Abano has two businesses in the dental sector, Lumino The Dentists in New Zealand and Dental Partners in Australia. These businesses provided 36 percent of Abano’s group revenue in 2009.

A “roll-up” strategy is in place for both of Abano’s dental businesses, where continued growth by acquisition increases the scale of each group to cover the relatively fixed cost of the central overhead infrastructures.

The combined NZ and Australian dental market is worth over NZ$6 billion, more than four times bigger than the audiology market, and there is significant potential to grow both dental brands. In both countries, the dental industry is characterised by a predominance of small dental partnerships, a mainly private revenue stream with limited public funding and little or no marketing or branding.

Dentists operating as sole traders or in small partnerships face several challenges including the rising cost of keeping up with modern technology; intensifying competition, particularly in the main metropolitan centres; more time required for administration rather than revenue-generating dental treatment; and a lack of collegial support. These factors are increasing the attractiveness to dentists of operating within a corporate-owned dental group.

Abano structures its acquisitions to retain the founder/ dentists through continued service contracts, settlement retentions, and long-term profit shares or earn-outs of between four to six years. All dentists are remunerated on commission, providing a further incentive for them to increase revenues and grow the business.

A key focus for Abano is to provide a world class working environment with training, conferences and modern high tech equipment. This has proved very successful in recruiting and retaining dentists post the earnout periods and in ensuring Abano’s dental businesses are the employer of choice in the industry.

In New Zealand, Lumino The Dentists has grown rapidly over the past five years, predominantly through the acquisition of high quality dental practices, and as at 31 May 2009 had a network of 42 practices and mobile buses across New Zealand. With each new acquisition, margin contributions continue to improve.

As well as expanding the network through continued acquisition, existing practices have been developed to accommodate more dentists and additional services are being offered, such as orthodontic treatments.

In 2010, the growth strategy will be continued and management will also focus on building the brand profile through targeted marketing and advertising campaigns.

There is an element of discretionary spend in the dental sector, particularly in relation to elective cosmetic dentistry. The current global downturn has put pressure on consumers’ discretionary spend and as a result, the New Zealand dental sector has seen a softening in demand as consumers defer treatment until a later time. Increasing demand and growth for dental care is expected once economic conditions improve in New Zealand. The impact of the global downturn has not appeared to have been as evident in Australia.

Dental Partners was established in Australia in June 2008 and has grown from an initial network of nine practices to 18 practices in New South Wales, Queensland, Victoria and ACT as at 31 May 2009. Abano holds 70 percent of this business with the remainder held by experienced senior management executives and dentists. The focus for 2010 is to ensure Dental Partners maintains its strong operational platform, continuing to build the range of services on offer from existing practices and to grow the network through acquisition.

Abano now has a depth of experience in the dental market with a proven business model. Growth is through acquisition where the investment costs of each acquisition are offset by immediate returns from positive EBITDA cashflows.

The future focus is on growing each network and increasing margins and returns. Investment capital facilities are available for growth through ASB Bank in New Zealand and through a dedicated ring-fenced facility from CBA in Australia, solely for the growth of the Dental Partners business.

Operational Performance

Operational Performance

* After allocation of corporate overhead
1. Entry into Australian market June 2008

Network Growth

Netwrok Growth


2009 Highlights and Achievements

  • Acquired 10 practices throughout New Zealand, including New Zealand’s largest single site practice ProudMouth in the Auckland CBD
  • Acquired practices for the first time in the Bay of Plenty, Hawkes Bay and Canterbury
  • Added a third mobile bus to the adolescent services provided in the Auckland region

Focus for 2010

  • Continue to acquire further practices
  • Continue to grow overall EBITDA margin and ROIC
  • Continue to grow the “pipeline” of potential dentists and hygienists
  • Continue to grow the profile of the Lumino brand and increase the flow of new patients
  • Continue to grow the clinical expertise within the group and continue to improve patient experience


2009 Highlights and Achievements

  • Entered Australian market in June 2008 with initial acquisitions of nine practices
  • Acquired a further nine practices during the 2009 financial year
  • Held inaugural Practice Managers conference in February 2009

Focus for 2010

  • Dentist Conference planned for August 2009
  • Continue to grow overall EBITDA margin and ROIC
  • Continue to strengthen the business platform with substantial growth planned for 2011 financial year and beyond
  • Identify and evaluate opportunities for Greenfield site development as well as acquisitions