2010 Annual Meeting Summary
Abano announces $27 million capital return, a $5 million investment into PET/CT scanning and continuing growth in New Zealand, Australia and Asia.
The announcement of a $5 million investment into PET/CT scanning at Ascot Radiology was a highlight for those attending the Abano Healthcare Group Limited annual meeting of shareholders held in Auckland today.
PET/CT scanning is the leading diagnostic tool in indentifying and fighting cancer and is mainly used to determine the appropriate form of treatment for cancer patients.
Chairman of Abano, Mrs Alison Paterson commented: “It is through investments such as these that our clinicians remain at the leading edge of the professional services they offer. PET/CT scanning is an extremely valuable diagnostic tool and the GE scanner selected by Abano offers a number of unique features and opportunities for Ascot Radiology.”
Also of interest at the annual meeting was the approval of a resolution to return $27.3 million to shareholders through a 1 in 4 share cancellation at $5.23 per share. The capital return was proposed by Abano’s directors following the sale of Abano’s jointly held shareholding in National Hearing Care Group, which led to a one off profit for Abano of approximately $11 million and cash proceeds of over $26 million. Following shareholder approval, the capital return will now be carried out subject to court approval and the settlement of the National Hearing Care Group sale, which is expected in late December 2010 with the cancellation expected to take place in late January 2011.
Mrs Alison Paterson commented: “The share cancellation represents a tax effective return of capital to shareholders, and is an efficient use of Abano’s balance sheet. It will also reduce the number of shares on issue and therefore improve earnings per share going forward.
“Abano retains sufficient funding facilities and capital to continue investing into our growth businesses, being dental in New Zealand and Australia, radiology in New Zealand and audiology in Australia and Asia.”
The Company also provided guidance for the first six month results and an updated outlook on the full year performance.
Alison said: “For the first six months of the 2011 financial year ending 30 November 2010, we are expecting revenues of $85.8 million to $86.8 million, EBITDA of $9.0 million to $9.5 million and NPAT to be in the range of $2.0 million to $2.3 million. Excluding recently adopted IFRS changes, underlying earnings will be between $2.6 million and $2.9 million.
“In line with our normal market guidance communications over the last six years, we will issue a full year forecast around March next year, once we have assessed trading over the Christmas and summer holiday break.
“However, we are able to provide some high level guidance on the second six months of trading at this time. The second six months is always affected by the Christmas and Easter holiday periods, which means our second half trading is traditionally softer than our first half year.
“Economies on both sides of the Tasman remain very sluggish. Retail spending is down and the full impact of the global economic crisis is still being felt. As a consequence it has left the legacy of a wary economic outlook by employers and consumers alike. While we are relatively protected from economic down turns, many areas of our Group are still dependent on discretionary healthcare spending.
“Policy changes in ACC referrals still impact in several businesses and as a consequence, trading in these businesses will take some time to work back to previous levels. Also, and as a result of the unexpected and unplanned sale of our investment in National Hearing Care in September, we will no longer receive an equity accounted profit contribution from that investment in our second half year.
“Finally, we elected to accelerate changes to our audiology management structures in both Asia and Australia. These changes will have a one off cost in our second half but position us well for long term growth. We therefore believe that our second half will be well down on our first half year performance.”
Managing director of Abano, Mr Alan Clarke, commented further on the Company’s performance into the 2011 financial year.
“We have continued investing in our growth sectors. Since the start of our financial year on 1 June 2010, Lumino The Dentists has acquired a further four dental practices in New Zealand, taking their network to 54 practices nationwide. In Australia, Dental Partners has acquired seven practices and now has 33 practices based predominantly in New South Wales, ACT, Victoria and Queensland. We plan to grow through acquisition by around 25 to 30 practices a year on both sides of the Tasman making Dental a primary income generator in the immediate future.
“Our audiology operations in Australia and Asia have also grown and in the next few weeks, we will enter Taiwan through the acquisition of a small audiology chain, Team-Bell. This investment will help build our understanding of how to operate in this very large, traditional Chinese market. Audiology in Australia and Asia will grow primarily through Greenfield developments and therefore this investment in growth is expensed through the Profit and Loss account and not capitalised through the balance sheet. As previously advised, we do not expect any significant profit contribution from audiology for at least three to five years.
“Our radiology investment in PET/CT will open a number of new referral opportunities for this group leading to strong future income generation and our Orthotics business, which is tracking well, is pursuing several local expansion opportunities. Aotea Pathology’s five year DHB contract finishes in late 2011 and we are working hard to ensure this long established pathology service continues for the Wellington and Hutt Valley communities.
“Abano has an established track record of performance delivery and growth. We will continue investing in and strengthening both our local and offshore management teams and development offices. While this will have a short term investment cost, it will yield strong benefits in the medium to long term. We see a number of exciting growth and development opportunities in New Zealand, Australia and Asia and we will continue to be a leading healthcare investor and provider and the partner of choice for clinicians under our proven Co-invest and Build strategy.”
Shareholders passed all resolutions at the meeting including:
- Reappointment and remuneration of PricewaterhouseCoopers as auditors
- Re-election of Mr Trevor Janes as a director
- Re-election of Mr Peter Hutson as a director
- Increase in directors’ remuneration
- Approval of arrangement relating to the return of capital to shareholders (99.6% voted in favour)