REASON TO GRIN
NINE new facilities, growth in revenue and after tax profit are the highlights for Townsville company 1300 Smiles.
Its annual report for the 2017- 18 financial year was released on the Australian Stock Exchange yesterday.
It showed 1300 Smiles has acquired practices in New South Wales and regional Queensland in the past financial year.
The last acquisition was an established practice in Noosa, with the transaction completed in July.
Managing director Daryl Holmes said it had been a good year for the business with the new acquisitions.
“It is tough out there. We have low single figure growth, that’s sort of at inflationary levels,” he said.
But Mr Holmes said 1300 Smiles was looking at opportunities and wanted to continue its growth.
Revenue was up 8.8 per cent to $ 39.3 million, with net profit after tax up 5 per cent at $ 7.6 million.
In a letter to shareholders Mr Holmes highlighted a measure of the company’s success – net profit after tax as a percentage of statutory revenue.
“While this measure, at 19.4 per cent, is down slightly on the previous two years, it remains above the level of all earlier years,” he said.
“This measure is dragged downward somewhat in years in which we make a large number of acquisitions; to deliver only a slight decrease on this measure in a year marked by numerous acquisitions is a good result indeed.”
Mr Holmes said it was a very challenging economic environment but it was slowly getting better, locally, regionally and nationally.
“We have seen positive year- on- year improvements on all key measures including revenue, EBITDA, net profit after tax, earnings per share and dividend per share,” he said.
Mr Holmes said the business would grow this financial year.
“There’s no particular area we’re looking at but we are looking at expanding,” he said.
Mr Holmes had a warning about health insurance funds and how they deal with dental service organisations.
“All of the DSOs have dealings, to a greater or lesser extent, with the various health insurance funds,” he said. “This fixture of structures, objectives, ownership and deeply conflicting interests suggests to me that the DSO sector is one in which we will see further changes.”
Mr Holmes said a core conflict arose from the fact various health funds sought to build a controlling relationship with dentists by referring patients, but placed limits on treatments and billing.
“The health funds can at any time establish their own dental clinics and steer patients away from dentists formerly treated as ‘ preferred providers’,” he said.
“Too many dentists have built practices based on their health fund relationships and then watched as their patients were diverted to clinics owned and/ or operated by health funds.”