit After Tax (“NPAT”) is $3.8 million, an increase of over 35% on the 2007 interim result of $2.8 million.

The improved performance is due to growth in all sectors. The company’s announced acquisition and expansion programme is tracking ahead of plan with a number of new acquisitions completed in recent weeks, including four new dental clinics and six new audiology clinics in New Zealand and Australia in the past two months. The full impact of these acquisitions, along with the improved operational performance, will be seen in the second half of this financial year.

Chairman Alison Paterson commented: “This is pleasing progress with the first half performance above budget and forecast expectations. The board is expecting a significantly stronger second half result compared to the first half, which is consistent with a company that is growing at over 25% per year. The results for the full year are now expected to be above our previous market guidance. The board will closely monitor the company’s performance through the next two months and updated market guidance will be provided in the New Year.”

Abano traditionally enjoys a stronger first half as the second half year incorporates the low referral holiday periods around Christmas, New Year and Easter. However, a combination of new long term fixed income contracts spread evenly over 12 months, as in the case of the pathology business, and the accelerating organic and acquisitions growth programme means that the full contribution of these initiatives will not be seen until the second half of this financial year. A stronger second half performance, compared to the excellent first half result, is therefore expected.

Alison Paterson continued: “Abano has met or exceeded all guidance that it has provided to the market over recent years, and the board and management are confident of meeting all projections that have been released by Abano, including those used in the Ferrier Hodgson Independent Expert report. This has again been demonstrated by the strength of the current half year results.”

Based on the current dividend policy, which commenced with a maiden dividend paid in August 2007, the board has signalled its intention to pay an interim dividend of 8.5 cents per share in January 2008. This interim dividend can only be declared by the board once the current Masthead offer expires, unless Masthead otherwise agrees. The reason is the Masthead offer precludes Abano from declaring a dividend during the offer period, and if one is declared, it would breach one of the conditions Masthead has imposed on the company.

As previously advised, Abano has operational cash flow and banking facilities which are sufficient for the planned capital expenditure and acquisition growth programme for the foreseeable future, including the planned dividend programme.

Alison Paterson commented: “An early payment of the 2008 interim dividend is the prudent course of action to protect shareholders value by distributing some of the imputation credits in a timely manner.”

The interim dividend, which the board intends to declare if the Masthead offer is unsuccessful, would be 8.5 cents per share, fully imputed. This is in line with the current dividend policy of 50% of NPAT and is based on Abano’s half year NPAT of $3.8 million.

Based on the current year NPAT guidance of $7.1 million, the total 2008 dividend would be 41% higher than the 2007 dividend. In addition, a higher dividend is likely to be paid should a full offer be made for the company or after a year end NPAT performance of greater than $7.1 million.

In the interest of keeping shareholders fully informed, the board has also released the level of uptake for the Masthead conditional partial offer. As at today’s date, the level of acceptance notified to the Company’s share registrar has been very low, with acceptances for less than 302,000 of the 7.1 million shares Masthead require by 10 December to succeed with their partial takeover bid.

Alison Paterson said:

“While Masthead has stated that larger shareholders tend to accept offers on the last day, the board notes that Abano’s two largest shareholders subject to the offer, have publicly stated that they considered Abano to “have good growth prospects”. One of the larger shareholders, Rotorua Energy Charitable Trust, has publicly stated that it would not be selling into the Masthead offer.

“The board will be writing to shareholders to provide further advice on the Masthead Portfolios Limited partial takeover offer.”

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