23 Dec 2013

Abano rules out further corporate activity

7:15 am on 23 December 2013

Abano's board has ruled out any of the alternative approaches it received during the informal take-over attempt by Archer Capital and former director Peter Hutson.

However, the board says those alternative proposals did give it additional confidence about Abano's current and long-term potential.

Managing director Alan Clarke says all the interest centred on the company's growing dental operations.

He says at there was a very visible approach from the Archer Group, and on the back of that there were a couple of approaches to the company which had indicated an interest in Abano.

Mr Clarke says some of the indicative values that were tabled were above the indicative, conditional, non-binding, confidential values under the Archer Hutson process.

He says when the approaches were examined in more detail it was found that they were invalid or more work needed to be done.

"We felt at the time it was important that the market understood that there were other approaches. Where we're at at the moment is that those conversations have ceased and are not progressing so again we just wanted to make sure that that was understood."

Abano's first-half profit rose 31%, largely because losses from its greenfields audiology businesses dropped by two-thirds.

Despite this, the operating profit of the key dental business, which accounts for nearly 70% of gross revenues, fell 16.3%.

That was despite the company buying a further 10 dental practices in the six months and three more since balance date.

Alan Clarke says the high New Zealand dollar - more than 50% of Abano's total business is now in Australia - the ending of an Australian government subsidy and the slowing Australian economy dragged on the dental division results.

He says the company intends to continue to buy dental practices and is looking at one acquisition about every two weeks.

Mr Clarke says other dental consolidators in Australia suffered more than Abano from the withdrawal of the subsidy.

He says the Abano dental operations have achieved compound annual revenue growth of 36% over the last three years while the next highest-performing Australian consolidator of dental practices achieved only 22% annual growth.