Abano Delivers Record Profit On Strong Growth

ABANO DELIVERS RECORD PROFIT ON STRONG GROWTH
Abano Results Announcement for Year Ending 31 May 2009

Abano Healthcare Group today announced a Net Profit After Tax (NPAT) of $9.7 million for the year ended 31 May 2009, an increase of 24 percent on the previous year.

The record profit was driven by continued demand across all four healthcare sectors, as well as from growing contributions from several new acquisitions, leading to a 51 percent year on year increase in revenues to $187.2 million.

A record Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $31.5 million was also achieved, up 35 percent year on year. This is of particular note as the operating profit included all the initial start up costs of several new significant initiatives undertaken during the financial year in Audiology, Dental and Radiology.

A final dividend of 12 cents per share, with a blended imputation credit of the old and new company tax rates, has been declared for the 2009 year, payable on 19 August 2009. The total dividend for the 2009 financial year was 21 cents per share, maintaining the Group’s policy of distributing 50 percent of NPAT.

Chair of Abano, Alison Paterson, said: “Over the past eight years, Abano has achieved strong year on year business growth with improving profitability. We are pleased to continue this again with our revenue, EBITDA and profit result for the 2009 financial year at the top end of the company’s revised guidance.

“During the year, we continued to focus on our long term Co-Invest and Build strategy with our clinical partners and concentrated our efforts into our identified growth sectors, particularly our emerging Audiology networks in Australia and Asia, Dental in New Zealand and more recently, our very successful dental expansion into Australia and through a doubling of our Radiology investment footprint in New Zealand. These sectors offer the most attractive mid to long term investment returns along with significant future growth potential.

“While New Zealand remains our biggest geographical base, the Australian and Asian markets now offer considerable potential and will be a significant opportunity for Abano going forward.

“2009 was also a year of unprecedented global economic turmoil. Although healthcare is relatively sheltered, growth opportunities were and will continue to be affected as consumers’ discretionary spending remains under pressure. While Abano continues a focus on the delivery of private health services, the Group has a balanced mix of private and public revenue streams and a regional geographic presence which provides us with a balanced spread of businesses in a number of economies and the ability to grow profitably in the current economic climate.

“We continue to receive strong support from our long term banking partners, ASB Bank in New Zealand and CBA Bank in Australia. These two banks have provided us with long term facilities of approximately NZ$130 million in confirmed funds to draw on and we closed the year with a net debt position of NZ $82.2 million.”

Audiology in New Zealand continued its three year trend of double digit revenue growth; however, Bay is now reaching a position of maturity with respect to market penetration. Although growth in New Zealand will continue, the future high growth opportunities for Abano in audiology will be through the Bay Audio business in Australia, which was launched in February 2007, and through Bay Audiology in Asia, which commenced operations in November 2008. Both of these business streams are in their infancy in markets with considerable potential.

Today, Abano also announced it has added to its Asian audiology footprint with a small investment into two clinics in Malaysia, facilitated through Abano’s world-wide agreement with Siemens Group. Similar to other Asian markets, Malaysia is characterised by sophisticated consumer markets and behaviours and growing household incomes.

Managing director of Abano, Alan Clarke, said: “Our audiology expansion into Australia and Asia is opening up some very interesting and exciting opportunities. Our retail mall based clinics, developed in Australia using Bay’s unique touch screen, self testing technology, is proving to be a success in both markets and we see strong growth potential.

“Abano’s dental sector now consists of Lumino The Dentists in New Zealand and Dental Partners in Australia and experienced significant clinic expansion and growth in margins during the financial year. Lumino The Dentists added a further 10 practices to its network, increasing the network to 42 practices across New Zealand. The Australian business, which was established in June 2008, doubled in size to 18 practices by year end. Abano now has a depth of experience in the dental market with a proven business model. The future focus is on continued growth and increasing margins and investment returns.”

Significant investment was also made in the Radiology sector during 2009, with the opening of a second clinic at Ascot Hospital offering specialised digital breast imaging services in conjunction with a leading Breast Surgery partnership. In addition, Ascot Radiology’s MRI resources were enhanced with two new 3T MRI machines and an expansion of the Radiologist partnership in the practice.

In November, Abano co-invested in Insight Radiology Group with the founder, Dr Richard Davis, and immediately introduced a fourth 4D Ultrasound machine to this highly respected Obstetric imaging practice in Auckland. The New Zealand radiology market offers considerable opportunity for expansion and will be one of Abano’s three growth sectors for the 2010 year and beyond.

Abano’s businesses in pathology, brain injury rehabilitation and orthotics also produced solid results and improved margins with a strong focus on improving operational efficiency and customer services.

Alan continued: “The 2010 year will be one of continuing achievement for Abano, particularly for our Dental businesses on both sides of the Tasman, our Audiology networks in Australia and Asia and the Radiology operations in New Zealand. We will continue to implement our proven and successful Co-Invest and Build strategy with our clinical partners, while keeping a careful eye on the global economy.

“Looking forward, Abano is well positioned to maximise value from existing businesses and pursue value adding opportunities, enhancing our shareholders’ wealth.”

ENDS

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