2015 Annual Report

The trans-Tasman dental market is worth approximately $11 billion and Abano’s dental group is the second largest in Australasia. There are a number of market factors which make this an attractive sector for us including minimal reliance on public funding, a large pool of practices for acquisition, a growing number of female dentists wanting flexible working conditions, dentists offering a greater range of services and long term growth trends as better oral health practices lead to retention of natural teeth.

We have also focused on private paying patients who generally form long term relationships with their dentist. This approach avoids the risks and volatility associated with government funded dental contracts.

Our focus is on growth, primarily through the acquisition of established practices that provide immediate accretive earnings.

During the year, we added 20 practices to our dental group, including the acquisition of 19 practices expected to provide approximately $30 million in additional annualised gross revenue and the opening of a greenfield practice in New Zealand.

On average, we are acquiring one practice every two to three weeks and we expect this growth rate to continue. Following the acquisition of four practices in the first two months of this financial year, we now have 177 practices providing over $240 million in annualised gross revenues.

In New Zealand, Lumino again achieved compounding same store sales growth, with a 3.2% increase in same store revenue, while the performance of our Australian dental network Australia was flat, reflecting Australia’s economy which is growing at below historical trend rates.

We are continuing to invest into infrastructure and capability to support the growing size of our dental networks. We expect to see EBITDA margins improve incrementally in dental, however investment spend on branding and infrastructure will limit the rate of increase in the near term.

Lumino is a more mature business than our Australian business with a well-established business structure in place. We are continuing to build on this by introducing new initiatives such as our LuminoGo clinical development programme for our younger dentists.

Lumino holds a leadership position in New Zealand and we continue to attract new patients through our highly successful marketing and brand campaigns, such as the popular and very successful 18 months interest free offer on Qcard.

Our Australian group is the second largest dental network in Australia and continues to grow. We have been investing into infrastructure to support this growth. In the last year, we further strengthened the leadership team with the appointment of a new General Manager Operations and General Manager Marketing.

We are excited to have recently announced the launch of a new national brand for our business in Australia. Dental Partners is now known as Maven Dental Group, with the choice of name being finalised after an extensive and careful selection process involving members of our Australian Clinical Advisory Committee, the senior management team and branding experts.

This new name will allow us to collectively promote the strengths of our practices, as we have done with the Lumino brand, and enable us to stand out in the very large, competitive and fragmented dental market.

Maven is an ancient word meaning “a trusted expert in a particular field, who seeks to pass knowledge on to others”. It represents the people and the values within the organisation. Our goal is for it to become as well known in Australia as our Lumino brand is in New Zealand.

Lumino has now achieved 50% unprompted brand awareness, which means that one in every two New Zealanders knows the Lumino name. Prompted awareness has increased to 85%. It will take us several years to achieve these market characteristics for Maven Dental Group in Australia but we have made a good start with the commencement of the branding strategy.

The trans-Tasman dental market provides a large and exciting opportunity for Abano and we are well positioned to take advantage of this through our two well established dental networks.

Read a detailed review of Abano's Dental businesses and FY15 performance

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