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"Multiple Markets Focus for EBOS”

19 October 2005

"Multiple Markets Focus for EBOS”

Having diversified its operational base, EBOS Group Ltd is well prepared for any downswing in the economic cycle, and will continue to pursue growth prospects, chairman Mr Rick Christie told shareholders at today’s annual meeting of the company.

EBOS is active in three major sectors: healthcare, consumer healthcare and life sciences and the business has a market presence in multiple economies. Income streams are derived in New Zealand and Australian currencies and imports provide further balance.

“Whilst being wary of over-emphasising the downside risks, we are well positioned for any change in the business climate,” he said.

“The company strongly re-asserted its presence over the past year as the largest New Zealand owned independent national distributor and marketer of medical, dental and scientific supplies,” said Mr Christie.

He said the 23% rise in revenue to $280m this year reflects:

An increased contribution by the now 67% owned Global Science & Technology Ltd.

Initial contributions from newly acquired Australian assets.

The level of customer demand for products.

Sales and marketing performance sustained at a high level.

Borrowings rose to around $30m to help fund increased investment in life sciences and new acquisitions in Australia and required interest paid of $2.2m. This year’s expenditure of $14.8m on acquisitions is “effectively investment in future growth.”

Pre-tax profit was ahead by around 20%. Net profit of $9m enabled a record $5.5m to be paid as dividends. Shareholders have seen a 31% increase in dividend payments per share over the past two years.

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Whilst comfortable with present debt-equity ratios, directors expect there to be further opportunities for EBOS to expand its business. Accordingly, a range of funding alternatives may be considered.

The managing director and chief executive Mr Mark Waller told the meeting, “EBOS strategy is to extract more value from existing sectors whilst making new acquisitions with potential to quickly generate additional earnings.”

EBOS is creating a managerial talent pool to energise the still growing business and investing in new positions focused on exploiting new growth prospects.

“We aim to retain the small business attributes of flexibility, speed, energy, innovation and personal values and attain those related to greater scale including access to capital, cost savings and career opportunities for staff.”

Mr Waller described EBOS as a technology savvy business continually searching for new products or agencies to introduce into multiple market channels.

EBOS has centralised customer relations, built a common I.T. platform and consolidated Australian activities under the EBOS brand.

Health Support Ltd holds a cornerstone position in the supply of medical and pharmacy consumables and the contracts to supply the Auckland Regional Health Boards with medical consumables for a minimum term of 5 years represent revenue of the order of $350m between 2005-09.

EBOS Healthcare continues to perform well as a key supplier to hospitals, primary care providers and the aged care/rehabilitation sector. Whilst the pressure on health budgets is unrelenting, sales of medical technology by the hospital business unit are expected to continue in the current year with further hospital upgrades and construction scheduled in the public sector.

Sales of medical devices by the primary health business unit to community-based primary health organizations and clinics have ongoing prospects.

Excellent opportunities are seen for the relatively new business unit in Occupational Safety and Health, particularly in the areas of hearing protection, eye and face protection and respiratory protection. Aged Care and Rehabilitation is developing supply partnerships with rest home and private aged care providers.

The Consumer division is well positioned to sustain strong results in the pharmacy and retail grocery markets, variety and, baby products. The dental division is developing sales of high-end technology. International has a positive future with a good forward workload.

The 67% ownership in Global Science & Technology provides a stronger market position in scientific consumables, laboratory media and equipment.

Mr Waller said EBOS is moving strongly forward in life sciences via Global Science and newly acquired Australian businesses.

Over the medium term, EBOS aims to establish a buying company to source commodity type products from Asia. It will also develop export markets for house brands Anti-Flamme, Allersearch and LiceBlaster. Consumer Healthcare will be developed as another core business.

Interest in EBOS has grown in line with the company’s improved earnings trend. The number of shareholders has grown from 2421 in 2004 to 3080 this year.

On the current outlook, Mr Christie said directors are expecting "an intensely competitive and exacting year ahead, for which we are well prepared”

“At this stage, directors are confident that the current level of dividend payout ratio is likely to be sustainable in the 2006 year.”


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