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Abano reports lower half-year underlying profit

Tuesday 21st December 2010

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Abano Healthcare reported a half year underlying profit after tax of $2.8 million, down from $3.4 million the year earlier as conditions remained challenging.

The previous year's first six month result had included the operations of Bay Audiology, which was sold during the year ago period for a net gain on sale of $76.6 million.

The continuing dental, diagnostic and rehabilitation sector operations had revenue growth of 16%, from $74.8 million a year earlier to $86.7 million in the current half year to November 30, Abano said today.

In line with the past two years, a constant dividend payment of 21c per share was intended for the 2011 financial year. Therefore, an interim dividend of 7.3cps had been declared.

The half year result included a full contribution from Abano's jointly held shareholding in NHC Group, which was sold during the period with settlement after the period end. A gain on sale of about $12 million would be reported in the second half of the financial year.

Abano's net debt to net debt plus equity ratio was 19%, the company said.

Confirmed debt facilities of $45 million in New Zealand and $A25 million in Australia would be invested in the expansion of dentistry on both sides of the Tasman, radiology services in New Zealand and continued growth of Abano's joint venture audiology business in Australian and Asian markets.

Abano chairman Alison Paterson said economic and trading conditions had remained challenging during the first half of the year, while consumer and business confidence was still down going into the second half.

"While healthcare is relatively protected from economic downturns, many areas of our group are still dependent on discretionary healthcare spending and both the Australian and New Zealand economies remain very sluggish," Paterson said.

Policy changes in ACC referrals continued to affect several businesses, with no substantial improvement in performance, particularly the brain injury rehabilitation business which was almost totally funded by ACC and Ministry of Health contracts.

Abano's growth businesses continued to expand in the half year, with Lumino The Dentists acquiring a further four dental practices in this country. In Australia, Dental Partners acquired seven practices.

Audiology operations in Australia and Asia also grew, with Abano most recently announcing its entry into Taiwan through the acquisition of a small audiology chain, Paterson said.

Abano had decided to accelerate the relocation of its regional audiology support offices.

"Firstly, from Singapore to Hong Kong to allow us to have a refreshed senior team closer to the Chinese markets of Taiwan and Hong Kong and secondly, from Brisbane to Sydney, to be closer to the New South Wales and Victoria markets.

"These changes will have a one-off cost which will be accounted for in the second half of the 2011 financial year, but will position us well for long term growth."



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