2011 Results Announcement
2011 A YEAR OF TRANSITION FOR ABANO HEALTHCARE GROUP
Abano Healthcare Group Limited has today released its audited financial results for the year ended 31 May 2011, reporting revenues of $174.8 million, an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $14.0 million and a Net Profit After Tax (NPAT) of $11.5 million.
Excluding the one-off $12.3 million gain from the sale of Abano’s shareholding in National Hearing Care, and the de-recognition of tax losses in Bay International of $3.1 million as detailed below, Net Profit After Tax was $2.3 million. Underlying operating earnings produced an EBITDA of $17.9 million and an Operating Profit of $3.1 million.
Chairman of Abano, Alison Paterson, commented: “The year ending 31 May 2011 was a year of transition for Abano Healthcare Group as dental replaced audiology as our primary revenue generator. This followed our move out of the mature New Zealand audiology market and into the emerging audiology markets of Australia and South East Asia, through our audiology joint venture, Bay International.
“Key highlights in 2011 included the continued growth and improving profitability of our dental businesses across New Zealand and Australia, the expansion of our radiology facilities in New Zealand and the extension of important contracts in pathology and orthotics. We also sold our shareholding in National Hearing Care (NHC), completing our exit from the New Zealand audiology market and allowing us to make our third return of capital to shareholders, this time of $27.3 million through a buy back and cancellation of 1 in every 4 shares held.
“Our strategy has been to return equity to shareholders when surplus funds are available and since 2005, we have returned $66.8 million to shareholders through three share buy backs and a special interim dividend.
“In New Zealand, the flow on from the global financial crisis has continued to impact Abano’s businesses, with increased pressure on publicly funded contracts, a more restrictive ACC environment and a slowing in demand for some elective private healthcare encounters. The effects of the global financial crisis are also now more obvious in Australia, with a related slow-down in consumer confidence and expenditure.
“In addition, the natural disasters in New Zealand and Australia have had a financial and human impact on both economies, and Abano Group earnings were depressed by an estimated $0.5 million in the 2011 financial year, as a direct result of these events.
“Looking forward, we are expecting similar economic and confidence conditions to exist through the first half of our 2012 financial year. However, we anticipate an improvement in the business climate on both sides of the Tasman in the second half of the year.
“Abano continues to be in a strong position, with significant investments now in place in a number of emerging and growth markets which offer long term profitability and potential.”
Managing director of Abano, Alan Clarke, commented: “Overall, the company produced a good performance for the 2011 financial year with a number of strategic achievements, underpinned by strong new business growth.
“Our consolidated performance in 2011 reflected the first year of no income from the New Zealand audiology group, which was sold in November 2009. Excluding the audiology sector, reported earnings from continuing operations were up strongly when compared on the same basis to the previous year with revenues of $174.8 million compared with $150.6 million in 2010 and EBITDA of $20.5 million compared with $17.1 million in 2010, primarily reflecting the strong growth of our dental businesses.
“A number of one-off costs were absorbed in the last half of the 2011 financial year. These included the staffing and opening of the $5 million Positron Emission Tomography – Computed Tomography (PET CT) scanning centre in Auckland, the recruitment of experienced executives to strengthen the Bay Audio regional management teams and relocation of the Bay Audio regional offices in Australia and Asia and the unplanned impacts of the natural disasters in New Zealand and Australia.
“We also expensed the production costs of the ground breaking nationwide television and marketing campaign for Lumino The Dentists in New Zealand, which commenced in May 2011 and will continue to run through 2012.
“Additionally, there were timing delays in the settlement of several dental acquisitions, previously forecast to occur toward the end of the 2011 financial year. These were settled early in the 2012 financial year, with a total of seven dental acquisitions providing over $10 million in annualised revenue, settling since 1 June 2011. As of today, we have 40 dental practices in Australia and 59 practices in New Zealand. We have accelerated growth plans in place on both sides of the Tasman, with an acquisition target of over $30 million in annualised dental revenues for the current financial year.
“A new A$30 million, five year banking facility was arranged with CBA, dedicated for the accelerated growth of our Australian dental business. Revenue and operating earnings from these acquisitions will continue to improve EBIT over the next two years. However, the increased line fees and costs associated with the establishment of this significant new banking facility will impact immediately in the 2012 financial year.
“Abano’s joint venture audiology company, Bay International, continues to invest in Australia and Asia in line with our growth strategy. In 2011, we strengthened and relocated the management teams to new regional offices and a new IT infrastructure and network will continue to be rolled out in the 2012 year. As we have previously advised, our audiology business is in an investment, loss making, phase with positive income streams expected in the medium to long term. The Board is confident in the Greenfield development model and growth strategy for this business.
“Under IFRS, however, a shorter recognition timeframe is required in which to fully utilise tax assets. Based on this, the Board is required to de-recognise some of the tax assets in Bay International in the 2011 year. This is a non cash, one off impact, which does not affect our ability to utilise these tax losses in the future.
“During the year, we also invested further into emerging technology for our radiology business and, in April 2011, we were delighted to welcome the Prime Minister to open our new $5 million PET CT scanning centre at Ascot Radiology. This is an important investment which cements Ascot’s position as a leading specialist provider to the Auckland and Northland regions, and long term benefits are expected to flow through from 2012 onwards.
“Our diagnostic business, Aotea Pathology, had a good year, providing solid returns and performance. In late December 2011, we announced a three year, $75 million extension of the existing five year community pathology contract we hold with the Hutt Valley and Capital & Coast District Health Boards (DHBs). The extension means this contract now runs to October 2014.
“Our orthotics business also had a good year, despite the adverse effect of the Christchurch quakes. The acquisition of Orthotics South Island just prior to the 2011 financial year boosted the performance of this business and in March 2011, the Orthotic Centre was granted a three year $3 million orthotics contract for the Southland DHB.”
Alan Clarke concluded: “The success of our partnership model and our ability to add value to the businesses in which we co-invest has been proven over the past ten years. We have an established record of growth and performance, which will continue into the 2012 financial year in New Zealand, Australia and Asia.”
A final fully imputed dividend of 13.7 cents per share will be paid on 24 August 2011, resulting in a total dividend for the 2011 year of 21 cents per share, consistent with the previous two years’ dividend payments.
Summary of Key Dates:
- 10 August 2011 Record date for dividend
- 17 August 2011 Confirmation of issue price for shares under the DRP (Shares will be issued at a 2.5% discount on the closing price)
- 24 August 2011 Payment date of dividend/Issue of shares under the DRP scheme.