Advance Healthcare Group has flagged the possibility of further capital raisings after announcing its second successive multi-million dollar loss.
Advance Healthcare Group has flagged the possibility of further capital raisings after announcing its second successive multi-million dollar loss.
The Balcatta-based pharmaceutical company incurred a $15.2 million loss in the year to December 2005 following a $10.8 million loss in 2004.
The belated completion of Advance’s 2005 accounts has allowed the company to call its annual general meeting, where it will seek shareholder approval for a $10 million capital injection by Hawkesbridge Private Equity.
The AGM had been scheduled for May but has been put back to August after the company faced delays in completing its audited accounts, which new chief executive Ken Atkinson attributed to complications arising from new accounting standards.
Hawkesbridge is already Advance’s major shareholder with an 11 per cent stake and the capital raising will allow it to significantly increase its stake.
The company has also stated that it “recognises the need for additional working capital to meet (its) needs over the next 12 months”, but was not able to provide any further information.
Contributors to the latest loss included a sharp downturn in the performance of its pharmaceutical and medical products distributor Cottman Australia, which suffered a $1.6 million loss after sales revenue fell by 13 per cent to $93 million.
Mr Atkinson said the main reason was a decision by Sanofi-Aventis to take over its own distribution arrangements.
Advance also incurred $7 million in one-off costs as it continued to implement a major restructuring of the business.
Looking ahead, Advance chairman Peter Woods said the company would focus on its core businesses, led by Cottman, which was a major force in Western Australia and South Australia.
Mr Woods said the board also regarded Pharmeasy, which holds one of a handful of corporate pharmacy licences in Australia, as a major opportunity.
The restructuring of the group has included cutting its administration costs, centralising its finance function in Perth, outsourcing its IT operations and reducing non-core inventory.
Mr Atkinson said his aim was to have the group trading profitably before the end of the December 2006 financial year, though he expected it would be 2007 before the full effects of the new strategy were converted to profit.
The new Hawkesbridge investment continues its close links with the WA Local Government Super Plan.
The super fund is one of the major investors in Hawkesbridge and its former chairman, Alex Bajada, is a current director of both Hawkesbridge and Advance. The fund also held $2.7 million in Advance convertible notes, which have been transferred to Hawkesbridge.
