Abano flags softer bottom line in first-half on charges; revenue climbs

Monday 7th November 2011

Abano Healthcare, which invests in specialist health clinics, expects weaker first-half profit on administrative charges, even as its boosts sales by as much as 19 percent.

Outgoing chairman Alison Paterson told shareholders at their annual meeting in Auckland the company faces some charges to the bottom-line, even though it expects to see underlying earnings and sales growth.

That includes new finance and depreciation costs, as well as accounting rule charges due to the International Financial Reporting Standards (IFRS) regime, which will leave net profit between $200,000 and $700,000 in the six months ending Nov. 30, down from $2.2 million a year ago.

“Our accelerating dental acquisition programme will result in full IFRS reporting charges, but will only show a small portion of their full period performance benefits,” Paterson said in speech notes lodged with the NZX. “We are expecting continued revenue and EBITDA growth but a flat second half net profit after tax, after all IFRS non-cash charges are taken into account.”

Abano expects first-half revenue to be between $101.5 million and $103.5 million, up from $86.7 million a year earlier, while earnings before interest, tax, depreciation, and amortisation are forecast to be between $11 million and $12 million, up from $9.4 million a year ago.

The shares fell 1.4 percent to $4.28 in trading today, and have shed 10 percent this year.

Still, the health clinic investor expects rapid growth beyond this year as governments look to private healthcare providers to mop up excess demand, and is also looking to grow offshore sales to account for at least half of its revenue by 2015.

“Our aim is to continue this growth rate through acquisition, organic growth of existing businesses and long-term co-investment partnerships in new businesses where we see both growth and profit enhancement opportunities,” Paterson said.

Abano said it expects to be making annual dividend payments of at least 21 cents per share by 2015 on the back of its growth strategy. That’s what it paid out in the 12 months ended May 31, and the previous two years.

Today’s annual meeting was Paterson’s last as chairman, and she is succeeded by her deputy Trevor Janes.

BusinessDesk.co.nz

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