Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Abano tips positive earnings from struggling audiology JV

Abano tips positive earnings contribution from struggling audiology JV in next financial year

By Paul McBeth

May 20 (BusinessDesk) - Abano Healthcare, the medical investor embroiled in a dispute with its biggest shareholder, anticipates its Australian and Asian audiology joint venture will start making a positive contribution to earnings in the next financial year.

Bay International, which is jointly-owned by Abano and dissident shareholder Peter Hutson, is on track to break even on an earnings before interest, tax, depreciation and amortisation basis, after boosting Australian sales in recent years, Abano managing director Alan Clarke told Radio New Zealand. Abano appointed a new chief of its Australia audiology unit, and opened new outlets in malls rather than using the stand-alone suburban hearing aid clinic model that had proved successful in New Zealand.

“Over the last 18 to 24 months, that has really moved that business now to the level of breakeven and where it will start laying down positive earnings going into the new financial year,” Clarke said.

The audiology unit has been a perennial underperformer since the successful sale of the New Zealand business in 2009 for $158 million to National Hearing Centre. Abano retained the Australian and Asian businesses, letting Hutson lift his stake to an equal share from 40 percent, with an $11 million payment used to leave the unit debt-free.

At the time of the transaction, Bay had $17.3 million in assets and the same amount in liabilities, and was forecast to be loss-making for the following two years, according to a KordaMentha independent adviser’s report on the transaction. The KordaMentha report said the transaction was fair to Abano shareholders not associated with Hutson.

Since then, the audiology unit’s assets rose to $22.3 million as at Nov. 30, while its liabilities climbed to $47.1 million. It made a first-half Ebitda-loss of $3.3 million in the six months ended Nov. 30, down from a loss of $6.2 million a year earlier.

Hutson and fellow shareholder James Reeve are agitating for change on the Abano board, seeking a special meeting to dump chairman Trevor Janes.

Hutson was a director of Abano until last September when he teamed with and Reeves to mount a full takeover bid for Abano pitched as high as $7.80 a share. The board rejected the offer, relying in part on a report by investment house Grant Samuel, which Hutson and Reeves says gave an inflated valuation.

The aborted bid was backed by private equity firm Archer Capital, which would have sold the audiology unit to Hutson for a nominal sum, retaining the rest of Abano’s businesses.

Last month Abano offered to buy out Hutson’s stake for $12.9 million, below the bottom end of the $16.7 million and $19.8 million range in a Grant Samuel independent adviser’s report commissioned in anticipation of a takeover offer.

The Grant Samuel report said Bay International was loss-making in Australia, with “significant potential to expand and generate good earnings once the new store development is recommenced,” and breaking even in Asia.

“Despite Taiwan having considerable potential for growth given the very low penetration of audiology outlets, Grant Samuel is not convinced that Bay International has developed a workable strategy for achieving sustained growth in this market,” the report said.

Last week the Employment Relations Authority upheld Abano’s right to sack Peter Hutson and his wife Anya from their positions at Bay as chief executive and human resources director, which was written into their temporary contracts in 2009. The Hutsons claimed Abano’s right to terminate their employment fell away after the end of the three-year term of their contracts, something the ERA rejected.

Abano sought to oust them after the Hutsons turned down a suggestion that protocols be put in place to manage conflicts of interest when Peter Hutson’s involvement in a takeover bid emerged last year.

The termination of Hutsons’ employment doesn’t affect their shareholding or rights to board representation, though the KordaMentha report cites a five-year non-compete condition in the shareholders’ agreement after Peter Hutson ceases to be an employee or sells his shares.

Hutson was seen as the driving force behind the successful New Zealand audiology expansion, and Abano backed him to do it again in Australia and Asia after selling the local business.

Abano shares were unchanged at $6.93, and have gained 8.8 percent this year. The stock is rated an average ‘buy’ according to two analyst recommendations compiled by Reuters, with a median target price of $7.58.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news