1300SMILES Posts Record Half-Year Profit

Friday, February 20, 2009
MEDIA RELEASE by Shane Russell, Bare Publicity

LISTED Queensland dental group 1300SMILES (ONT) has defied the stock market meltdown to post a record half-year profit.

The company recorded a half-yearly profit of $2.1 million, up 83 per cent on the previous years result.

The profit came on the back of a 58 per cent leap in revenue to $11 million after the company endured core growth through the consolidation of several key acquisitions in Queensland and at its newest practice on the Gold Coast and Tweed Heads border.

Shareholders can expect a bonus after the company announced its half-year fully-franked dividend would be up 35 per cent per share to 5.4c, and up 35 per cent from December 2007.

1300SMILES managing director Dr Daryl Holmes flagged a milestone in the company’s position, saying with the group’s Net Profit After Tax (NPAT) growing faster than revenue the group had reached critical mass in terms of growth and profitability.

“We now operate on a scale that enables us to increase NPAT faster than revenue,” said Dr Holmes.

“This result reflects that we now have our core infrastructure fully in place, and that a shrinking share of overhead and head-office expense is allowing profit to increase.

“All of this year to date we have been focused on consolidation, internal growth and efficiency.”

Dr Holmes said the company would continue to make acquisitions only when it could acquire practices on terms which ensured that the acquired businesses made an immediate positive contribution to NPAT.

He said while 1300SMILES had the funding facilities and finance in place to make further acquisitions, it was in no hurry to do so.

“The alternative route to growth, that of bringing more dentists into our established facilities, remains wide open,” he said.

“All of our practices were designed with this sort of growth in mind, and we can accommodate additional dentists in top-quality facilities in many different cities, at little or no capital cost to us.”

Dr Holmes said the group sought to balance its commitment to deliver growing dividends with the prudent application of capital to reduce debt and preserve its ability to make further acquisitions when the opportunities arose.

1300SMILES BACKGROUND:
1300SMILES owns 17 multi-dentist facilities in 10 major regional centres in Queensland and New South Wales. The administration office is located in Townsville.

The company provides the use of dental surgeries, practice management and other services to self-employed dentists who operate their own practices.

The company’s structure allows dentists to focus on the delivery of dental services rather than the administrative and management operations. The dentists pay fees to the company for the provision of these services under a Dental Service Agreement with the company.