Sydney, May 9, 2006 AEST (ABN Newswire) - IBA Health Limited (ASX: IBA), Australia's largest ASX listed eHealth company, today announced three transactions that will accelerate its Asian growth strategy and position the company as the leading Health IT provider in Asia.
The transactions are:
- A long term contract with Solutions Protocol (SP) to supply IBA's hospital information systems to the Malaysian Ministry of Health for a further 10 public hospitals; and establishment of a joint venture with SP's parent, SPK Group.
- Entry into the Chinese market through the acquisition of the Malaysian hospital information systems company, HealthLogic Sdn Bhd, and its Shanghai associate, Ying Shen Infocomm.
- The acquisition of the primary care systems group, Monet Technologies which will provide products and capacity to deliver enterprise solutions to community medical centres in Asia, which are the fastest growing segment of that market.
The combined investment (cash and shares) for these transactions will be A$33 million as detailed below.
These transactions will contribute an additional A$60 million of revenue over the next three years.
IBA has also issued the following guidance for FY2007 which shows an increase to the current EPS (earnings per share) by 2.5 cents per share.
FY 2007Guidance FY 2006Guidance A$Millions A$Millions----------------------------------------------------------------Revenue 74-76 55-57Net Profit Before Tax 25-26 14-15Net Profit After Tax 23-24 12.5-13.5EPS 7 cps* 4.5cps--------------------------------------------------------------------*Assumes dilution from issue of additional shares
Executive Chairman of IBA, Gary Cohen said "These transactions will take IBA to a new level, with a strong market position in Asia and a significant increase in sustainable earnings.
"As we announced at the time of our half year results, IBA planned to build a substantial business in China. With the acquisition of HealthLogic we will have a strong base, with existing top quality reference sites in Shanghai, and ongoing revenue on which to grow our business in China and take advantage of its double digit growth in health technology expenditure.
"With the joint venture in Malaysia we will be the largest provider of hospital information systems to the Malaysian Ministries of Health and Education. Malaysia has a population of over 25 million and is investing heavily in health infrastructure across the country.
"Our joint venture provides the opportunity to increase our expanded Malaysian base of 25 hospitals and establishes a large and profitable supply contract," concluded Gary Cohen.
Steve Garrington, CEO of IBA said "These acquisitions provide quality earnings capitalising on our investment in India, and position IBA to take advantage of the numerous opportunities in Asia and particularly China. Using these investments as a base we will establish a regional headquarters in Malaysia. This will give further momentum to our growth in Asia."
Details of the Transactions
Joint Venture with SPK
SPK, through its subsidiary Solutions Protocol (SP), has a Concession Agreement with the Malaysian Ministries of Health and Works to supply health information systems to thirteen public hospitals. IBA India has supplied hospital information systems to SP for three of these hospitals and a fourth Ministry of Defence hospital.
IBA and SPK have entered into a joint venture to deliver and support hospital information systems in Malaysia. IBA will be the exclusive supplier of hospital information systems to SPK and SP. The further rollout to the remaining hospitals is dependent upon Malaysian Ministry of Health approval, which is expected imminently.
The benefits of these arrangements are:
- A licence and services agreement contributing revenue of A$47 million to IBA over three years, and which;
a. secures licence and service revenue of A$21 million over the next three years, which would have been expected to have been earned under the existing arrangements with SP; and
b. contributes an additional A$26 million in licence revenue over the next three years, which will lead to an additional A$8 million pre-tax earnings each year for the next three years.
- Additional recurring revenue streams (after initial warranty period) in excess of A$4 million per annum.
- Local skills and services to develop a regional health information systems implementation and deployment capability which will generate further revenue streams, reduce delivery costs and enhance project capacity.
IBA will invest A$18.5 million for a 49 per cent interest in the joint venture and issue to SPK 7 million IBA shares escrowed up to 12 months. The funds will be provided by the joint venture to finance SP's implementation of the Concession Agreement.
Acquisition of HealthLogic
HealthLogic, is a Malaysian health information systems company which has eleven private hospital clients in Malaysia and Indonesia and controls Ying Shen Infocomm Pte Ltd, a Chinese health information systems company based in Shanghai and Beijing.
Ying Shen has contracts with three of Shanghai's largest teaching (Level 3A) hospitals, including Renji (which is also a Kodak reference site), Songjian and the newly constructed Huashan International Hospital (Pudong) which is associated with Harvard Medical International.
The acquisition will provide prestigious reference sites, positive revenue streams and a quality work force based in Shanghai.
The Chinese market for health information technology is growing at a double digit rate, fuelled by re-development of China's 65,000 hospitals and 200,000+ health and medical institutions.
IBA will acquire HealthLogic and Ying Shen for a total of A$5.9 million to be satisfied, at IBA's option, by cash or 7 million shares at an issue price of 85 cents (40% of the shares escrowed for 12 months). A further A$4.6 million may become payable based on an earn-out over two years. The acquisition will be earnings accretive.
Acquisition of Monet
Monet Technologies is a company that supplies enterprise wide primary care and clinic solutions.
In 2005, IBA acquired the exclusive Australian and New Zealand distribution rights to Monet's product, which is currently used by Independent Practitioner Network's one thousand independent clinicians. IBA's acquisition will bring technical and marketing skills that will enable IBA to deliver complementary product to community medical centres in Asia.
Under the terms of the distribution agreement, IBA was due to pay Monet A$2 million in two A$1 million tranches in June 2006 and 2007. Under the proposed terms of the acquisition IBA will issue to Monet 2.35 million IBA shares (50% escrowed for one year) on completion. In addition IBA will issue to Monet 5 million options over IBA shares at an exercise price of A0.85 cents, subject to performance. The earliest date for exercise of these options will be June 2008.
Funding
The joint venture agreement with SPK is conditional on IBA raising A$18.5 million for its investment.
IBA has mandated ABN AMRO Morgans and BBY to advise IBA on raising A$35 million to fund the joint venture, retire bank debt and provide additional working capital.
Source:
Fergus Ross
www.fcr.com.au
Contact
Gary Cohen
Executive Chairman
Phone: +61 2 8251 6700
Email: gary.cohen@ibahealth.com
Steve Garrington
CEO
Phone: +61 2 8251 6700
Email: steve.garrington@ibahealth.com
| ||
|
