Ebos head recalls Australian moves

By Chris Hutching

Friday 26th October 2001

Will medical supplier Ebos Group suffer the same fate as many other New Zealand corporates in its forays into Australia?

The question, posed by a concerned shareholder at the annual meeting in Christchurch, refers to the failure of many companies when they expand across the Tasman.

Managing director Mark Waller said this was certainly not the case for Ebos, although chairman Philip Burdon poked fun at himself when he noted he had been one of the Air New Zealand directors to sign off on the purchase of Ansett Australia.

Mr Waller said Ebos took a cautious approach, usually building stakes until it was fully satisfied of the wisdom to move to full ownership.

Mr Waller is negotiating to buy three more companies and the talks may be concluded by Christmas.

One is a medical supplies company in Australia, another is a New Zealand company, while the third deal involves a 51% stake in Biomed, a joint venture with international company McGaw Braun.

Mr Burdon pointed out Ebos was the highest-achieving small-cap stock on the New Zealand Stock Exchange over the past five years and second in the past 10 years.

An investment of $1000 in 1991 would now be worth $25,000, taking into account rights issues and splits, and the investor would have received $10,6000 in dividends as well.

Average annual growth had been 15% in recent years.

One of the most significant investments over the past couple of years has been the 50% stake - raised to 74% since balance date - of Medial Health Support, a company held in partnership with district health boards and supplying 60% of its products with automated ordering and invoicing to hospitals and 35% to medical practitioners.

This division provided $95 million of sales in the year to June 2001, with Australian operations providing $48 million and other Ebos operations, including exports to the Pacific Islands, providing $58 million. Previously, Ebos has declined to provide this breakdown.

Mr Waller said future growth prospects were focused on Australia via its Richard Thomson subsidiary supplying products to hospitals and aged care facilities while Ebos Health & Science supplies orthopaedic prosthesis products.

The company reported a 222% lift in profit to $5.18 million on sales of $108 million ($80 million in the previous period).

Thanks to a $10 million capital raising last year to help fund Australian operations, the debt to debt plus equity ratio is low at 15.8% (25.4%) and net tangible asset backing is 122c (109c) with earnings per share 19c (15c).

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