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Abano 2012 Financial Results

Abano Healthcare Group has today released its audited financial results for the year ended 31 May 2012, reporting record revenues of $206.4 million, up 18% from the previous year (FY11:$174.8 million).

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) were up 30% to $25.7 million (FY11: $19.8 million[1]).

During the 2012 financial year, a number of strategic investment decisions were made which will yield significant benefits for the long term profitability of Abano. These included an accelerated dental acquisition programme in New Zealand and Australia, funded by an increase in debt facilities, as well as investment into dental IT platforms. There was also the start up of the PET CT radiology centre in Auckland, which was commissioned in late FY11, and the development of the new Millennium radiology clinic which will open in late 2012 on Auckland’s North Shore.

While these investments all provide strong growth platforms for the company and will generate long term profitable cashflows, the associated costs had an immediate and negative impact on the Profit and Loss account in the 2012 financial year. As a result, while Net Profit After Tax (NPAT) at $1.6 million was in line with forecast, it was down on the previous year’s NPAT of $11.5 million which also included the one off $12.3m gain on sale of National Hearing Care.

Underlying earnings[2] produced an EBITDA of $27.3 million (FY11: $20.6 million1), and an operating profit of $3.0 million (FY11: $3.1 million).

Managing director of Abano, Alan Clarke, said: “Abano grew strongly over last year, producing a solid result that was in line with our market guidance. Revenues were at their highest level ever and, as expected, we have seen strong cash flow growth at EBITDA.

“We are now well down the track to rebuilding our bottom line earnings towards the levels achieved prior to the sale of our New Zealand audiology business in FY10. In line with this, we expect to see continued improvement at the bottom line.”

Alan continued: “During the 2012 year and into the first quarter of FY13, we made a number of decisions which will ensure that our company continues to advance and perform successfully into the future. This included the divestment of our brain injury rehabilitation business, which settled just after year end, in June 2012, and the subsequent acquisition of the outstanding 30% shareholding in Dental Partners.

“This portfolio rationalisation has seen the release of funds from a business that was highly dependent on public funding in a limited scale market, and increased investment into a fast growing, private income business which is in a very large, scalable market.

“Dental is, and will remain, our primary revenue and income generator, and our accelerated acquisition programmes continue in both Australia and New Zealand. Pleasingly, good organic growth is also being seen in New Zealand and will be increasingly important as we enter our second year of national television advertising and online marketing for Lumino the Dentists.

“Radiology in New Zealand is expected to deliver increasing returns, as demand for our PET CT cancer service builds. There will be additional, new growth from the Millennium radiology clinic which is expected to commence in October this year. Audiology is making progress, with growth in Australia and steady development in Asia. We are on track to see this business breakeven, as expected, in two to three years time.

“We expect another solid and stable year of performance from our orthotics business and Aotea Pathology, both of which will continue to work within their DHB contracts to provide the best possible, quality service for their clients and the communities they serve.

“Over 45 % of Abano’s revenue is now generated from outside of New Zealand. While New Zealand will remain our biggest geographical base in FY13, domestic growth opportunities are eclipsed by the sheer size of the Australian and Asian healthcare markets. This means our offshore growth will be faster than domestic growth, and by 2015, it is estimated that over 70% of Group income will be derived overseas.”

The Abano Board has confirmed an annual dividend of 21 cents per share for the fourth year in a row, demonstrating the Board’s confidence in the underlying growth of NPAT. Therefore a fully imputed final dividend of 13.7 cents per share will be paid on 24th August 2012.

Summary of Key Dates:

  • 10 August 2012 Record date for dividend
  • 17 August 2012 Confirmation of issue price for shares under the DRP (Shares will be issued at a 2.5% discount on the closing price)
  • 24 August 2012 Payment date of dividend/Issue of shares under the DRP

[1] EBITDA excludes profit/losses generated by Bay International, in which Abano holds a 50% shareholding. Due to this, 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.

[2] 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. A reconciliation of reported results to underlying results is provided at www.abano.co.nz/latestfinancials.

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