Sydney, Aug 31, 2006 AEST (ABN Newswire) - IBA Health Limited (ASX: IBA) Australia's largest ASX listed eHealth company today announced a record net profit after tax of A$15.26 million. The net profit before tax of A$15.63 million was ahead of the revised guidance of A$14 - A$15 million provided to the market in May this year and up 6.7% from the prior corresponding period.
Net profit before tax, before a restructuring charge of $3.16 million and an impairment charge of $0.9 million, was $19.7 million, an increase of 40% over the prior corresponding period.
Revenue from operations was $58.4 million also ahead of the revised guidance of $55 - $57 million and a 43% increase over the prior corresponding period.
Earnings per share were 5.8 cents an increase of 29% from the revised guidance provided.
A final dividend of 1 cent per share has been declared by the directors, payable on 16 October, 2006. Total dividends for the financial year will be 1.5 cents per share an increase of 50% over the previous corresponding period.
IBA today also announced a dividend reinvestment plan (DRP). This will enable shareholders to reinvest their dividend into IBA shares at a 5% discount to the IBA share price for the 5 days following the dividend record date.
The DRP will be available for this year's final dividend provided the company receives notice before the record date of 3 October, 2006. ABN AMRO Morgans and BBY are jointly underwriting the shares not subscribed for by shareholders.
Executive Chairman of IBA, Gary Cohen, said "2006 year was a record breaking year for IBA Health with results above the upper end of the revised guidance provided to the market in May, 2006.
"This strong performance came from operations throughout the group which benefited from the acquisition of MEDICOM, completed in December 2005, and the success of our international sales programme particularly, in South Africa, Malaysia and Thailand."
"With our world class solutions, our low cost infrastructure, our Centre of Excellence in Bangalore and our network of offices throughout the region we are well positioned to capitalise on a number of major international opportunities" said Gary Cohen.
Operational Review
IBA Health provides information systems for the healthcare industry, whether they be healthcare professionals, providers or payers. IBA's business is carried out in over 23 countries and covers some 5,500 health care provider organisations ranging from a 3,000 bed Hospital in South Africa through to a small clinic in rural Australia. Customers are serviced through offices and staff in eight countries that serve hundred's of thousands of health care users of IBA's electronic health information solutions.
Further Success in Increasing Sales
This year we were successful in winning over $29 million of new sales, including:
- Sisters of Charity St Vincent's, St George's & Caritas Christi
- St John of God - the third largest "Not for Profit" operator in Australia
- Southern Cross Group - the largest private hospital operator in New Zealand
- Siriraj Hospital - Thailand's oldest, and one of their largest hospitals
- Ministry of Health public hospitals - Malaysia
- University of Malaysia Medical Centre - a large teaching hospital in Kuala Lumpur
- Johns Hopkins in Singapore
- Ministry of Health public hospitals - Province of Limpopo, South Africa
- Ministry of Health public hospitals - Republic of Sudan.
In addition to the initial licence and implementation fees that these sales generate, they also bring recurring annual licence fees after their respective installation and warranty periods. These provide an important and growing annuity stream raising the quality and certainty of IBA's future revenues.
The eHealth Networks business covers payments and transactions for both GP's (Medicare) and ancillary health care providers (private health funds). In the GP segment - there was a small decline in revenue whilst the Australian Government reviewed its options for a private industry role with GP claiming. The Australian Government has announced some significant new initiatives to allow private industry to participate in this area which may provide some incremental opportunities. In the ancillary health care sector the business has continued to show improved performance. More than 16 private health funds are now part of the growing IBA network and we expect that to further expand during the next 12 months.
Reducing the Cost of Product Development & Delivery
The acquisition of MEDICOM which was completed in December 2005 has enabled the company to move a substantial part of its development to its Centre of Excellence in Bangalore, India, where today it has approximately 180 personnel in its own premises in Electronic City. The integration is well on track and we expect to complete this process by December this year. We are beginning to see the benefits of a substantially lower cost of development.
We have incurred a restructuring charge of $3.16 million in the FY 2006 year in implementing this strategic move to establish a lower cost base for the business. This is further underpinned by our sales and delivery functions that are increasingly based close to our customers. In FY 2007, the company will start to derive the benefits of the planned cost saving of up to $4.5 million per annum from moving the development to Bangalore.
Accelerated International Expansion
The company has been expanding globally. We have established offices in Asia in Kuala Lumpur, Malaysia - where we have secured Regional Headquarter (MIDA) and MSC status; in Bangkok, Thailand and in Shanghai, China. These are in addition to our subsidiaries in Singapore and in Bangalore, India. In South Africa we have established a local subsidiary and an office in Johannesburg. We already have an established presence in the Middle East in Muscat, Oman.
The company completed a $28 million equity raising in June this year. 85% of the amount raised was taken up by Australian and International Institutions, bringing over 500 new shareholders onto the IBA share register. The funds from this raising enabled IBA to complete its joint venture with the Malaysian SPK Group and its acquisition of the Healthlogic group and thereby consolidate its position as the leading provider of hospital information systems across Malaysia.
With the acquisition of Ying Shen, acquired as part of the Healthlogic Group, IBA now has 3 strategic reference sites in Shanghai. These will provide the springboard for IBA into the world's fastest growing market for healthcare systems.
The acquisition of the Monet clinic system increased the scope of IBA's offering across the multi-site clinic market - particularly pertinent across Asia. Consequently, we decided to consolidate all of IBA's primary care solutions under a single brand. The decision to close off the NxtHealth prospectus without issuing any DOCs ensured the company had the ability to integrate these two businesses.
Balance Sheet
IBA's balance sheet has been strengthened with net assets growing by 109% to $117.9 million and net tangible assets growing by 55% to $43.6 million or 13.8 cents per share.
The success of IBA's international expansion strategy which resulted in over $20 million of new sales towards the end of the second half of the year has resulted in strong revenue which is translating to cash receipts in the current period.
In addition to incurring a restructuring charge this year, the company is required under AIFRS to review its assets to determine whether there should be impairment to their carrying value. Following this review the company has decided to write down its investment in the DOCs scheme and other assets and take a one time charge of $0.91 million.
Outlook
IBA began FY 2007 with its strongest ever order book. The outlook for sales growth is also encouraging. The company is driving international growth by leveraging its leadership position in Asia, Middle East and South Africa with a number of tenders and proposals. In FY 2007 IBA will also realise further benefit from the integration of businesses with a reduced average cost base which will ensure that we maintain our excellent margins.
Following on the successful 2006 year and the synergies being realized from the acquisitions, the Board reconfirms the following guidance for FY 2007:
Revenue from operations: $74-$76 million.
Net profit after tax: $23-$24 million
Earnings per share: 7 cents
Contact
Gary Cohen
Executive Chairman
IBA Health Limited
Phone: +61 2 8251 6700
Email: gary.cohen@ibahealth.com
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