Sydney, July 13, 2006 AEST (ABN Newswire) - IBA Health Limited (ASX:IBA), Australia's largest ASX listed eHealth company, today announced completion of the Joint Venture agreement with the SPK Group through its subsidiary Solutions Protocol and the receipt of the first order for licences under this agreement valued at over $6 million.
The completion of the Joint Venture agreement follows an announcement by IBA in May 2006 to enter into a joint venture with the SPK Group. 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.
Through the joint venture, IBA will be the exclusive supplier of hospital information systems to SPK and SP.
Executive Chairman of IBA, Gary Cohen said "the benefits of the Joint Venture are significant to IBA, as the agreement secures:
- A licence and services agreement contributing revenue of $47 million to IBA over three years, and which
1. locks in licence and service revenue of $21 million over the next three years, which would have been expected to have been earned under the existing arrangements with SP; and
2. contributes an additional $26 million in licence revenue over the next three years, which will lead to an additional $8 million pre-tax earnings each year for the next three years.
- Secures additional recurring revenue streams (after initial warranty period) in excess of $4 million per annum.
- Secures an exclusive health information technology and services supply agreement for SPK Group's construction projects in Asia and the Middle East
- Provides the scale to develop a regional health implementation and deployment capability which will generate a further revenue stream, reduce delivery costs and enhance project capacity.
- Provides the scale to attract regional and Malaysian Government incentives for the creation and localisation of health technology and services for Malaysia and regional export, for example:
- Tax relief for up to 10 years
- Foreign exchange flexibility and operation of foreign currency accounts including accounts for the retention of export proceeds
- Ability to remit funds globally
- Special visa programs for foreign workers
- Intellectual property protection
"The Asian market across the board is experiencing double digit growth rates for the take-up of health information technology and this agreement is a key part of our Asian growth strategy allowing IBA to accelerate growth whilst building a regional brand for the delivery and deployment of health information technology" concluded Gary Cohen.
Steve Garrington, CEO of IBA Health said "we have been building our Asian growth strategy over the last 2 years. The quality of earnings from recent wins with our partners in Malaysia and Thailand have laid the foundations for delivering sustainable revenue growth for IBA.
"Malaysia has a population of over 25 million and is investing heavily in health infrastructure across the country. The completion of the Joint Venture, along with our other planned growth activities cements our base of over 20 hospitals in Malaysia. We will leverage this base to become the largest provider of hospital systems to the Malaysian Ministries of Health and Education. This all adds to our market share and increases the quality of our recurring revenues from the region.
"We intend to establish a Regional Headquarters operation in Malaysia and we will use these investments to consolidate our activities in the region where we have been working with our partners for the past two years." concluded Steve Garrington.
For more information on IBA Health, please visit the Company's website at www.ibahealth.com
Contact
Gary Cohen
Steve Garrington
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