Abano delivers second year of strong profits

Abano Healthcare chairman Trevor Janes (R) and Abano chief executive Alan Clarke (L). NZH pic

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

Profit climbed to $6.1 million in the year ended May 31, from $2.8 million a year earlier, the Auckland-based company said in a statement. Sales climbed 2 per cent to $274 million.

That's the second year in a row that profit has climbed 75 per cent 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 per cent to $6.15 and are rated a 'buy' based on two analysts who follow the stock, having declined about 3.5 per cent 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 focusing 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 per cent of the company.

Hutson owns the other 50 per cent 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.