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2012 Annual Meeting Summary

Continued growth and investment into the company’s dental, radiology and audiology businesses will be the prime focus in 2013, said chairman Trevor Janes at the Abano Healthcare Group annual meeting held today in Auckland.

Continued growth and investment into the company’s dental, radiology and audiology businesses will be the prime focus in 2013, said chairman Trevor Janes at the Abano Healthcare Group annual meeting held today in Auckland.

“Rapidly rising demand for quality healthcare solutions is providing a pathway for Abano to become a significant investor in the New Zealand, Australian and Asian healthcare markets. We are a growth company and our proven investment strategy remains to co-invest with the clinical leaders in businesses where we can add value as a corporate partner.

“The company has excellent relationships with its banking partners, and there is sufficient funding in place for the current development and investment needs of the Group.”

He continued: “During the 2012 financial year and into the first half of the 2013 financial year, a number of strategic decisions and investments have been made.

“In particular, these include an accelerated acquisition programme for our dental businesses in Australia and New Zealand; investment into leading edge PET CT scanning technology and a new North Shore clinic for our radiology business; and acquisition of the outstanding shareholding in Dental Partners in Australia, taking our holding to 100%. We also divested our brain injury businesses in New Zealand, with a $1.7 million gain to be recognised in the 2013 financial year. While these decisions will lead to strong revenue and cash flow growth, they depressed our NPAT performance in 2012 and will continue to have an impact into 2013.”

Managing director, Alan Clarke, provided further comment on the company’s performance.

“The dental market across New Zealand and Australia is predominantly private payment and worth over $7 billion a year. We have an accelerated acquisition programme in place, and are continuing to build on the 131 clinics we currently have across the region. This means that, on average, we are acquiring a new dental practice every two weeks, and adding over $30 million in additional annualised gross revenue each year. With a trans-Tasman market of this size, growth at this rate can continue for many more years.

“Our radiology business in New Zealand is now one of the largest specialist radiology practices in the country. We have invested significantly in the past 18 months into leading edge technology and equipment, as well as new state of the art facilities. From 1 November 2012, we will merge our two radiology businesses into one entity, to be known as Insight+Ascot. Abano will hold 73 percent of the shares, with our radiologist partners holding the remaining 27 percent.

“Both our dental and radiology businesses are providing growing revenues, cash flows and profit margins, and both offer attractive near as well as long term prospects.

“Our emerging audiology businesses in Asia and Australia are located in regions with enormous populations that offer significant growth potential in the medium to long term. We will continue to invest in the development of these networks and we expect to see continued revenue growth, with break even forecasted to be reached in two to three years’ time.

“Our other businesses in pathology and orthotics are respected, professional and well run organisations that generate solid cashflows, however, due to their high reliance on public funding, we have hold and maintain strategies in place.”

In line with its normal practice, the Abano Board provided market guidance for the first half year.

Trevor Janes said: “Our guidance for the first six months of the 2013 financial year ending 30 November 2012, excluding the $1.7 million, one-off gain on the sale of Abano’s brain injury rehabilitation business, is that we are expecting revenues of between $105.4 million to $107.4 million, an EBITDA of between $13.6 million to $14.6 million and a NPAT to be in the range of $1.3 million to $1.8 million.

“The underlying earnings are expected to be an EBITDA of between $14.1 million to $15.1 million and a NPAT of between $2.1 million to $2.6 million.

“While we have seen a limited recovery and growth in the New Zealand market in recent months, there has not yet been any significant or lasting improvement. The Australian market is now also experiencing a downturn in consumer confidence and market conditions, which has started to affect both audiology and dental demand. Asia remains strong and upbeat, however a slowing in growth has been reported in several countries and there is a general wariness about world economic performance and the possible effects on the Asian economies.

“Because of these uncertain conditions, we will be carefully watching the summer holiday trading and our second half. As is our practice, we will issue a full year forecast around the end of March next year, once we have assessed trading over the Christmas and summer holiday break.”

Shareholders passed all resolutions at the meeting including:

  • Authorised directors to fix the auditors’ remuneration
  • Re-election of Mr Peter Hutson as a director
  • Election of Ms Pip Dunphy as a director
  • Increase in the total Directors’ remuneration payable annually to all non-executive Directors taken together for their services as Directors of the Company from $395,000 to $429,500.

1. 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.

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