ABA
30/07/2013 16:26
FLLYR
REL: 1626 HRS Abano Healthcare Group Limited
FLLYR: ABA: Abano Healthcare Group FY13 Annual Results Announcement
ABANO HEALTHCARE GROUP DELIVERS GROWTH AND IMPROVING EARNINGS
Full year results for the year ended 31 May 2013
Healthcare investor and operator, Abano Healthcare Group (NZX:ABA) continued
to build on its successful growth strategy during the year to deliver record
revenues of $207.0 million and a 75% increase in Net Profit After Tax to $2.8
million for the financial year ended 31 May 2013.
The company reported Earnings Before Interest, Tax, Depreciation and
Amortisation (EBITDA) of $27.7 million, up 8% on last year.
The revenue and EBITDA results reflect the divestment of the brain injury
rehabilitation business in June 2012 at the start of the financial year, for
a gain of $1.6 million, resulting in no further earnings contributions from
this business. The Australian dental business, Dental Partners, also
continued to roll out the change in the basis for contracting dentists, which
in effect means revenue is now recognised after the payment of dentists'
commissions.
Gross revenues which include the audiology group (Note 1) and Australian
dental revenues before payment of dentists' commissions increased to $257.8
million, primarily driven by increasing dental group gross revenues which
were up 18% on FY12.
Underlying earnings (Note 2) excluding non cash items required to be
expensed under the International Financial Reporting Standards (IFRS), the
one off gain from the sale of the company's brain injury rehabilitation
business and a review of Bay International's goodwill and tax losses were
$28.6 million at EBITDA giving an underlying NPAT of $4.5 million, up 50% on
FY12.
Directors have confirmed a final dividend of 13.7cps, making an annual
dividend of 21cps for the financial year ended 31 May 2013. This takes the
total dividends and capital returns paid to shareholders over the past five
years to $74.0 million.
In addition to the Dividend Reinvestment Plan, the Board has resolved to
raise approximately $15 million of capital in the coming quarter. Forsyth
Barr Limited has been appointed to arrange the offer and it is intended that
the issue be underwritten. It is likely that the offer will consist of a
small placement and Share Purchase Plan to provide for substantially pro-rata
participation by all our shareholders.
Chairman and Management Commentary:
It was a year of sustained growth for Abano, as we continued to build on our
proven investments in the Australasian region. In particular, we continued
to invest into the expansion of our dental networks on both sides of the
Tasman and into our Auckland-based radiology group.
Dental generated gross revenues of $177.8 million (an 18% increase on FY12)
and is the largest business within the Group, contributing 69% of Abano's
gross revenue.
In FY13, we acquired 24 dental practices across Australia and New Zealand,
providing $23.1 million in additional annualised gross revenues, growing our
trans-Tasman network to 138 practices at year end. We also invested in the
buyout of our minority 30% partner in our Australian dental business, Dental
Partners Pty Limited, increasing our ownership from 70% to 100% of its 62
practices as at year end. We have been the majority shareholder in Dental
Partners since its inception in 2008 and were delighted at this opportunity
to invest further into the dental industry and this very valuable company.
Organic growth also continued in dental with the successful Lumino TV-led
advertising campaign in New Zealand moving into its second year. We are just
now starting to see the benefits of scale across New Zealand and Australia,
particularly with laboratory and materials purchasing. In the first two
months since year end, we have acquired a further three practices providing
$7.4 million in additional annualised gross revenues.
Recent transactions in the Australasian corporate dental market indicate a
significant uplift in the value of our dental business and validate our
ongoing dental strategy.
Radiology is also an important investment area for us, with the opening of a
new clinic in the Millennium Institute on Auckland's North Shore during FY13.
We merged our two radiology businesses into one organisation in November
2012, to take advantage of synergies and economies of scale. Thanks to our
ongoing investment into leading edge technologies and equipment,
Insight+Ascot Radiology is now widely recognised as a leading specialist
provider in the greater Auckland region.
Our audiology networks in Australia and South East Asia continued to develop
and grow. These businesses are still in a development phase, with breakeven
at EBITDA expected in FY16.
Following a review in South East Asia, we have decided to close three stores
in Hong Kong due to the very high costs of suitable retail space. The closure
has no impact on the development strategy for our audiology businesses in our
other markets in South East Asia. The regional support office will move to
Taiwan and the consolidation of resources will realise operational
efficiencies and cost savings.
The majority of our audiology investment is in Australia, followed by Taiwan.
Both these businesses operate in large markets and continue to show improving
performance, with the more mature Australian business showing a year on year
double digit revenue increase. We also continue to maintain our two smaller
audiology businesses in Singapore and Malaysia.
Our pathology and orthotics businesses operate in the public contracting
environment, mostly under fixed price short term contracts. Both performed
well and provided solid cash flows for the Group. We continue to work closely
with the District Health Boards to renew contracts as they expire, as well as
investigating opportunities to de-risk the reliance on public funding.
The positive FY13 result was delivered despite the ongoing soft economic
environment in New Zealand and a significant downturn in the Australian
economy and consumer confidence, particularly in the past six months. While
healthcare overall is relatively shielded from changing economic headwinds,
some privately funded healthcare services, such as dental care and high end
hearing devices, can be impacted as consumer spending decreases. Over the
past three years, we have gained considerable experience operating in the
soft New Zealand market and we are now applying these strategies in
Australia.
During FY13, we reviewed our banking arrangements, refinancing our existing
Australian and New Zealand debt facilities and gaining improved pricing and
tenure. In addition, we negotiated a new facility of A$30 million to be used
for future acquisitions. As at 31 May 2013, Abano had confirmed banking
facilities of $151.6 million including undrawn facilities of $61.1 million.
Outlook:
Dental and radiology remain our primary growth opportunities. We continue to
expand our dental footprint in New Zealand and Australia and are now starting
to see the benefits of scale. Demand for the new radiology modalities and
clinics we have invested into over the last five years is continuing to
build.
While relatively small and still in a development phase, audiology continues
to offer significant future potential in the markets in which we now operate,
which all have large, wealthy and sophisticated populations. The audiology
group remains on track to breakeven at EBITDA in the 2016 financial year.
While we expect the economy, particularly in Australia, to remain soft, we
have gained experience and developed strategies in New Zealand to ensure our
businesses are well positioned to navigate these challenging conditions. We
therefore anticipate that the Australian downturn will have a limited impact
on our business and our mid to long term view of the opportunities offered in
Australia remains positive.
We will continue to invest into our company, building on our proven track
record of successful growth and delivering increasing shareholder value.
Key Dates
13 August 2013: Dividend record date
20 August 2013: Confirmation of issue price for shares under the DRP (Shares
will be issued at a 2.5% discount on the closing price)
23 August 2013: Dividend payment and issue of shares under DRP
ENDS
For more information visit www.abanohealthcare.co.nz
Note 1: Abano holds a 50% share in Bay International and therefore the
results for the Bay group are equity accounted and not included in the
reported revenue and EBITDA results.
Note 2: More information on gross revenue and underlying earnings which are
non-GAAP financial measures and are not prepared in accordance with NZ IFRS,
is available on the Abano website at www.abano.co.nz/underlyingearnings.
End CA:00239098 For:ABA Type:FLLYR Time:2013-07-30 16:26:59
