ABANO HEALTHCARE GROUP 2016 ANNUAL MEETING
Business Update and FY17 First Half Guidance
Growth of Abano''s trans-Tasman dental group is driving an uplift in earnings
and profit, despite the sale of the audiology business in June 2016,
shareholders were told at the Abano Healthcare Group Limited (NZX: ABA)
annual meeting held in Auckland today.
Abano is expecting an increase of at least 35% in underlying NPAT from
continuing businesses for the first half of the 2017 financial year, due to
improving margins and growing revenues from Abano''s dental businesses, along
with steady growth from the radiology business.
Chief executive, Richard Keys, commented: "The $11-billion trans-Tasman
dental market remains our primary focus. With 196 practices, our Lumino the
Dentists group in New Zealand and Maven Dental Group in Australia form the
region''s second largest trans-Tasman network, and we are continuing to grow
them through the targeted acquisition of dental practices and selected
greenfield locations. Our goal is to become a $1 billion revenue company and
we are currently generating approximately $265 million in annualised gross
revenue from our dental businesses alone.
"Approximately 95% of Abano''s revenues will be generated by our dental group
in FY17, and we are continuing to invest into our successful marketing and
brand building, particularly in Australia where the new brand rollout
commenced in late 2015."
Chairman of Abano, Trevor Janes, commented: ""We see significant opportunity
in the $11-billion trans-Tasman dental market and we are well placed to
continue growing our market share through our fast growing dental networks.
Our radiology business also offers steady returns and growth potential. We
have well established businesses led by strong and experienced management
teams to enable us to execute on our strategy."
HY17 Business Update
Abano''s trans-Tasman dental network has continued to expand, with 12
practices expected to generate approximately $17 million in annualised gross
revenue acquired in the financial year to date. All acquisitions provide
immediate WACC accretive earnings. Development has also commenced on another
greenfield site, which is expected to provide a positive contribution in the
2018 financial year.
The more established Lumino The Dentists business has just completed its 11th
consecutive quarter of positive same store revenue growth, with marginally
positive same store growth in the year to date reflecting timing of
conferences and clinician leave during the period. The EBITDA margin has also
increased, continuing a five year trend of annual improvements in margin.
Marketing remains a big investment for the New Zealand dental business, with
every dollar spent on TV and online advertising generating approximately $5
in patient spend. Customer satisfaction is also an important focus, with a
current Net Promoter Score of 65. The latest initiative is the Lumino Dental
Plan which offers patients an affordable dental regime, for less than $1 a
day. This is proving very popular with existing and new patients, and is now
being rolled out across the network.
While Maven Dental Group is a younger business than Lumino, it is already the
second largest network in Australia. The challenging economic conditions in
Australia are ongoing and, corresponding with reports from other dental
corporates, Maven has also experienced a softer start to FY17, with same
store revenue down 8% year to date. This also reflects higher than normal
clinician leave during the period.
Initiatives are being put into place to reduce costs and improve performance
in Maven including the recent restructure of the Australian management team
to enable closer collaboration with the New Zealand dental business, as well
as some staffing efficiencies within practices. Marketing is an essential
element in Maven''s future growth, with the continuing rollout of the Maven
Dental Group brand and the introduction of targeted marketing campaigns and
initiatives, including the planned introduction of an interest free offer,
which has proven very successful in NZ. Online marketing activity will be
the main focus to drive new patients into Maven''s practices.
Maven has delivered improved margins in the year to date, reflecting early
benefits from these initiatives. However, investment into rebranding and
other initiatives will increase in the next few months and this will impact
the margin in the short term.
Radiology is also a valued part of the Abano portfolio. The focus remains to
drive demand for all Ascot Radiology''s services, including the latest
generation digital tomosynthesis mammography offer and PET-CT scanning.
Guidance for the Six Months to 30 November 2016
In summary, for the six months to 30 November 2016, earnings and profit will
be up on the prior comparative period, despite the sale of the audiology
business in June 2016, with a strong uplift in results when comparing
continuing businesses.
Based on the performance to date and current operating conditions, guidance
for the first half of the 2017 financial year is expected to be as follows:
Gross revenuesi are expected to be $135 to $140 million and revenue is
expected to be $113 to $118 million. EBITDA is forecast to be $14.4 to $15.6
million with underlying EBITDAii of $14.8 to $16.0 million. Net Profit After
Tax is expected to be between $4.5 to $5.1 million, with underlying NPAT
between $5.0 to $5.6 million.
The year on year comparison reflects the divestment of the audiology
shareholding late in FY16 which means there are no longer earning
contributions from this business in this financial period. Therefore, a like
for like comparison for HY16, excluding the audiology business, has been
provided to provide readers with further clarity on the relative performance
of Abano''s ongoing businesses.
Shareholders passed all resolutions at the 2016 Abano Annual Meeting:
Authorise Directors'' to fix the auditor''s remuneration
FOR 11,310,012 AGAINST 0 ABSTAIN 28,254
Election of Dr Ginni Mansberg
FOR 7,228,960 AGAINST 225 ABSTAIN 4,109,081
Re-election of Mr Danny Chan
FOR 7,194,751 AGAINST 4,109,080 ABSTAIN 34,435
Re-election of Mr Trevor Janes
FOR 7,189,868 AGAINST 30,275 ABSTAIN 4,118,123
Increase in directors'' remuneration
FOR 6,696,775 AGAINST 4,196,195 ABSTAIN 445,296
ENDS
End CA:00291406 For:ABA Type:MEETING Time:2016-10-25 13:10:49