Abano provides 2012 Market Guidance
Listed healthcare investor and operator, Abano Healthcare Group, has today provided guidance for the financial year ending 31 May 2012.
Growth in consumer demand following a successful television campaign for dentistry in New Zealand, accelerated dental acquisition growth in Australia and New Zealand, and growing referrals in radiology have underpinned the second half forecast for Abano.
The company expects annual revenues to grow to between $205.0 and $207.0 million (FY11 $174.8million), and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDAi) to be between $24.7 and $25.7 million (FY11: $19.7 million), generating a Net Profit After Tax (NPAT) of between $1.3 and $1.8 million (FY11: $2.3 million, excluding the one off gain from the sale of Abano’s shareholding in National Hearing Care and the one off de-recognition of tax losses in Bay International which occurred during FY11).
Underlying EBITDA is expected to be between $26.2 and $27.2 million (FY11:$20.5m) and underlying NPAT between $2.7 and $3.2 million (FY11:$3.1mii). The company notes that this guidance is in line with broker forecasts.
As reported in the first half, the 2012 full year guidance also reflects the loss of investment income from National Hearing Care (which was sold in December 2010), an increased depreciation charge from accelerated investment in IT infrastructure, and facility fees associated with an additional debt facility in Australia.
Abano managing director, Alan Clarke, said: “The growth in revenues and earnings is very pleasing as we are in a regeneration phase, following the sale of our New Zealand audiology operations in 2010 and 2011.
“Our primary source of income is now from our dental businesses on both sides of the Tasman. We have accelerated acquisition plans for both these networks, and have achieved excellent growth this year with the acquisition of 24 practices to date, which will provide an additional $36 million in annualised revenues.
“Pleasingly, we have also seen organic growth within the Group. This follows a successful television campaign for Lumino the Dentists in New Zealand, as well as improving demand in radiology in New Zealand as our investment into new technologies starts to deliver results. Our joint venture audiology networks in Australia and Asia continue to show improvement, but are still incurring development losses and it will be three to four years before this business group breaks even. Finally, our pathology, brain injury and orthotics businesses in New Zealand are all producing steady results.”
In a new initiative that was announced in February 2012, Abano’s radiology sector will expand with the development of a purpose built $4 million specialist radiology clinic in the AUT Millennium Campus, on Auckland’s North Shore. Opening in the new financial year, this clinic will offer Australasia’s first GE second generation wide-bore 3T Magnetic Resonance Imaging (MRI) scanner, as well as providing specialist obstetric ultrasound services, Plain Film, Ultrasound and Mammography modalities.
Chairman of Abano, Trevor Janes commented: “While both the Australian and New Zealand economies remain flat, Abano is seeing a return of organic growth, underlining the relative resilience of healthcare spending in both markets. Our new AUT Millennium radiology investment, while incurring set up costs in the 2012 financial year, will provide an additional source of income in the 2013 financial year and onwards.
“The Board will continue to report Underlying Earnings, which excludes acquisition and IFRS charges and therefore will provide our shareholders with a “like for like” comparison with previous years’ performance. We believe that this is a more appropriate representation of Abano’s performance and provides useful information on the ‘normalised’ profit of the company.”
There are a number of recent changes under IFRS regulation which have had and will continue to have a significant impact on how Abano reports its results. The main impact of these changes is with respect to payments, costs and charges relating to acquisitions. Historically, most of these costs were capitalised whereas now under IFRS they must now be expensed. As Abano has an acquisition growth strategy, the number of acquisitions made will continue to increase, which means the one off costs and charges incurred in these acquisitions will negatively impact the reported NPAT performance going forward.
Trevor Janes commented: “We expect to see the current growth in revenue and EBITDA continue into the 2013 financial year and beyond, with an improving bottom line NPAT performance as our investments and accelerated acquisitions contribute positive earnings.”
The Abano board has reconfirmed its expectation to maintain the 2012 dividend at 21 cents per share.
i:EBITDA excludes profit/losses generated by Bay International, in which Abano holds a 50% shareholding. The results for the Bay Group are now equity accounted and therefore no longer included in the consolidated EBITDA. FY11 EBITDA has been restated to provide a like for like comparison.
ii: Further information on underlying earnings, which is a non-GAAP financial measure and is not prepared in accordance with NZ IFRS, is available on the Abano website at www.abano.co.nz/underlyingearnings