Wakefield result a boon for Fisher Funds, AMP Capital

Fisher Funds, AMP Capital Investors and Masthead Investments all have something to smile about after an impressive full year result from Wakefield Health.

The three firms are all substantial shareholders in the NZX-listed private healthcare company, which yesterday posted a net profit after tax up 41.4% to $10.13 million.

This was achieved through improving margins, with revenue increasing by just 10.3%. The comparable profit from continuing operations was up 27.9%.

“Revenue growth reflected both increases in in-patient numbers and a favourable case mix driving increased utilisation of hospital facilities,” Wakefield comments in its announcement.

AMP Capital Investors has a 12.92% stake in Wakefield.

Its head of New Zealand equities Guy Elliffe says he was very pleased with the result, which shows Wakefield has been achieving growth while keeping costs under control, allowing it to expand margins.

The dividend was also up strongly, with a final dividend of 15c bringing the year’s total to 25c, an increase of 25%.

Mr Elliffe is impressed that Wakefield has been carefully eying potential acquisitions rather than bowing to the temptation to take the first opportunity that presents itself.

The company has made no secret that it wants to expand but, as yet, hasn’t found an acquisition for which the business case stacks up.

Wakefield Health chief executive Andrew Blair says the company evaluated several acquisition and expansion prospects during the year, but none were able to meet the board’s criteria for growing shareholder value.

“While we are taking a measured approach in the current economic environment, the company continues to believe that further consolidation in the private surgical industry is both desirable and inevitable, and we remain well positioned to respond to any opportunities which may emerge.”

Wakefield’s gearing at March 31 was just 6%, compared to 16.3% a year ago.

The company says it has contracted volumes in both the Hawkes Bay and Wellington through until 30 June 2009, but volumes beyond this remain uncertain.

The financial mire that ACC is in could have negative repercussions for bookings in the future, and the revenue gained from elective surgery performed under contract from District Health Boards is volatile.

“In the current environment there is a risk that self funded patient numbers will decline and also that those insured patients with a substantial excess in their policy will be less able to fund major surgeries. 

“The group has experienced some slowing in patient numbers in recent times that may indicate some near-term weakness in the market,” it says.

Both Fisher Funds and Stewart family investment vehicle Masthead Investments appeared on the Wakefield Health share register in mid 2008.

Fisher Funds senior investment analyst Murray Brown says Wakefield is in the “sweet spot” for Fisher as it is a relatively small company with high growth.

“We like investing in industries where there’s a tailwind,” he says – in Wakefield’s case, these are New Zealand’s aging population and under-resourced public health sector.

Fisher Funds has an 8.08% stake in Wakefield.



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