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Abano achieves second year of 75% profit growth

Abano Healthcare [NZX: ABA], the medical investor fending off a hostile takeover from its biggest shareholder, posted a 75 percent jump in full-year profit, beating guidance and allowing it to maintain dividend payments for a sixth straight year.

Net profit jumped to $4.9 million in the 12 months ended May 31, from $2.8 million a year earlier, the Auckland-based company said in a statement. Underlying profit, which excludes one-time items and accounting adjustments, climbed 35 percent to $6.1 million. Sales climbed 2 percent to $211 million.

That's the second year in a row that profit has climbed 75 percent and the company said today it expects to list earnings again in 2015, allowing it to lift dividends starting in the first half of the current year. The shares rose 1.5 percent to $6.15 and are rated a 'buy' based on two analysts who follow the stock, having declined about 3.5 percent this year while the nation's benchmark stock index gained.

Abano's trans-Tasman dental business was the biggest contributor to revenue growth in the latest year, along with the company's Australian audiology joint venture and it said today that "growth through acquisitions is still the key focus for the dental sector as we build scale in this very large and attractive market."

"The increasing size of the dental group is providing a stronger negotiating position with suppliers and more economies of scale are being achieved," it said.

The weak Australian dollar had eroded returns from dental, slicing about $14.3 million off gross revenues and $1.8 million off underlying Ebitda, versus a year earlier. Abano's Bay Audio Australian joint venture reduced its losses in the latest year while its Bay Audio Asia group "is still focussing on achieving a monthly Ebitda breakeven performance," the company said.

Abano will pay a final dividend of 13.7 cents a share, making 21 cents for the year, with a record date of Aug.11.

At a special meeting on June 13, dissident shareholders Peter Hutson and James Reeves lost in an attempt to oust chairman Trevor Janes, who has led opposition to their takeover attempts. Hutson and Reeves control close to 20 percent of the company.

Hutson owns the other 50 percent of Abano's Bay International audiology business and would have gained full control for a nominal sum under last year's aborted takeover. He was removed from the board last September.


Comments and questions

What a great result after a tough year. A projected increase in dividends is great news for shareholders who have hung in there. Watch this space. A possible takeover from someone who can put their money where their mouth is.

The share price today confirms the market likes the result and the possibility of a higher dividend. Thanks to a board who considers all shareholders not just the big shareholders.

Gordon, I'm not sure if 15000 shares trading at 1.40 less than what the Hutson group proposed and $3 or so less than the so called "independent" valuation the Abano board paid for to discredit that proposal is something to crow about.

You are confusing valuations including a premium for 100% control vs buying some shares on market. Also interesting to see the broker reports coming out now supporting Abano and at a higher price than Hutson/Reeves were trying to get Abano at. But I guess you will say they are not "independent" too?

There has been much talk by this outfit about how valuable they are (they spent $700,000 on their campaign doing so!) but the market does not believe them. This is probably because of a consistent failure to deliver a decent return on investment (except when they sold Peter Hutson's audiology business) and a history of debt fuelled revenue growth at the expense of profitability. The brokers under pressure from Abano's board of influential professional directors and institutional holders (ACC, Milford etc) took a self interested stand - as they are entitled to do - and now are trying to justify it. Fantastic if they can but history would suggest otherwise and if the results don't start backing up the talk and the share price continues to linger nowhere near the fraudulently named "independent" Grant Samuel valuation, this lot should be run out of town.

The Chairman allowed expenditure of $700,000 of Company money to protect his own job? Gobsmacked. This cannot be justified.