Changes to ACC rules hurt Abano

Alison Paterson. Photo / Paul Estcourt

Abano Healthcare is expecting its second-half earnings to be weaker than planned, due to a temporary slowdown in its Australian Audiology business, and ACC changes in this country.

Company chairwoman Alison Paterson said that before the gain made on the sale of Bay Audiology in New Zealand, revenues for the full year to May 31 would be between $175 million and $180 million.

Operating earnings before interest, tax and amortisation would be between $18 million and $22 million, and net profit after tax (npat) would be between $4 million and $4.5 million.

Paterson also announced Abano would be altering its annual dividend policy of 50 per cent npat for the 2010 financial year, and would maintain last year's dividend per share for this financial year.

A dividend of 21c per share would be paid for the full financial year ended May 31.

In November an interim dividend of 7.3c was declared, excluding the special interim dividend payment made following the sale of Bay Audiology.

The balance of 13.7c would be paid in August, Paterson said.

The change in dividend policy was partly due to lower than planned earnings per share for the full financial year, which came about after a share buyback and cancellation offer was undersubscribed, leaving Abano with 4.8 million more shares on issue than planned.

Other factors in the change of dividend policy for 2010 included Abano's strong capital structure, lower than planned levels of debt, and confidence in mid and long-term growth prospects.

Abano also said it would soon announce details of an on-market, share buyback programme.

Abano managing director Alan Clarke said brain injury rehabilitation work flow and referrals were markedly down and income has been adversely affected by ongoing changes to ACC rules.

Abano had halted the expansion of its joint venture audiology business in Australia in December as it consolidated 10 new greenfield clinics opened since the beginning of the company's financial year, Clarke said.

The company also noted a downturn in Office of Hearing Services (OHS) coupons for hearing devices being approved.

That slowdown appeared to be due to an administrative process change by OHS, which halved approvals in January and February.

Approvals had grown in March and were expected to increase to normal levels into April.

Abano said that following the sale of Bay Audiology in New Zealand, it had continued to expand in the second half of the 2010 financial year, with new acquisitions and organic growth in targeted healthcare sectors.

The company's dental sector was playing an increasingly significant role within the group with accelerated growth plans in place in both this country and Australia.

Lumino The Dentists in New Zealand had grown to 49 practices with the acquisition of Duncroft Dental in Dunedin in February, on top of six practices bought in the first half of the 2010 financial year.

In Australia, a further three practices had been added to the Dental Partners business in the past four months.

Abano said yesterday that it was also acquiring the Orthotics South Island business, which would expand the national footprint of Abano's orthotics business.

The company was also investing in audiology in Australia and Asia for the medium and long term. NZPA