ABANO DELIVERS RECORD HALF YEAR RESULT IN LINE WITH GUIDANCE
Results for the six months to 30 November 2017
o Abano confirms record half year result in line with guidance
o Result driven by acquisition growth in the dental business, improving
dental same store sales growth and a solid performance in radiology
o Interim dividend of 16 cents per share declared
Abano Healthcare Group Limited (NZX:ABA) has today reported a lift in both
revenue and underlying earnings as it delivered a half year result in line
with its November 2017 guidance.
The company has benefitted from acquisition growth in the dental business and
a continuing trend of improving same store sales growth in both New Zealand
and Australia.
Based on unaudited management accounts, Abano has reported gross revenue of
$158.7 million (HY17: $138.9m) and revenue of $133.2 million (HY17: $116.8m).
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA ) were
$17.9 million (HY17: $16.5m), with Net Profit After Tax (NPAT) of $6.0
million (HY17: $5.9m).
The result is after non-cash expenses including accelerated depreciation
relating to the decision to relocate Lumino''s largest practice to a new
location in Auckland in early 2018 and a $0.2 million loss on sale on the
associated divestment of its small non-core laboratory business.
Abano also reports on underlying earnings which provides the basis of
Abano''s dividend policy. The Company''s Underlying EBITDA was $18.3 million
(HY17: $16.8m), resulting in an Underlying NPAT of $6.7 million (HY17:
$6.3m).
The directors have declared an interim dividend of 16 cents per share on all
shares (HY17:16cps), including those issued under the recent 1 for 5 rights
offer.
Chair of Abano, Trevor Janes, commented: "The record half year result
reflects Abano''s continued focus on growing its share of the $11-billion
trans-Tasman dental market and our goal to be a leading provider of dentistry
in Australia and New Zealand. Our strategy of dental practice acquisitions
and selected greenfield openings, combined with realising organic growth
opportunities, is continuing to deliver earnings growth."
(See table of pcp comparison in attached release)
Trading Performance Commentary
Abano Dental remains the second largest trans-Tasman dental group with 215
practices across Australia and New Zealand at half year end.
Growth is primarily through dental practice acquisitions which are providing
additional operational, scale and synergy benefits as the group continues to
expand. The acquisition opportunity, particularly in Australia, is
significant and remains strong, and Abano is taking advantage of this to
increase its acquisition rate above previous years.
In the first half of the financial year, Abano acquired ten practices,
expected to generate $18 million in annualised gross revenues, with several
larger acquisitions, with a corresponding higher purchase price, settling
later in the first half than anticipated. While incurring the acquisition
costs of these practices in the current financial year, their full year
contributions will not be realised until FY19. Since the end of November
2017, one further dental practice has been acquired.
In addition, Lumino the Dentists opened a new fully digital and purpose built
greenfield practice in Rangiora during the half year.
Abano is also focused on increasing same store sales revenue by expanding the
services on offer, increasing and maximising existing capacity, increasing
clinical days and continuing to invest into branding and marketing.
During the first half of FY18, Lumino in New Zealand reported positive same
store growth of 1.7% (HY17: 0%), despite being adversely impacted by the
winter storms and flu in July and a softer school holiday period in October
compared to the previous year.
Clinical days increased, although average revenue per dentist declined
slightly as expected, as a greater number of younger and less experienced
dentists replaced a higher than average number of senior retiring dentists in
the previous financial year as part of Lumino''s succession planning. A key
focus for Abano is clinical training and development of staff and it is
anticipated that the daily revenue rate of these younger dentists will
increase over time.
Economic conditions are a key influencer on the dental industry, with
non-urgent dental services often considered a discretionary healthcare spend.
The Australian economy remains challenging with recent economic reports
indicating spending on almost every discretionary purchase was down in the
September quarter, with the lowest household consumption growth since the
global financial crisis.
To combat this environment, management are focused on initiatives to
encourage new and repeat patients visits. Maven Dental Group is showing
improvements with positive same store sales growth for three of the six
months in the first half. Overall, same stores sales was -1.6% for the half
year (compared to -5.8% for the first half of FY17 and -4.4% at the end of
the FY17 year).
Investment continues to be made into driving the performance of both the New
Zealand and Australian dental businesses.
Initiatives include the rollout of online bookings; the rebranding of
existing practices in Australia; the commencement of the new Australian
patient contact centre; and the rollout of the new CRM and analytics systems
in Australia which are providing greater depth of data with which to manage
the business. Early benefits are now starting to be seen with these short
and long term initiatives.
Dental margins for the full year are expected to be in line with the
previous financial year, despite the increased investments being made into
marketing, technology and branding and the same store revenue performance in
Australia.
Ascot Radiology delivered both revenue and EBITDA growth for the first half
year as it focused on widening its referral base and working closely with
local GPs. Abano has today announced a conditional agreement to sell Ascot
Radiology to Abano''s radiologist shareholder partners for a total
consideration of $17.0 million with settlement expected in late February
2018. The sale will complete Abano''s transition into a single focus dental
group and sale proceeds will be used to fund the continuing growth of the
dental group.
Key Dates:
o Interim Dividend Record Date: 9 January 2018
o Interim Dividend Payment Date: 19 January 2018
o Release of HY18 Interim Report: By end-February 2018
o End of FY18 Financial Year: 31 May 2018
ENDS
End CA:00312216 For:ABA Type:HALFYR Time:2017-12-20 08:38:58