December 17, 2004
Increased Payout
Our December quarter pre-tax distribution payout is being increased from 2.0 cents a unit to 2.15 cents a unit. On an
annual basis the pre-tax distribution will increase from 8.0 cents per unit to 8.6 cents per unit.
We announced the 7.5% increase at the annual meeting held in Tauranga in November, and this decision was based on the
recent sale of non-yielding assets and the imminent completion of Epworth Eastern in Melbourne.
In making the announcement the Chairman, Bruce Davidson, said the increase in distribution was “warranted and
sustainable”.
Tauranga Annual Meeting
Holding the annual meeting in Tauranga was a great success, with more than 210 attendees.
Based on feedback from those present, the Directors are of the view that taking the annual meeting around the country is
a very worthwhile exercise which will be repeated in future years.
Assets Sales
The big news in the lead up to the annual meeting was the completion of the sale of our Waitemata land holding for
$12.825 million.
We have received the deposit of $8.5 million in cash, and the remaining $4.325 million, plus interest at our cost of
borrowing, will be received over a maximum period of four years.
The sale value represents approximately 6% of our total assets, and is a significant step forward in making our
portfolio fully yielding.
We also entered into an option agreement for the sale of our 20% equity interest in Ascot Radiology Limited. The option
is exercisable in April 2007.
The option is at a price ranging from $500,000 to more than $1 million. The precise sale price will be determined by
reference to Ascot's Radiology’s profitability for the year
ended 31 March 2007. Should profitability not reach a minimum pre-agreed level, either party has the right to terminate
the deal.
Having said this, based on the current forecast of Ascot Radiology’s management, the sale price at this point in time is
expected to be $1 million.
Epworth Eastern
The other news is that the 100% pre-let Epworth Eastern in Melbourne is forecast for practical completion in late
February 2005 with the doors being opened for business in early April 2005.
The complex is a hive of activity as builders and contractors put the finishing touches to the major structure with the
army of fit out specialists converting the shell into a state-of-the-art, fully functioning medical facility.
The estimated value of the finished complex is A$42 million, and it will feature with the $66 million Ascot Hospital in
Auckland as one of our two flagship properties.
Trust Structure
Prior to the annual meeting the Directors announced the result of their study into the Trust’s corporate governance
options.
The conclusion reached was that it was in the best economic interests of Unit Holders for the current structure to be
retained.
The study confirmed that rather than changing the structure, the focus of the Directors and Management should be on
delivering on four key areas, namely
Improving the earnings, and therefore the distribution paid to unit holders. This should in turn improve unit price
Growing the Trust through acquisitions that are earnings positive and have a strategic fit ( not growth for growth’s
sake ) Ensuring alignment of the Manager’s incentive and service fees with outcomes that are positive for unit holders
Ensuring appropriate quality in the people that make up the Board and management of the Manager.
It is the Manager delivering on these four key areas that will lead to the enhancement of value for unit holders.
Christmas Message
On behalf of the Directors and Management team, I would like to wish Unit Holders and their families all the best for
the Christmas and holiday season.
We are closing the office from 12.30pm on December 24, and will reopen again for business at 8.30am on January 5, 2005.
It has been a busy past 12 months for Calan Healthcare, and one in which we have made steady, measurable progress
towards our goal of being a low risk, medium return investment that delivers a growing yield to Unit Holders.
We are looking forward to returning in the New Year fully refreshed, and continuing along the way of achieving our goal.
ENDS