Primary Health cuts annual profit guidance

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Primary Health Care has warned that it will miss its annual profit guidance, blaming a string of writedowns within the medical centres business.

The company expects to book underlying profit after tax of $104 million for the year ended June 30.

Previously, Primary had expected to meet the bottom end of its forecast range of $110 million to $115 million.

Primary said on Monday that it expects to book about $98 million in after-tax, non-cash write-offs to reflect the carrying values of a number of balance sheet items, including its IT systems, some centre closures and property.

Of the write-offs, $66 million will be booked in fiscal 2016 and $32 million in prior periods.

However, the impact on the group’s fiscal 2016 net profit will be partially offset by $30 million of profit on the disposals of Medical Director and Transport Health, in addition to other items reported in the group’s interim results earlier this year.

In February, Primary booked gains from the stake sale in Vision Eye and a tax settlement.

Primary chief executive Peter Gregg said the company is focused on getting its house in order.

“We are focused on setting the right foundations for the long-term, cleaning up the balance sheet and taking a more conservative approach to our asset values and levels of provisioning,” he said in a statement.

Mr Gregg said the changes don’t impact the group’s cash position or compliance with its banking covenants.

Primary is improving its balance sheet strength with more than $300 million of gross proceeds generated in fiscal 2016 from its capital recycling initiatives, Mr Gregg said.

Primary expects to report its annual results on August 17.

Primary shares closed down nine cents or 2.4 per cent at $3.73.