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Abano first-half profit soars on asset sale proceeds

Wednesday 27th January 2010

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Abano Healthcare Group posted a surge in first-half profit on proceeds of the sale of its Bay Audiology unit that allowed it to slash debt and return funds to investors.

Net income jumped to $80 million, or 344.17 cents a share in the six months ended Nov. 30, from $4.1 million, or 13 cents, a year earlier, the Auckland-based company said in a statement. Earnings included a net gain on the sale of Bay Audiology in New Zealand of $76.6 million.

The investor in specialist health-care clinics such as dental surgeries returned $29.5 million to shareholders from the asset sale, via a special interim dividend and a pro-rata 1-for-3 share buyback and cancellation at $5.93 apiece.

Fewer shareholders than expected took the opportunity to sell back their shares, with the buyback under-subscribed by $28.6 million. While the company saw this as a vote of confidence, it meant only 2.9 million shares were cancelled rather than the 7.7 million expected, and as a result, the track of per-share earnings  would be lower than predicted, the company said.

The company has erased all of its New Zealand debt and its gearing ration has shrunk to less than 15%, mainly reflecting debt in its Australian dental business. In the first half, Abano trimmed its debt facility with ASB to $80 million from $100 million and cancelled some interest rate swaps.

“After retiring debt, this has left us with a very strong balance sheet to realize the long-term potential for growth and future investment in the years ahead,” said chairman Alison Paterson.

Abano has “ample funding” to invest more in its growing businesses, such as Audiology in Australia and Asia, dental in New Zealand and Australia and Radiology in New Zealand. The company’s move into Asia and Australia “is still very much in its infancy, it said.

Operating profit after tax fell to $3.4 million from $4.1 million, reflecting only five months of trading from Bay Audiology because of the sale.

Shares of Abano were unchanged at $6.08 and have climbed about 28% in the past 12 months, outpacing a 16% gain in the NZX 50.

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