Sluggish trans-Tasman economies to weigh on Abano
Nov. 30 (BusinessDesk) - Abano Healthcare expects first-half underlying net earnings will be between $2.6 million and $2.9 million but its second-half results will be well down on that.
Chair Alison Paterson told the annual shareholders' meeting revenues for the six months ended November 30 are expected to be between $85.8 million and $86.8 million while earnings before interest, tax, depreciation and amortisation will be between $9 million and $9.5 million.
The bottom line will be dragged down by recent changes in accounting rules to between $2.6 million and $2.9 million, Paterson said.
The new accounting rules “are generally non-cash and non-deductible for tax purposes and will have a negative impact on reported net profit,” she said.“However, they will not impact on the underlying earnings of the group which continue to increase.”
Abano will be reporting both accounting profit and underlying profit in future to provide “a more accurate reflection on the operating performance of the group,” Paterson said.
Abano's second half is always affected by the Christmas and Easter holidays and is traditionally softer than the first half anyway, but this year “the economies on both sides of the Tasman remain very sluggish,” Paterson said.
“While we are relatively protected from economic downturns, many areas of our group are still dependent on discretionary healthcare spending.”
Abano runs dental practices in New Zealand and Australia, is expanding its audiology practices in Australia and Asia and also has pathology, brain injury, radiology and orthotics operations in New Zealand.
The company reported a $76.9 million net profit for the year ended May 31 this year which included profits from the sale of its New Zealand audiology business.
Operating net profit was $4.4 million.It will book a further about $11 million gain from selling its stake in National Hearing Care in the second half of the current financial year.
Since selling its Eldercare business in 2005, Abano has returned nearly $40 million in capital to shareholders and was seeking approval from shareholders at today's meeting to return a further $27.3 million.
Managing director Alan Clarke told shareholders the share price has also performed well and $1,000 invested in 2006 would be worth more than $5,000 now, on top of the $1,200 in imputed dividends paid over this period.
Clarke outlined Abano's expansion plans. “We will grow our audiology business through investment into new and existing markets, using a measured entry and expansion strategy.
”But over the next few years, the dental operations will be the company's primary income generator, Clarke said.
Abano shares rose two cents to $5.09 in morning trading. They have traded between $4.85 and $6.25 over the last 12 months.