Abano provides market update and guidance

Abano Healthcare Group today provided guidance to the market for the full year to 31 May 2007.

On 21 December 2006, the company announced the results for the first six month period to 30 November 2006, which were above the market guidance provided in October 2006. Following the company’s trading over the Christmas/New Year summer break, the board has now revised its guidance for the full year to 31 May 2007.

Revenues for the full year are now expected to be $85 to $87 million (previously $79 to $83 million), Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $12 to $13 million (previously $9 to $10 million) and Net Profit After Tax $4.2 to $4.7 million (previously $2.6 to $3.1 million).

Managing director of Abano, Mr Alan Clarke, said: "As shown in previous years, the company’s second half year performance  is generally softer compared with the first half year, due to the Christmas, summer and Easter holiday breaks, where historically, there is a reduction in referrals and a reduced demand for healthcare services over these months.

"In addition and as previously advised, the new joint venture with Sonic in Pathology will impact with a reduced contribution in the second half.

"Abano has made excellent progress over the past six months and we have continued our growth, both organically and through acquisition.

"After eighteen months of careful investigation, the Abano board has determined that the Australian market offers significant potential for our Audiology business. Bay Audiology has therefore initiated a small investment in Queensland with the opening of two new branches in the inner suburbs of Brisbane and the acquisition of a further two clinics in coastal towns, north of Brisbane.

"The entry by Abano and Bay into this important new market, in this manner, is seen as being of low risk and offering potentially attractive investment returns through profitable growth. This investment is expected to generate a small operating loss in the current year, which has been included in the updated market guidance, and is forecast to become operationally cashflow positive during the 2008 financial year."

A separate operating company, Bay Audio Pty Limited, has been established as a subsidiary of Bay New Zealand and the practices will be managed by Andrew Campbell, an Australian qualified senior audiologist who has been with Bay New Zealand for five years. The business will be operated separately using the infrastructure and support of the existing and successful Bay New Zealand systems and senior management team.

Chairman of Abano, Mrs Alison Paterson, commented: "The board recognises that there are market differences as well as similarities in Australia, and the development of the Bay Audiology chain under an Australian subsidiary is a carefully planned and incremental entry strategy with significant future potential for Abano shareholders.

"Abano has a depth of operational experience in the Australian market, through our senior audiologists and Bay’s executive chairman, Peter Hutson who lived practiced and owned clinics in Australia in the early 1990’s. In addition, Abano’s managing director, Alan Clarke, successfully implemented and managed, over a six year period, a large medical services acquisition strategy for a Swiss based multinational, prior to joining Abano in mid 2000".

Directors also provided updated guidance for the 2008 and 2009 financial years, with revenues over $100 million (previously $90 million) and EBITDA over $15 million (previously $12 million)for 2008, and revenues over $110 million (previously $100m) and EBITDA over $17 million (previously $15m) for 2009.

Abano’s interim report for the six months to 30 November 2006 will be released and available in early February 2007.

Alan Clarke
Managing Director
Abano Healthcare Group Limited
Tel: 09 300 1412 Mob: 021 368 818.

More information on Abano Healthcare Group is available at www.abanohealthcare.co.nz.