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Abano Shareholder Newsletter Shows Improving Performance

Abano Shareholder Newsletter Highlights Improving Performance

Abano has today released its regular shareholder newsletter, which highlights the Company’s fast growing trans-Tasman dental businesses and the improving performance of its Australian audiology business.

It also mentions a number of accolades received by Abano from investment professional bodies and independent brokers. This includes two independent brokers’ upgrades that increased their target valuation recommendation for Abano shares (Forsyth Barr to $7.47 per share and Deutsche Bank to $7.69 per share). In addition, Abano was selected by Forsyth Barr as one of five companies which, in their opinion, are creating value by expanding their operations in Australia.

Abano was also a finalist in two categories of the 2014 Institute of Finance Professionals New Zealand (INFINZ) annual awards which were held recently. After winning the award in 2013 for Emerging Leaders Best Corporate Communicator, Abano was again nominated as a finalist in 2014 for this category in addition to being a finalist in the Mergers and Acquisitions Transaction of the Year award.

Managing director, Alan Clarke said: “The value of Abano’s long term growth strategy is now becoming apparent, and our FY14 Net Profit After Tax (NPAT) is forecast to increase by more than 60% relative to last year.

“The forecast improvement reflects the growing returns from our trans-Tasman dental consolidation businesses, as well as an improving performance from our start up audiology businesses in Australia and South East Asia. The audiology improvement is pleasing, given that, while not consolidated, the investment losses previously generated by this business have been a drag on Abano’s cash flows and have depressed our reported NPAT by over $18 million during the past four years.

“Our entry to Australia and then Asia took longer and cost more than planned. It was only after several changes were made to the local senior management teams in both Australia and Asia that we started to see improvements in performance.

“The new executive team in Australia has made a material difference and we have seen significant improvements in sales growth over the past two years. This improvement has provided us with confidence that this business is now on track to be a positive EBITDA contributor in the FY15 financial year, some 24 months longer than the three years that was contemplated at the start of the joint venture under Peter Hutson’s leadership.

“The significant value of the audiology business has become increasingly evident as shown through recent third party valuations and this improved performance supported our offer to buy the 50% shareholding of the Hutson interests for $12.9 million, to which there has been no response.

“With this business moving into profit and the dental group’s solid growth and increasing profit contributions, Abano shareholders are expected to enjoy increasing value from their investment.”

The Abano shareholder newsletter can be viewed on the Abano website www.abano.co.nz.

The Abano Board has also distributed, with the newsletter, a letter to the Company’s shareholders, restating their unanimous support for Chairman, Trevor Janes, and urging shareholders to vote against any resolution put forward at the requisitioned Special Meeting, to remove Trevor Janes from the Abano Board.

The Special Meeting has been requisitioned by interests associated with Peter Hutson and by James Reeves, following their failed takeover attempt of Abano last year and their ongoing personal attack on Trevor Janes, as they attempt to control the Company and the Board. Following approval from the NZX, a Notice of Meeting will be sent to shareholders.

While Trevor Janes abstained from the Board recommendation, the other Abano Directors noted: “Abano is a valuable Company with successful businesses and great potential. Based on their previous actions, we believe the reason Peter Hutson and James Reeves want to remove the Company’s Chairman is to exert control over the Board for their own benefit.

“We are happy for this to be determined by shareholders and we encourage all our shareholders to vote against any resolution for the removal of Trevor Janes as a Director of Abano, thereby endorsing the Board and the Company’s strategy. We trust that the shareholder vote will put an end to the ongoing dispute with Hutson and Reeves and allow us to continue concentrating on growing and improving Abano’s already valuable businesses.”

The Letter to Shareholders can be viewed on the Abano website www.abano.co.nz.

ENDS

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