Abano Annual Meeting Summary 2011

2015 Vision of 20% Compounding Growth

Continued revenue and earnings growth of over 20% per year will help Abano achieve its vision of being a leading investor in the New Zealand, Australia and South East Asian healthcare markets by 2015, said chair Alison Paterson, at the Abano Healthcare Group annual meeting held today in Auckland.

“The company will achieve its vision by continuing to focus on our targeted growth areas, being dental in New Zealand and Australia, radiology in New Zealand and audiology in Asia and Australia”, said Alison.

“Dental is now the primary revenue generator for the Group, with radiology offering a wide scope of opportunities in the New Zealand market. Our emerging audiology networks in Australia and Asia are still in an early development and investment phase, which will continue for a further three to four more years before they achieve break even and thereafter start providing positive profit contributions.

She commented: “There are a number of opportunities and challenges presented by our involvement in the healthcare sector. Both in New Zealand and around the world, the healthcare industry is characterised by rapidly rising demand, increased patient expectations and ever tightening Government funding. We have a proven strategy in place which provides the pathway to us achieving our vision of being a significant regional investor by 2015”.

The company provided guidance for the first six month period ending 30 November 2011 and an updated outlook on the full year performance.

Alison said: “There are a number of components in the new IFRS regulations which have had and will continue to have a significant impact on our reported results, as they affect how we account for particular payments, costs and charges related to acquisitions. These accounting requirements affect us particularly because we are a growth company and, as our acquisitions accelerate, these IFRS charges against profit will increase, negatively impacting the reported NPAT.

“New Zealand’s depressed economy and consumer confidence have continued into the 2012 financial year, with increasing pressure on publicly funded health contracts and a continued slow-down in ACC approved surgical procedures. We also noted, for the first time, a material slow-down in consumer confidence and spending in Australia in the last six months of the 2011 financial year, which has since extended into the current year.

“Despite this, we are expecting strong growth in revenues and EBITDA.

“For the first half year period, consolidated NPAT will be depressed by the new IFRS charges, new debt facility establishment charges related to our accelerating dental acquisition programme, increased depreciation charges from our accelerated IT investment in audiology and dental and the loss of associate investment income from NHC (FY11: $0.6 million). As noted previously, we no longer consolidate our audiology business in Australia and Asia as it is a 50:50 joint venture.

“Therefore, our guidance for the first six months of the 2012 financial year ending 30 November 2011 is that we are expecting revenues of $101.5 million to $103.5 million, an EBITDA of $11.0 million to $12.0 million and a NPAT to be in the range of $0.2 million to $0.7 million.

“To better compare progress against previous years, we expect an underlying EBITDA of $12.0 million to $13.0 million and an underlying NPAT of $1.0 million to $1.5 million.

“In line with our normal market guidance communications as made over the last seven years, we will issue a full year forecast for the financial year ended 31 May 2012, around March next year, once we have assessed trading over the Christmas and summer holiday break. While we expect to see strong growth at revenue and EBITDA for the full year, there will be a flat to decreased bottom line at NPAT after IFRS reporting requirements and investment expenses are consolidated.”

The meeting was the last to be chaired by Alison Paterson, who stepped down as chair immediately following the meeting. She will remain as an independent director on the Board until the 2012 annual meeting. As previously advised, Trevor Janes was appointed by the Board as the new chairman at the close of the annual meeting.

Managing director of Abano, Alan Clarke, commented further on the company’s direction for the 2012 financial year.

“We are continuing to invest with accelerated growth plans in place for our dental businesses on both sides of the Tasman, some interesting radiology opportunities under assessment and ongoing investment into our emerging audiology businesses in Australia and Asia.

“Dental is now Abano’s primary revenue and profit generator and we have a trans-Tasman growth target to acquire $30 million in annualised revenues in the 2012 year. This will be achieved through the acquisition of existing dental practices in New Zealand and Australia. We are tracking to plan, with 19 dental practices and over $26 million in annualised revenues acquired in the year to date.

“Our audiology operations continue to be in an early investment and development phase, and we are focused on strengthening our business platforms in Australia and Asia going into 2012. As we have said, it will be three to four more years before this business group breaks even, with material profit contributions expected thereafter.

“After a year of pleasing growth, we will concentrate on consolidating operations for our Orthotic business and the focus for our businesses in pathology and brain injury rehabilitation is to maintain margins and provide an annuity income stream to the Group”.

Shareholders passed all resolutions at the meeting including:

  • Authorised directors to fix the auditors’ remuneration
  • Re-election of Mr Danny Chan as a director
  • Re-election of Mrs Susan Paterson as a director
  • Election of Mr Ted van Arkel as a director