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Abano operating profit meets guidance at $4.4M, before Bay sale proceeds

Tuesday 27th July 2010

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Abano Healthcare posted full-year operating net profit of $4.4 million, in line with its guidance in March, and held off announcing a share buyback pending the possible sale of an associate company.

The earnings figure excludes a $77.1 million one-time gain from the sale of Bay Audiology. When that is included, net income was $76.9 million, up from $9.7 million a year earlier. Revenue fell to $178 million from $187 million.

The sale of Bay Audiology allowed Abano to return $29.5 million to shareholders through a special dividend and a 1-for-3 share buy-back and cancellation offer. The company had planned to announce a further on-market buyback after its results but said today that it would hold off pending the potential sale of National Hearing Care, a business in which it co-owns a 13% stake.

The company also suspended its dividend reinvestment plan while it awaits “greater clarity.”

“We still plan to implement a buy-back programme but we are aware there is now a growing discussion in financial and media circles surrounding the potential sale of National Hearing,” chairman Alison Paterson said.

The annual results also included a non-cash writedown of $4.5 million on the Abano Rehabilitation brain injury business, with changes to ACC funding leading to a deterioration in its financial performance, the company said.

Abano will pay a final dividend of 13.7 cents on August 17, making 21 cents for the year, unchanged from a year earlier.

The results were released after the close of trading on the NZX today. Shares of the company rose 1.9% to $5.39 and have declined 16% this year.

Abano’s ongoing focus will be to increase its investment in three sectors – audiology in Australia and Asia, dental in New Zealand and Australia, and radiology in New Zealand, Paterson said. The company also has pathology, brain injury rehabilitation and orthotics units.

“Although New Zealand remains our biggest geographical base, Australia and Asia now offer expanded potential and growth opportunities going forward,” she said. “Revenue sourced from overseas expected to increase to over 35% of Abano’s total revenue in the 2011 year.”

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