ABA
29/07/2015 08:36
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REL: 0836 HRS Abano Healthcare Group Limited
FLLYR: ABA: ABA Announces Full Year Results and Increased Dividend
ABANO HEALTHCARE GROUP FULL YEAR FINANCIAL RESULTS ANNOUNCEMENT
Profit Results at Top End of Guidance
Healthcare investor and operator Abano Healthcare Group (NZX:ABA) has
continued delivering year on year growth with a result at the top end of the
Company's guidance for the financial year ended 31 May 2015.
Revenues for the year increased to $222.2 million, with gross revenues of
$300.4 million. This increase was primarily driven by Abano's expanding
dental businesses and strong growth from the Australian operations of the
Company's audiology joint venture.
Dental, audiology and radiology all maintained or improved margins during the
year. Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA )
were $29.6 million, with Underlying EBITDA , which excludes acquisition
costs, of $30.7 million.
The FY15 results reflect the divestment of the orthotics and pathology
businesses during the year and a corresponding loss in earnings contribution
following each business sale. The two business sales resulted in a $9.0
million non-cash loss and reduction in goodwill. Abano therefore reported a
Net Loss After Tax of $(1.3) million on an Underlying Net Profit after Tax3
of $8.8 million, which was 46% up on last year.
The Board believes that underlying earnings performance provides shareholders
with a more accurate portrayal of the Company's true performance on a like
for like basis with previous years and it is also the basis for the Company's
dividend policy.
Directors have confirmed a final fully imputed dividend of 15cps, taking the
full year dividend to 25cps, up 19% on the FY14 full year dividend. This is
equal to 59% of Underlying NPAT. The Dividend Reinvestment Plan (DRP) will
again be offered to shareholder. Historically, this has been well supported
with approximately 50% of dividends taken up in shares under the DRP.
OPERATIONAL COMMENTARY
Abano's investment strategy remains to invest into scalable growth
businesses, in the private, fee for service, healthcare market. We delivered
a pleasing improvement in our underlying performance in FY15 as we
restructured and re-focused our investment efforts into three sectors -
dental in New Zealand and Australia, audiology in Australia and South East
Asia and radiology in New Zealand.
Our trans-Tasman dental operations are our largest investment and they
delivered gross revenues of $211.1 million (Dental Partners A$114.3m and
Lumino NZ$88.5m), equal to 70% of Abano's FY15 gross revenue.
We have a growth strategy in place through both organic expansion of the
existing network and through the acquisition of new dental practices. In
FY15, we acquired 19 practices which we expect to contribute additional
annualised gross revenues of approximately $30 million (A$16.0m and NZ
$12.1m) and we opened one greenfield practice in New Zealand which is
performing strongly.
Abano's trans-Tasman dental group is the second largest in Australasia and we
continue to invest in infrastructure, expanding our resource base and
building our capabilities while gaining market share in the NZ$11 billion
trans-Tasman market. In New Zealand, Lumino again achieved steady compounding
same store sales growth in a recovering economy, while Dental Partners in
Australia was flat, reflecting Australia's slower economy and consumer
confidence.
Abano's joint venture audiology business, Bay International, delivered
NZ$40.1 million in revenue and provided 13% of our gross revenue for FY15.
Importantly after eight years of development losses, it achieved a positive
EBITDA in FY15, with strong year on year growth continuing.
Bay Audio Australia, which represents over 85% of audiology's revenues,
delivered a maiden net profit after tax, with same store revenue growth of
22% in local currency in a market that we believe saw less than 6% growth.
Three new greenfield stores were opened as a result of this improved
performance and all are performing well. Meanwhile, the very small Bay Audio
Asia business is now achieving breakeven at EBITDA in a challenging
marketplace.
Insight+Ascot Radiology delivered another year on year improvement in both
revenue and EBITDA. Revenue continues to grow as demand and referrals
increase for the business' high end imaging modalities and specialist
services across its five Auckland clinics.
During the year, we closed our rehabilitation sector following the sale of
our orthotics business and we divested our pathology investment, removing
almost all of our exposure to Government funding and fixed price short term
contracts. The proceeds from the sale were used to reduce debt and will be
reinvested in our growth businesses, particularly dental.
OUTLOOK
Demand for private healthcare and medical services continues to grow as aging
populations, new technologies and medical advances put increasing pressure on
public healthcare services. Abano remains the only NZX-listed opportunity to
invest into these sectors of the healthcare and medical services market.
Dental will remain our primary focus as we continue to build market share by
investing into both organic and acquisition growth, as well as realising
scale benefits across our substantial trans-Tasman group. There is now a
proven platform in place to support our ongoing expansion into the NZ$11
billion trans-Tasman dental market, with our focus on private payment for our
services delivering long term patient relationships. While the market in
Australia is currently soft, particularly for mid to high end treatments, we
believe that the market characteristics and long term growth opportunities in
both markets remain very attractive
Acquisition growth has continued in the first two months of the 2016
financial year with three large acquisitions delivering approximately NZ$9
million in additional annualised gross revenues. These take Abano's
trans-Tasman dental group to 176 practice locations across Australia and New
Zealand, with total estimated annualised gross revenues for the dental group
now in excess of $240 million as at today's exchange rate.
In New Zealand, Lumino's nationwide brand and marketing activity is an
established and integral part of the business' success. Over the next few
months, we will be launching a national brand for our dental network in
Australia. This will allow us to collectively promote the strengths of our
practices and enable us to stand out in this very large and competitive
dental market place.
We expect to see continued improvements from our Australian audiology joint
venture, with three new stores planned to open in the first half of FY16,
continuing double digit revenue growth and a full year net profit after tax
forecast for FY16. Bay Audio's Asian businesses, which are now under the
management oversight of the proven Australian management team, will focus on
delivering a breakeven performance.
Over 60% of Abano's gross revenues are now expected to be generated in
Australia and while economic conditions remain relatively stable in New
Zealand, the Australian economy is below historical trends.
We have an efficient balance sheet and strong relationships with our banking
partner, with improved pricing and tenure agreed in FY15. Year-end net bank
debt was $86.1 million and we have undrawn facilities of over $50 million,
providing headroom for continued growth.
We remain focused on our growth strategy and building long term value for our
shareholders. We expect to continue our track record of improved underlying
EBITDA and underlying NPAT growth in FY16.
KEY DATES
12 August 2015: Dividend record date
19 August 2015: Confirmation of issue price for shares under the DRP (Shares
will be issued at a 2.5% discount on the closing price)
21 August 2015: Dividend payment and issue of shares under DRP
ENDS
An analyst and investor conference call will be held on 29 July 2015 at
10.00am NZST to review the FY15 results and discuss the Company's outlook for
the 2016 financial year.
To attend the conference call, participants will need to dial into one of the
numbers below at least 5-10 minutes prior to the scheduled call time and
identify yourself to the operator. When prompted, please quote the conference
code: 1268089.
Dial toll free from NZ: 0800 450 585
Dial toll free from Australia: 1800 554 798
Other international calls (not toll free) +61 2 8113 1400
For more information, visit www.abanohealthcare.co.nz or please call:
Richard Keys
Chief Financial Officer/Chief Operating Officer
Tel: +64 9 300 1413 Mob: +64 274 818368
Abano Healthcare Group is New Zealand's leading listed specialist healthcare
investor and operator, with businesses in three sectors - dental, audiology
and radiology - and operations across New Zealand, Australia and South East
Asia.
End CA:00267559 For:ABA Type:FLLYR Time:2015-07-29 08:36:21
