ABA
26/11/2013 12:41
MEETING
REL: 1241 HRS Abano Healthcare Group Limited
MEETING: ABA: Abano Annual Meeting Summary and Results
INDEPENDENT VALUATION MIDPOINT PUTS ABANO SHARES ABOVE $9
An Independent Report prepared by valuation firm Grant Samuel at the request
of the independent directors of Abano, has a mid-point equity valuation for
Abano of $187 million or $9.17 a share, chairman Trevor Janes told
shareholders at the Abano Healthcare Group annual meeting held today in
Auckland.
The independent valuation from Grant Samuel was requested by the independent
directors as part of a preparatory process, in the case of a possible
takeover following the receipt and rejection of an unsolicited, indicative,
non-binding and conditional proposal from Archer Capital, together with
interests associated with James Reeves, and with Peter Hutson. As part of
that process, Grant Samuel undertook an independent valuation of the Abano
Group, which it has provided to the Board. Shareholders are encouraged to
read the full report, including the assumptions on which it is based, which
is available on the company website www.abano.co.nz.
Trevor Janes said: "The Grant Samuel Independent Report provides a value per
share of between $8.30 and $10.05, based on a 100% transaction. While no
actual notice of takeover offer has been received from the
Archer/Hutson/Reeves consortium, the indications of value we have had from
them are still materially below this.
"The necessary activity surrounding this approach has been a major
distraction for the Board and management; however, it has accelerated and
brought forward a number of other attractive options which we are assessing."
Management continue to focus on the company's long term growth strategy and
developing the potential of each business within the Group, and managing
director, Alan Clarke, provided a detailed update to shareholders at the
meeting.
"By staying focused on our overarching goal of better client and patient
care, we have grown our businesses and added considerable value for all our
stakeholders, from clients and patients to staff to shareholders. Currently,
our portfolio consists of seven businesses in four different sectors, all in
differing stages of maturity.
"Our growth businesses are headed by our two dental networks which are our
primary revenue and earnings generators and our most valuable enterprises.
We operate in the $9.6 billion trans-Tasman dental market and the current and
future value of our dental group is substantial.
"Despite the soft economic conditions seen in both Australia and New Zealand,
Abano's dental group has performed strongly when compared to its competitors.
"Our Australian business, Dental Partners is the second largest group in
Australia and it achieved the fastest compound growth rate over the last
three years, out of the top four corporate consolidators. We rank second in
EBITDA margin while continuing to invest in growth, with the leader being a
business that is not investing in growth, has stagnant revenues and is
effectively cashed up. We are generating returns on invested capital that
are materially above our largest competitor which is also still investing for
growth.
"In New Zealand, Lumino The Dentists' successful marketing campaign has been
a key factor in the business significantly outperforming the market over the
last three years, on a same clinic basis.
"We are continuing to build our dental networks and, just as importantly,
investing into the culture, people, brands and clinical knowledge that are
key ingredients in our success. This heavy investment into the
'organisational glue' helps to align all stakeholders within our business and
is creating substantial value for Abano's shareholders.
"We are also investing into the growth of our audiology networks in Australia
and Asia and are seeing excellent progress, especially in Australia where
that business is now trading close to breakeven, many months ahead of plan.
This is the result of consistent and careful work by the new management team,
who delivered 17% year on year revenue growth during FY13, in a market where
two larger competitors saw revenues decrease.
"Our other growth business, Insight+Ascot Radiology, continues to focus on
building demand for the new technologies and clinics which have been
established over the last five years. We are taking steps to address the
fluctuating demand for some of these top end technologies and are confident
in the long term value inherent in this business.
"Abano's pathology business has recently agreed to a $26 million, one year
extension of the existing community pathology contract in the wider
Wellington region. It is now fully engaged with the DHBs to explore long term
solutions for a continuation of the existing service for all communities in
the region. The Orthotics Centre which operates in a fixed price, publicly
funded environment, continues to provide a solid performance and consistent
cashflows."
Chairman, Trevor Janes, provided an update on the company's guidance for the
half year ending 30 November 2013.
"While we expect Net Profit After Tax to be above the 2013 first half year,
revenue and EBITDA are expected to be slightly down, primarily due to soft
economic conditions seen in Australia. In addition, the strong New Zealand
dollar compared to the Australian dollar is having a non-cash but adverse
effect on our reported results.
"For some time now, we have been operating in a soft New Zealand and, more
recently, a soft Australian economy. We believe these conditions are cyclical
and not structural. They have been affecting the dental industry in New
Zealand, with a similar negative growth story now emerging in the Australian
dental industry as the softer economic conditions and the removal of the
Government-funded chronic disease dental subsidy impact on practice revenues.
"Dental, our flagship business, remains our major focus on both sides of the
Tasman, and we have accelerated our investment in the first half year as we
position our businesses for continued growth. While the new Millennium
radiology clinic is showing good results, the fluctuating and soft demand for
top end imaging technologies at Insight+Ascot Radiology, is also having an
impact.
"In addition and regrettably, the first half result will also include costs
being incurred by Abano in relation to the Archer/Hutson/Reeves proposal,
which under a normal takeover offer would be at the bidders' expense."
Abano is expecting the reported half year Net Profit After Tax (NPAT) to be
ahead of last year, at between $1.8 million to $2.3 million (HY13: $1.5
million). Reported revenue is expected to be slightly down at $104.9 million
to $106.9 million (HY13 $107.9 million) along with EBITDA at $12.9 million to
$13.9 million (HY13 $14.8 million).
Gross revenues which include the audiology group and Australian dental
revenues before payment of dentists' commissions are expected to be $120.5
million to $122.5 million (HY13 $119.7 million).
Underlying EBITDA excluding non-cash items required to be expensed under the
International Financial Reporting Standards (IFRS) is expected to be between
$13.8 million to $14.8 million (HY13 $15.4 million), resulting in an
underlying NPAT of between $2.5 million to $3.0 million (HY13 $2.7 million).
Trevor concluded: "The Board and management are confident of the significant
value inherent in Abano's long term strategy and we see the current softer
trading performance as a short term anomaly, primarily due to economic
conditions in Australia, and also reflected in the weakness in the Australian
dollar. Abano is in an exciting growth and investment phase as we build new,
valuable and sustainable long term businesses for all our shareholders."
Shareholders passed all resolutions at the annual meeting:
o Authorised directors to fix the auditors' remuneration
o Re-election of Mr Trevor Janes as a director
o Re-election of Mr Ted van Arkel as a director
o Ratification of issue on 2 September 2013 of 1,554,622 ordinary shares in
the Company
o Increase in total annual pool of funds that is reserved for flexibility to
provide additional remuneration for non-executive Directors, from $50,000 to
$150,000
ENDS
End CA:00244311 For:ABA Type:MEETING Time:2013-11-26 12:41:45
