Record profits for G8 Education

CHILDCARE provider G8 Education has posted a record $19.2 million net profit for 2012 when it continued its buying spree, taking its national tally of childcare centres to 167.

The listed Gold Coast company also told the stock exchange yesterday that it had spent $3.3 million to purchase a new headquarters at Varsity Lakes to house growing staff numbers.

G8 employees nationwide now total more than 4200.

The purchase of the 1600sq m property -- the former base of Gold Coast law firm Minter Ellison -- was a savvy buy, picked up for almost half the $6.085 million paid at its previous sale.

Company chair Jenny Hutson told the annual general meeting at the Southport Yacht Club yesterday that G8's growth had seen the company join the ranks of the S&P/ASX 300, an elite index of Australia's top 300 stocks.

Ms Hutson said G8 remained in acquisition mode throughout 2012, adding 33 centres to its childcare-centre stable and selling one.

"That has meant that, in terms of size, we have just over 13,000 children in care," Ms Hutson said.

G8 also announced yesterday that, since January, it had secured the ability to purchase a further 20 centres along the eastern seaboard.

G8 Education's portfolio also includes centres in Singapore where it owns eight, manages 10, and has 51 under franchise.

Ms Hutson said G8 represented just 3 per cent of the long day-care market in Australia and was well geared for future growth.

"Today's result is a great result," she said.

"The company is going extremely well -- it is a significant contributor to childcare in Australia and to business life on the Gold Coast.

"We are looking at acquisitions every day -- we have made no secret about that -- and we will continue to buy the right assets at the right price," she said.

"With only 3 per cent of the market, there is significant room for growth."

G8 Education recorded earnings before interest and tax (EBIT) of $30.01 million. The company in 2012 raised $35 million through an investor placement which resulted in the issue of somewhat more than 24 million shares, taking total shares on issue to 272 million.

Ms Hutson said the company had increased its annual dividend by 25 per cent from 8 fully franked to 10 fully franked.

"Our share price has also increased from 91 on April 26, 2011, to more than $2.40 at the close on Monday," Ms Hutson said.

G8 shares closed up 1.66 per cent at $2.45 yesterday.

Collins Acquisitions brokers Geelong centres

The directors of G8 Education Limited (ASX: GEM) are pleased to announce the settlement of Treehouse Geelong and Bellnore Drive childcare and education centres. The childcare and education centres are located in Geelong.

The purchase price for the two centres was $4.8 million which represents 4 times anticipated EBIT for the 12 months post settlement. $4.4 million is payable at settlement and a further payment of $0.4 million is conditional upon the centre based EBIT target being achieved in the 12 months post settlement.

Collins Acquisitions brokers group of 5 centres

G8 Education Limited (ASX:GEM) has contracted to buy five childcare and education centres for $6.4 million from a number of different vendors.

The childcare and education centre operator says the centres are located in New South Wales and Victoria.

Managing Director Chris Scott says the acquisitions form part of G8’s expansion and will add 453 licensed places to the group.

The five centres are anticipated to contribute to earnings immediately upon settlement which is expected before the end of April 2013.

G8 Education reported a net profit of $19.2 million in the first half of the 2013 financial year.

$36m for G8 Education acquisitions

We saw today the annoucenment below outlined by The Deal Journal (Wall St Journal). We expect to contribute a large proportion of this growth phase for G8 Education and look forward to working with them.

Childcare center operator G8 Education Ltd. GEM.AU +2.50% is seeking 35 million Australian dollars (US$36.5 million) to bolster its war chest for acquisitions, mainly in Australia, a person familiar with the matter said Monday.

The A$1.45-a-share raising to Australian and offshore institutional investors–led by Petra Capital and Canaccord Genuity–represents an 11.6% discount to the stock’s last-traded price of A$1.64.

Trading in shares of G8 Education were halted early Monday, citing an imminent share placement.

Institutional shareholders with substantial stakes include Perpetual Ltd. PPT.AU -2.14%, Northcape Capital and Paradice Investment Management.

Bupa buys Dental Corp

Singapore-based Fortis Healthcare has offloaded its 64 per cent stake in Australia’s largest provider of dental services, Dental Corporation, for $270 million to UK’s Bupa.

Fortis, backed by Indian billionaire brothers Malvinder Mohan Singh and Shivinder Mohan Singh, paid $100 million for a 30 per cent stake in Dental Corp in December 2010. It upped its investment to a majority stake in 2011, which valued Dental Corp at about $400 million.

Fortis said in a statement on Monday the sale to Bupa was in line with its strategic direction to focus on health care in Asia, including India.

“The move is good for Fortis as it aligns the company with its current strategic priorities,” the company said. “This will help consolidate our presence as one of the fastest growing health care companies in the region.”

When Fortis upped its stake, the idea was to consolidate Australia’s fragmented dentist market.

It grew the business from 142 dental practices in Australia and New Zealand to 190, and entered the Canadian market. But it said it was unable to expand into other countries as originally envisaged.

Fortis recently entered into a strategic tie-up with Majid Al Futtaim Healthcare, the health care arm of Majid Al Futtaim Ventures, to operate and manage its health care assets in Dubai.

Dental Corp has engaged Moore Stephens to prepare an independent expert’s report to advise on whether the deal is in the best interests of security holders.

Bupa plans to buy 100 per cent of Dental Corp via a scheme of arrangement.

Fortis and financial investors will be entitled to receive $2.347 a share and management and dentists will be entitled to receive 93.88¢ a share plus three annual earn out payments over the next three years.

The Bupa deal is expected to be completed in March 2013 subject to shareholder and regulatory approvals.

Bupa was advised by Merrill Lynch and Herbert Smith Freehills, while Dental Corp was advised by Asia Principal Capital Ltd, Religare Capital Markets and Minter Ellison.

Collins Acquisitions brokers $28m deal

Collins Acquisitions has brokered Victoria’s largest private group to G8 Education.

CHILDCARE specialist G8 Education has taken the reins at 16 centres established by late Australian football legend Jim Stynes after settling a $28 million deal, the company’s largest purchase to date.

The centres have been operated by Pacific Early Learning Group, associated with Stynes and a partner, Hugh Ellis, who established their first centre in 2005.

Stynes, who was committed to helping young Australians, died on March 20 after a three-year battle with melanoma.

Gold Coast-based G8 Education unveiled the Pacific Group deal on September 24 and announced its settlement yesterday.

It said 14 of the centres were in Melbourne, “where G8 is rapidly expanding its footprint” and two in Queensland.

The company said the $28 million price-tag represented four times anticipated earnings before interest and tax for the coming 12 months.

Managing director Chris Scott said the deal, funded from cash reserves, was the largest in value to be undertaken by G8 Education.

He said it added 1492 places, or an average of 93 per cent, to the national tally of the company which stood at 11,575 across 150 centres after its last acquisition — seven centres in Sydney, bought for $9.2 million in October.

“We see Pacific Group as a particularly significant acquisition as it adds 25 per cent to consensus broker EBIT forecasts in a single transaction,” he said.

Mr Scott said G8 Education would remain focused on acquisition for as long as childcare businesses could be bought at fair value.

It is understood Mr Ellis chose not to remain in childcare after the death of his business partner.

Pacific Group brands included Pelican, Armadillo and Penguin childcare and early learning centres, and it employed 270 staff.

Stynes was born in Dublin, Ireland in 1966 and was brought to Australia in the mid-1980s under a program to recruit Irish footballers for Melbourne Football Club, of which he was chairman from 2008.

He played his first senior game in 1987 and retired in 1998 after playing in 264 matches and becoming the only non-Australian-born VFL/AFL player to win the Brownlow Medal, which he won in 1991.

After quitting the sport, he was inducted into the Australian Football Hall of Fame.

In 1994 he co-founded with film director Paul Currie The Reach Foundation, a non-profit organisation committed to people aged eight to 18.

Honours bestowed on Stynes for his community work included Melburnian of the Year (2010), Order of Australia and Churchill Fellowship (2007), and Victorian of the Year (2001 and 2003).

Southern Cross sell major stake

Sydney dentist and entrepreneur Dr David Penn has sold a majority stake in his business Southern Cross Dental Laboratories to a private equity company in a deal worth nearly $100 million.

Penn will remain chief executive of the business he started nearly 30 years ago while private equity player Ironbridge Capital takes a 60% stake.

Under the deal, Southern Cross is valued at $95 million, including debt, which is an estimated six times earnings before interest and tax.

Neil Broekhuizen, joint chief executive and founding partner of Ironbridge, told SmartCompany the investment in Southern Cross was the private equity company’s first foray into the dental industry.

“We have invested previously in hospitals, in aged care, in pharmaceuticals, in fertility and obstetrics but not dentistry,” says Broekhuizen.

“The business has got very good growth prospects. It supplies a very high quality product at extremely competitive prices into the Australasian marketplace.

“The business has a number of innovations and developments that are yet to come to the market, which also attracted us, and generally the dental sector has some positives.

“Clearly there is an increasing focus on dentistry from a cosmetic and healthcare point of view and the ageing population also plays into the hands of the dentistry market as people’s teeth deteriorate as they get older.

“If people are living longer, to live a decent life, they need to have decent teeth.”

Broekhuizen says there are “significant opportunities” overseas for Southern Cross, which already has small operations in New Zealand, Ireland and the UK that Ironbridge will look to grow.

Broekhuizen says Penn has retained “a significant stake” in the business and is subject to a two-year service contract, but “our expectation is we will be partners to continuing the growth of the business”.

“We will be attempting to grow the business organically and inorganically,” says Broekhuizen, which may involve “acquisitions at the right price”.

Penn is a successful dental surgeon in Double Bay and has also developed a range of new appliances for temporomandibular disorders and sleep apnoea.

He still works about seven hours a week as dentist and also teaches internationally on the topics of aesthetic dentistry and the invisible braces known as Invisalign.

“This has not been an overnight success; it’s been a lot of hard work,” Penn told The Australian Financial Review.

Patrica Koh appointed CEO of G8 Education Singapore

SINGAPORE – The founder of well-known pre-school chain Pat’s Schoolhouse has left her eponymous brand to join an Australian childcare company in Singapore.

Mrs Patricia Koh, 61, is now chief executive of G8 Education – which runs the beleaguered Cherie Hearts childcare centre, among others.

Two months ago, Cherie Hearts emerged from a legal tussle over a business acquisition contract.

G8 Education also owns pre-school brands Bright Juniors and Our Juniors’ Schoolhouse.

Mrs Koh, a former primary school teacher with a master’s degree in child development, started with one Pat’s Schoolhouse in 1988, later expanding to 15 centres. She sold her chain to global education group Knowledge Universe five years ago.

Last month, she left Knowledge Universe for G8 Education, which announced her appointment in a letter to parents yesterday.

Leaving after 20 years at the helm of Pat’s Schoolhouse was a “very sad” decision to make, said Mrs Koh. “But like any child, if you hang on too tight to anything that is precious, you might kill it,” she said.

The reason for her departure is a desire to work with children from different backgrounds. She said: “I want to do something for more children and meet the needs of different groups of parents – not just from the top tier.”

These families may not spend a lot of money on fees, she said, but will still get a good foundation for their children.

This means going back to the basics, such as indulging children’s love of music, literature and expression, said Mrs Koh.

“When children are encouraged to sing, dance and dramatise, they will naturally learn to read and write and everything makes sense to them,” she said.

Which is why, in her new role, aspiring pre-school teachers will be asked to sing and tell stories during their job interview.

Centres and facilities under the brand will also be spruced up. Children will get more pianos and keyboards and will have “pretend” play areas, where they can play dress-up.

“Rather than using iPads, animation and loud sounds that will only attract a child’s attention, I want to teach children so that their imagination can go further, they feel the emotions of a story.”

Abano aggressive dental growth

Abano Healthcare says it needs to acquire a new dental practice about once every 10 days in order to ensure continued growth in corporate dentistry.

The healthcare provider, which operates Lumino the Dentists in New Zealand and Dental Partners in Australia, gets 63% of its revenue from its dental operations.

In July, it reported a $1.6 million profit, up 30% from the previous year.

At its annual general meeting in Auckland today, it announced it is expecting profit for the first half of the year to be between $1.3 million and $1.8 million, up from $0.6m million for the same period last year.

“In 2012 we acquired 26 dental practices, and since May we have acquired another 14 practices, bringing our total to 131,” managing director Alan Clarke told shareholders.

However, that figure is constantly changing, with three more acquisitions today brings that number to 134.

He says Abano is the second-largest “corporate dental consolidator” in Australasia and there is significant room for growth in corporate dentistry.

“The trans-Tasman dental market is worth about $7 billion a year, and there are about 7500 dental businesses.

“There are 14,000 dentists in Australia and 3000 in New Zealand.

“All corporate dental consolidators still only hold 10% of this market. There is a significant opportunity, with growth at this pace possible for many more years.”

The problem with that rate of growth, however, is attracting the number of dentists to operate the practices, as some will move on following an acquisition.

“The thing we struggle with in New Zealand is attracting and retaining good clinical people. We actually compete with Australia for that talent.”

Mr Clarke says there is a focused effort to attract immigrants to Australia and New Zealand.

“We work in the UK looking to attract good people. We are seeing a lot of dentists coming out of Europe because of a weakening economy there.”

Asked by a shareholder whether a share split would help improve liquidity, Mr Clarke said the company was too young for that sort of move.

“I would rather we are known for delivering revenue and profit, and not trying to do tricky things with the register to stimulate growth.”

As well as growth in its dental operations, Abano expects a boost from its new radiology centre opening at the Millennium Institute on Auckland’s North Shore next month.

Radiology comprises 17% of the group’s revenue.

Abano is also merging its two radiology business, Ascot and Insight, into one entity.

Dental revenue bite suggested

THE head of Australia’s only listed dental chain, Daryl Holmes, doesn’t believe in sparing the feelings of his fellow mouth manipulators.

The good doctor accuses the profession of being “asleep at the wheel” ahead of the pending closure of a $1 billion-a-year federal dental scheme for sufferers of chronic ailments.

Holmes says the nation’s 6500 dental practices – most of them sole practitioners – face a nasty 20 per cent-plus revenue bite, at the same time as an emerging oversupply of new dentists.

These “horrific” forces will hit practice profitability and spur a flow-on reduction in the value of practice goodwill at a time when more baby-boomer dentists try to sell their business. “This is probably the most remarkable government announcement in my 25 years of being a dentist,” Holmes told Criterion.
“It effectively takes 20 per cent off dental revenues in Australia, with immediate effect.”

The federal government last month abolished the Chronic Diseases Dental Scheme, a Howard government initiative allowing patients to spend up to $4250 a year to rectify oral problems related to serious illnesses such as heart disease. The scheme, which relied on doctors’ referrals and was not means tested, was believed to have been widely rorted.

Canberra intends to replace the CDDS with a $4.1bn Medicare-style scheme for seven million low-income earners. But Holmes notes the scheme doesn’t start until July 2014 and with an intervening election there’s doubt it will ever come to fruition.

The CDDS is in run-off and ends on November 30.

Holmes says the closure is of little concern to 1300SMILES, whose 24 clinics are in regional areas where supply and demand are better balanced.

“We are sitting reasonably pretty but not arrogantly so,” he says. The Townsville-based 1300SMILES has defied the difficulties faced by other dental entrepreneurs who have tried to consolidate practices and list under a corporate banner.

Last year, the company generated its fifth consecutive record profit of $6.2 million, up 20 per cent on turnover of $36m, which was up 28 per cent.

An intriguing piece of 1300′s defensive armoury is a scheme to offer interest-free financing of major dental work, through Dental Members Australia.

The idea is that for a membership fee of $1 a day, clients are covered for preventative dental work and are financed for 80 per cent of the major stuff.

“It’s just blowing us away,” Holmes says of the initial reaction from door-to-door sales.

Apart from 1300SMILES and unlisted consolidators such as Dental Corp, dentistry remains as much a cottage industry as doily making but this will change as the costs of setting up a surgery soar.

According to IBISWorld research, the dental sector turned over $5.5bn in 2011-12, generating a $1.5bn profit. It forecasts turnover to grow at 3.8 per cent per annum over the next five years, “due to growth in volume and prices.”

G8 Education seek $36m for Collins Acquisitions deal

Below is a story published in the Wall street Journal today. Collins Acquisitions secured a very good deal for our client and we look forward to seeing the raise go through promptly.

G8 Education Ltd. is seeking to raise up to 34.5 million Australian dollars (US$36 million) through an equity placement, according to a term sheet seen by Deal Journal Australia.

A total of 30 million shares are to be placed by the childcare operator at A$1.15 each, representing 14.6% of the stock currently on issue, the term sheet stated.

Australia’s G8 Education entered a trading halt early Monday before announcing the acquisition of 16 childcare and education centers in Victoria and Queensland states for A$28 million, which represented a multiple of four times forecast earnings before interest and tax, or Ebit.

The raising, which G8 Education will use to fund the acquisition and for working capital, is at a 10.9% discount to the stock’s last-traded price of A$1.29.

Petra Capital is managing the placement for G8 Education and the offer is due to close on Tuesday.

G8?s substantial shareholders include funds managed by Perpetual Ltd., Wallace Infrastructure, Northcape Capital, Paradice Investments and Challenger Ltd..

Dental deal attracts $100m

With Dentistry changing so dramatically here at Collins Acquisitions it wasn’t surprising to find out David Penn secured such a great deal as reported by the Australian Financial Review today.

Sydney dentist and medical appliance innovator David Penn has sold a majority stake in his Southern Cross Dental Laboratories to private equity player Ironbridge Capital in a deal worth nearly $100 million.

Dr Penn will remain chief executive of the business he started nearly three decades ago but told The Australian Financial Review it was time to bring in a partner to help take the company to its next stage of growth. “This has not been an overnight success; it’s been a lot of hard work,” he said “On my experience and expertise on a corporate level, I think I have reached my zenith.”We are growing nicely and there are some incredible opportunities. The biggest challenge of all has been managing this growth. It’s been difficult to take the business to the next level” Dr Penn, whose wife Linda is a Lowes Manhattan retail clothing heiress, said he expected Southern Dental to continue to grow as much as 20 per cent a year in revenue and gross profit in the next three years. The 56-year -old saw an opportunity to break into the local dental prosthetics market by going to Asia to have crowns, dentures, veneers, bridges and grinding splints made 30 years ago. “When I graduated I knew that in Australia the cost of dental prosthodontics was high,” he said “I thought there was an opportunity with local laboratories. I went to Hong Kong in 1983 and it took a while to get that right. There were tanks at the borders. That was when we communicated by telex machine.” Dr Penn got involved with Hong Kong University dental school in 1986. He said this move “set the company up for change given the high level of dental technology”. Dr Penn and his wife gained some unwanted media attention in 20 1 0 after buying a $44 million Point Piper harbour front property, Villa Veneto. The media-shy Dr Penn said he was adopted as a baby and grew up in Sydney’s Bondi. He went to Sydney Boys High School and graduated from the University of Sydney at age 22, when he bought his first practice. His relatively humble background, growing up with his mother who worked as a pharmacist’s assistant and a father who worked in a hardware store, has kept him grounded despite his business success, he said Dr Penn is not only a successful dental surgeon in Double Bay, he has also developed of range of new appliances for temporomandibular disorders and sleep apnoea. He still works about seven hours a week in this Double Bay practice and also teaches internationally on aesthetic dentistry and the invisible braces known as Invis align. “We see a lot of growth opportunity in the Invisalign products;” he said “I wrote the accreditation course for

Teaching general dentists how to use Invisalign. We have a very powerful education arm. Basically, anything you can put in your mouth we can make it.” His most recent developments include the Penn Composite Stent, which is a system for producing morphologically idyllic, inject able composite veneer restorations without tooth preparation.

Under the deal with Ironbridge, Southern Cross is valued at $95 million, including debt, which is an estimated six times earnings before interest and tax. Ironbridge will control about 60 per cent of the business, while Dr Penn and management will retain the remainder. The joint chief executive and founding partner of Ironbridge, Neil Broekhuizen, will join the new holding company, which will own 100 per cent of the Australian and New Zealand operations and 40 per cent of the UK and Ireland business. “Ironbridge has been a consistent investor in the healthcare sector and we see significant growth opportunities both in Australia and New Zealand and to develop overseas businesses that Southern Cross Dental has already invested in,” Mr Broekhuizen said.

Childcare subsidies great for G8 Education

The rebates also were manna from above for Eddy Groves’s ABC Learning, fuelling the group’s acquisitive growth before its debt-inspired implosion.

Now the Gillard government is mulling a plan to subsidise childcare workers’ pay to the tune of $1.4 billion. We await Canberra also topping up the stipends of lowly paid cleaners, dish pigs and journalists, but we’re not holding our breath.

As the only listed childcare provider, G8 is a logical beneficiary, although it’s far too early to gauge any effect. Because the industry is fragmented and highly competitive, the savings are likely to be passed on to the customer.

Still, it won’t do any harm in terms of fostering affordability and increasing demand.

G8 chief operating officer Chris Sacre says wages typically account for 70 per cent of a centre’s operating costs, but in G8′s case it’s more like 60 per cent. Then again, given G8 doesn’t have a unionised workforce under an enterprise agreement, it could well miss out.

This week G8 continued its acquisitive push by acquiring seven more centres in NSW for $9.2 million, taking its total outlets to 150. G8 is the second-biggest operator with a 2.5 per cent share, behind the Good Start charity, which bought most of the ABC centres, with 11 per cent penetration.

After a shaky start G8, based on the stricken Early Learning Services, has taken more than baby steps to proving its credibility.

The ABC fiasco still casts a pall over the sector while G8′s management – the rump of the old schoolies’ accommodation specialist S8 – bears that north-of-the-Tweed guilt by association.

Unlike ABC, G8 doesn’t own freehold property and has been disciplined in its acquisitions. The latest seven properties were bought on an earnings before interest and taxes multiple of four times, while ABC thought nothing of paying high single-digit multiples.

Some investors are chary about the sector because most of the centres are owned by not-for-profit groups that don’t have shareholders to worry about. But in many cases the centres subsidise the unprofitable parts of the charity and an average outlet should be able to turn a quid on a stand-alone basis.

There’s little doubt G8 is in the right sector: the nation’s birthrate, migration and female workforce participation levels have increased, while high property costs means fewer centres are being built and there’s a supply shortage in some areas.

Sacre says that, unlike earlier equity-funded acquisitions, further purchases will be paid for via a recently negotiated $50m debt facility and G8′s $12m cash balance. G8′s June-half earnings vaulted 81 per cent to $6.78m. Analyst consensus points to full-year earnings per share of 9.5c this year and 11.3c in calendar 2013.

With the ABC sores festering, Criterion rated G8 an avoid at 68c in May last year (and indeed the stock fell to 50c). Now that G8 has a track record, we upgrade to long-term buy.

Dental Group 1300 Smiles continues to grow

We have see a real opportunity for dentist to take advantage of 1300 smiles push through regional areas. Today The Age reported this story about their recent success.

SOME investors are betting that Townsville-based dental ”roll-up” business 1300 Smiles will match another practitioner of this type of business strategy, InvoCare, the funeral-home operator.

The former’s 30 per cent rise in the past eight weeks suggests its investors may be on to something.

The ”roll-up” business model involves buying a large number of smaller operators for three times their earnings, and then putting them into a business that is trading on a price-earnings (PE) multiple of 20 times-plus (the average for industrials is about 11 times). At least in the early phases, acquisitions can add to earnings growth from day one.

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InvoCare is a definite success story, with a market worth of more than $900 million, and a share price that has almost doubled in the past three years.

With its shares at $5.15, 1300 Smiles is becoming one, with a market capitalisation of $122 million. It listed in 2005 after raising $1 million at 80¢ a share.

Driving this is phenomenal earnings growth. 1300 Smiles has more than doubled its profits in the past three years. But will this breakneck speed continue?

The stock is priced as though it will, trading on a PE multiple of about 20 times. To keep generating 20 per cent-plus profit growth, 1300 Smiles needs to attract more and more dentists to regional Australia and keep them smiling, as they are its most important asset.

The connection between a patient and a dentist is crucial, whereas in InvoCare the relationship is somewhat more detached.

1300 Smiles managing director Daryl Holmes (who keeps in touch by working half a day a week as a dentist) owns a 62 per cent stake in the company and is dismissive of any suggestion that there is a difficulty in finding professionals.

”We take away all the admin and management issues, and let the dentists concentrate on what they do best … I’ve just come back from the British dentistry convention and I met over 50 dentists wanting to relocate to Australia,” he says.

After watching several episodes of British sitcom My Family, which stars a dentist, Radar has no doubt that this is the case. Written by Richard Hemming

Collins Acquisitions brokers Sydney portfolio

Today G8 announced their latest acquisition brokered by Collins Acquisitions.

G8 Education Limited (ASX:GEM) has inked a deal to buy seven childcare and education centres in New South Wales for $9.2 million. The news comes just one week after G8 announced it has purchased three childcare and education centres in Victoria for $6.2 million. Shares in G8 Education fell 2 per cent yesterday to close at $1.225.

5 trends facing dentists

The trend facing dentist today can dramatically affect your practice going forward so being mindful of what is coming ahead and dealing with it pro-actively can ensure a successful business in the long run. Dan Barton wrote a great article detailing what trends they moving forward.

This article was originally published at evancarmichael.com and written by: Dan Barton

Growing up, Geoff’s family spent the summers in the countryside near Montreal, Canada. During the summer he was sixteen, his neighbour and friend Karen, who had very bad teeth, was unexpectedly taken to the dentist by her father. When she returned home with her father, Geoff was in his yard enjoying the sunshine with his friends, but instead of smiling, saying hello, and joining in, Karen got out of the car and ran straight into the house without a word. Her father walked directly over to Geoff with a smirk on his face, and wiping his hands, said, “We just had all of Karen’s teeth extracted, so now I won’t have to worry about Karen’s dental bills anymore.” Geoff was shocked, and it was at that _ moment he emotionally and partially unconsciously made the decision to become a dentist as Geoff knew this was a problem he could help solve, and did not want to watch anyone else suffer through an ordeal like Karen’s. After many years of school, and after finding the proper mentor, he found himself setting up his own successful practice in Ontario, Canada.

Geoff and many other practitioners both nationally and globally are being presented with unprecedented opporttJnities for investing their money and growing their practice. However, with these opportunities also comes the chink in the proverbial silver lining of the clouds that can either make or break your investment and the success of a dental practice.

Over the past year, we have taken surveys, researched practices, and spent countless hours finding and pouring over data to bring you this comprehensive, in-depth study. Through our research, we have isolated the five most dangerous trends affecting dental practitioners today. These are trends that each and every dentist will come across during their years of practice, and these trends have the possibility of quickly eliminating the positive results that all those years of hard work and dedication have created. We have developed this report in the hopes that it will shine a light on these often tabo. subjects, as they so desperately need to be addressed especially in today’s often confusing and changing market place.

While researching this report, a common thread we found to be the main underlying passion many dentists expressed, was to provide for their families in a way that they themselves never experienced in their own youth, coupled with their strong desire to help others maintain good oral health practices. Through their hard work and dedication, dentists have the ability to ensure that their children do not have to face similar hardships and difficulties in attaining their goals. Providing privileged and care­ free lives for their children is a top priority for most dentists; however, the nature of the profession makes that goat more distant than one might assume. In order to provide more and more for their families, dentists find themselves sacrificing precious family time, which can be far more beneficial to a child’s upbringing than iPod’s, PC’s and latest whiz games from Xbox and Nintendo.

Or. Bob Muster, having spent the last 14 years in the dentistry field, has seen the ins and outs of the subsidized dental market and believes a change is in order. Muster knows what poverty feels like firsthand. He grew up poor, and now, as a dentist treating Medicare patients, he knows the industry needs a change. Muster opened his first dental office in Huber Heights, Ohio, which focuses on treating Medicare patients both young and old. The 7,800-square-foot dental office will cost about $1.6 million to open and feature state-of-the-art waiting rooms and dental implements. Muster worked for several Medicare dental offices and as he found the quality of care to often be poor, he was prompted to open his own practice.

When posed with the question, “Why did you become a dentist?” another practitioner replied, “I wanted to be involved in a medical profession, and my uncle, who was a wonderful dentist, was a great role model for me. Dentistry has an artistic component to it as well; dentists use their hands to sculpt teeth. Sometimes they use their skills to create more appealing smiles especially in cosmetic dentistry. I wanted to be involved in a helping profession which would also allow me a reasonable standard of living. Dentists provide a valuable service to their communities and if they do their job competently, they are respected by their patients. I have been a dentist for over 25 years and I have enjoyed helping my patients, and I get great satisfaction from the work itself. I continue to find Dentistry both challenging and interesting.”

While each and every dentist has their own passion about why they originally got into this field of practice, another common theme we found is the passion to create more confidence through the smile. This is no wonder. Researchers of a study led by Dr. Dacher Keltner of the University of California were able to predict the future marital status, even 30 years down the road, of various 21 year-old women, just by looking at their photographs. The key appeared to be the intensity of the women’s smiles.

“Women who displayed more positive emotion were more likely to be married by 27, less likely to have remained single into middle adulthood and more likely to have satisfying marriages 30 years later. This means we can take photos at a wedding and from them we may be able to tell how the marriage will go,” said Dr. Keltner.

Additionally, how intensely a person smiled was related to personality tests, and psychologists ranked the participants by how they expressed emotions like joy and happiness. How did they know the smiles weren’t being faked? They used computer technology to measure 44 aspects of facial activity. If a smile was not genuine, certain muscles would not move (for instance, certain muscles around the eyes that we don’t consciously control move when we feel emotion).

Dentists definitey seem to be on right path for creating more confidence through helping create better smiles. According to The British Dental Health Foundation, a smile gives the same level of stimulation as eating 2,000 chocolate bars. The results were found after researchers measured brain and heart activity in volunteers as they were shown pictures of smiling people and given money and chocolate. Dr. Nigel Carter, chief executive of the Foundation, pointed out, “We have long been drawing attention to the fact that smiling increases happiness both in yourself and those around you, so it is good to receive the backing of this scientific research … a healthy smile can improve your confidence, help you make friends, and help you to succeed in your career.”

What’s even better is that the more you smile, the more others will too. Says psychologist Dr. David Lewis, “Seeing a smile creates what is termed as a ‘halo’ effect, helping us to remember other happy events more vividly, feel more optimistic, more positive, and more motivated.”

Dentists are passionate about their work, and understand the power of good oral health and a great smile. However, despite their passion and desire to help others, their jobs, futures, and practices can still be placed at risk, which is why we have created this special in-depth study. As a real-estate investment company, Oasis Properties generally does not provide reports on other professions; however, considering that many of our clients who are dentists have expressed the same concerns and reasons for investing with us, we felt that providing this report would generate a high number of solutions for many of our current and future clients in this specialized field of work.

With strong reliance on scholarly journal articles, government published data and information from other reputable sources, this report will provide some unique answers and options that dentists typically will not expect from the traditional sources of knowledge and opinion. In the next section of this report you will discover one of the scariest pitfalls that have the potential to cause the most staggering amount of unnecessary damage in any dental practice. The top five most dangerous trends facing dentists today are trends which cannot be ignored, and we hope to set you back on the right track, mentally, physically, spiritually and financially. In this paper as we review case study after case study of dentists who are experiencing setbacks with maturing practices, we hope that this report will provide you with the answers needed to continue positively on with your life, your work and your mission in creating beaming smiles.

1. Lawsuits -The Single Biggest Fear

The first pitfall of practices that we will analyze is the one that has the potential to cause the most staggering amount of unnecessary damage. An article from the Journal of the Canadian Dental Association explains that since the mid-1980s, lawsuits have injected unprecedented levels of panic into the dental profession. An American dentist was successfully sued for the first time for neglect, which led to several of his patients contracting the HIV virus. The dental profession has since had to adopt a constant vigil to ensure patient safety. Following several lawsuits in the 1990s, dentists now have to face the threat of a lawsuit even for everyday missteps, such as spraying water in a patient’s eye. Though that particular case was successfully defended by the dentist, the doubt and fear that a lawsuit raises is enough to turn away future clients.

Running a dental practice requires the precious care of every patient’s safety. Managing one’s own practice s extremely time consuming, but incidents sometimes arise that compel patients to feel as if not enough precautions were taken with their dental procedure. This in itself is a stressful and dissatisfying aspect of the profession, especially as according to the Journal of Occupational Psychology, most dental practitioners cite interaction with patients as the highest cause of job satisfaction. Moreover, it is said that the single biggest fear of any licensed healthcare practitioner is being sued by a patient. Not only can a lawsuit be damaging financially, but it can tarnish a dentist’s reputation and place even further time demands on the office personnel through lengthy proceedings.

Recent state and provincial laws disallowing dentists from refusing clients that are infected with life threatening diseases adds another level of risk to a practice. While patients with perilous diseases are undeniably entitled to dental care, it means that dental practitioners are obligated to dedicate even more of their already limited time to ensuring procedural tasks such as sanitation are properly completed. A recent case against Dr. Stable in Ontario proved that some clients will pursue legal action even after a minor incident such as a non-scarring burn that occurred during a routine dental procedure. In addition to having to close his office for the duration of the trial, a trusted legal expert from JW Dental Legal malpractice lawyers, expressed that “The financial cost to Dr. Stable and loss of trust in dental professionals by Mrs. Fretter could likely have been avoided.”

The only way to truly protect oneself from potential lawsuits is “not only to do well, but to be seen doing well.” There are four common methods to ensuring your protection. The first is to keep up to date on new practice standards and keep informed on any developments or research within your field. The second is to maintain and enforce a constant level of communication with staff so that they do not omit any pertinent patient information. The third is ensuring all dental equipment is diligently inspected and maintained, and the final and- most effective method is to meticulously record all patient information and keep it well organized and separated. These files should also contain relevant conversations so they can be referred to should a patient pursue legal action.

While the above methods will provide piece of mind to concerned dentists, it further leverages a dental practitioner’s time towards administration tasks as opposed to patient care. By adding so many safety precautions to a dental practice’s existing administration tasks, it becomes necessary to hire additional staff. However, as we will see, this solution is not as simple and pain-free as one might believe.

2. Staff- The Leading Cause of Office Losses

In light of all the aforementioned time commitments that dentists must sacrifice to their administration and safety tasks, it becomes apparent that most dentists need qualified help within their business operations. As lawsuits can be costly and damaging to an office’s reputation, hiring quality administrative personnel and dental assistants becomes quintessential to the long term success of a practice.

Unfortunately, the process of identifying quality help can be extremely time consuming as well. In fact, the difficulty and level of expertise required to adequately staff an office has resulted in the opening of several businesses that focus exclusively on matching prospective dental assistants to offices in major urban centres. For any potential candidate, it is extremely important to check their qualifications as well as conduct a reference check. Administrative personnel hold a great degree of responsibility, as their organization and awareness on the job is the first line of defence against a lawsuit.

Aside from causing damage to the office through negligence, the Canadian Dental Association (CDA) warns that dental assistants and administrative staff can also knowingly cause damage. Many dentists have listed employee theft as one of the leading causes of office losses.

While the risks and difficulties of hiring adequate staff for a dental practice can be viewed as a necessary evil, they also bring with them rising costs. As a dental practice expands its personnel to take on more clients, its profit margin is significantly reduced. In 2000, a study by the International Journal of Health Studies showed that Canadian dentists spent a total of $928 million on administration expenses. When all the admin expenses are factored in, the actual practice owner can only expect to receive 35% of total revenues in compensation.

Possible mitigating measures may incorporate the use of staffing agencies. These agencies can save countless hours in pre-screening employees and finding- suitable matches. They can also provide valuable training to employees such as CPR certification or radiography training. One of the best features of these agencies is that many will allow for a trial period, whereby an employee can be tested out for a short period of time to make sure they will fit with the organization. However, the best staffing practice remains holding on to current staff members and keeping them satisfied with their job. Tenured employees will know what is expected of them, they will be less likely to break an employer’s trust, and they will develop a sense of ownership and responsibility for the practice.

3. Job Satisfaction -A Highly Emotional Decision

In Geoff’s story at the beginning of this report, we identified one common factor that was shared by most dentists: that the decision to become a dentist is usually an emotional one. For many dentists such as Geoff, the profession of dentistry offers a promise that one day you will be able to protect people and ensure that those closest to them smile brighter and more often. For many others, their dedication to their profession is a way of ensuring that their family will always be well taken care of. Unfortunately, in today’s times we are seeing a trend of dentists fearing the response of their patients and sacrificing treasured family time to ensure the success of their practice. We have taken the time to analyze some of the main factors contributing to the high levels of work stress that is attributed to the dental profession.

Despite holding re atively strong job security and accumulating a high level of pay, dentists continue to cite extremely low levels of job satisfaction. While every dental practitioner will likely have their own life factors that are adding to their level of stress, there is a common denominator that appears to be present within most of the profession. Constant time constraints appear to be the number one cause of stress for dentists, as they also inhibit them from properly performing the tasks that bring the most reward. As a possible solution, we will examine how dental professionals can leverage their time in order to overcome this stress factor.

Firstly, it is important to identify the aspects of dental work that contribute most to job satisfaction levels. A case study by Harry and Rutter et. al, for the Journal of Medical Education, has shown that the most gratifying aspect of dental work is interaction with the patient and being able to help the patient to the point where they are satisfied. Not only is properly treating a patient beneficial in promoting the practice, but it provides a moral reward that reminds dentists that they are helping people, not just servicing teeth. Dentists who expressed the most opportunity for personalization with patients also provided the highest job satisfaction ratings.

Two of the five most common factors to stress are patients’ negative perception of the quality of service received and staffing problems. It is understandable that a lack of appreciation by the patient could cause extreme job stress, as pleasing the patient is the main reason why most dentists started practicing in the first place. The aforementioned difficulty with staff is statistically one of the most common sources of job stress for dental practitioners. Not only is it difficult to find qualified professionals to trust one’s practice to, but sometimes friction can arise between employer and employee, and absenteeism is a common problem.

The remaining three most common causes of job dissatisfaction are all interestingly enough, time related. Most dentists we spoke, interviewed and studied, expressed that working under constant pressures, keeping to appointed schedules, and conflicts between profit and ethics are the leading causes of stress in their life. Due to rising overhead expenses, dental practices need to schedule in clients on a tight timetable that does not leave a lot of time to focus on clients’ distinct needs and concerns. This work environment means that practitioners are placed in a position whereby they must sacrifice quality of care provided for quantity of patients serviced.

The relationship between profits and quality of service places many dentists in a desperate cycle, where in order to keep increasing profits they must continue sacrificing their own work satisfaction. Several studies (including the aforementioned one completed by the Journal of Occupational Psychology) have even proven that the described work environment when combined with the perpetual time constraints, can often lead to severe health problems for dentists.

Not surprisingly, these job stress factors extend far past the office. The aforementioned research has also shown that dentists can face detrimental effects from these stressors such as elevated levels of cardiovascular disease, alcoholism, drug abuse, divorce and suicide. The real irony of this comes into play when one considers that many dentists enter this field in order to provide a happy upbringing for their family.

After assessing all the above stress factors, it becomes clear that the key to increasing job satisfaction is to allot more time for patients and personal needs. However, due to increasing expenses and administrative needs, dentists across the country are finding themselves working longer and harder hours. One viable solution is for dentists. to delegate more of their administrative responsibilities to handpicked assistants they can trust. In order to cut down on the daily patient load, a dentist will have to ensure that his practice is generating revenue as efficiently as possible. Under many circumstances, this may involve investing revenues into passive income sources such as stocks, bonds or real-estate.

4. Exit Strategy- A Buyer’s Market

It seems that current students suited for the dental profession are confused about what dentistry may offer them and if it justifies the necessary school commitment. With the average 20-something now changing careers over 5 times in their lifetime, dentistry needs more of a commitment. Attention spans are shortening with the introduction of intense video games, cell phones, and technology, making commitment harder for people who would have been ideal for the position just a few short years ago.

In an online thread, an Australian student was looking to undertake a number of interviews to hopefully gain insight into pursuing a dental science program. In preparation for these interviews, he was looking for feedback from those reflecting on their reasons for wanting to study dentistry, and was hoping someone who had been through a similar experience could offer him some feedback or advice.

The biggest questions he had to answer for himself were, “Why dentistry?” and secondly, “Why dentistry over medicine?” Provided below is one of the most sincere replies he received:

“My personal motivation to pursue a career as a dentist comes from the very nature of the work. It’s diagnostic, technical, and surgical enough to be continually interesting. I realize that like any job, some aspects would become mundane, but with the human form, I feel like there would be enough patient variation to constantly pose a challenge. Coupled with this is the human aspect. I’m not an extremely outgoing “people person,” but I do enjoy communicating.”

Canada’s dental community is currently undergoing extreme changes that will affect the exit strategy of current dentists. Retiring and selling one’s practice has always been a careful process, and the decreasing number of potential buyers is sure to make this process even more difficult than in previous years.

Traditionally dentists have been known to retire at an earlier age than most other professions. Due to the high level of stress produced by the job and the generally high wages, dentists usually need to retire earlier and can afford to do so. However, in the upcoming years, Canada will be faced by the predicament of many baby-boomer dentists retiring within a narrow time frame. As over 30% of the country’s dentists are over the age of 50 already, the upcoming decades will see a large sum of dentists and dental workers going into retirement. Recent studies by the Canadian Dental Association (CDA) have revealed that this generation is expected to retire at an even earlier age, as “inheritances, safe investments, and a changing attitude towards full-time work will encourage this segment of professionals to sell or close their practices and enter into full or semi-retirement at an earlier age than the previous generation.”

In recent years, medical schools have seen their ranks filled to 50% or more by female students. While male dentists on average pursue their careers for an average of 35 years before retiring, CDA statistics show that female dentists will usually retire 15 years earlier than their male counterparts. As women only started entering the industry in numbers equal to men in the mid 1980s, the Journal of Dentistry (2008) stated that we should be feeling the consequences of these early retirements in the upcoming decade. This trend has a twofold effect, as not only will it further increase the amount of dentists selling their practice, it will also decrease the amount of part-time employees that are available, as well as increasing the numbers of dentists who decide to reduce their hours or accept part time work.

Dental journals and professional associations have forewarned the dental industry about a shortage of dentists for several years now. The Canadian government has reacted by increasing the accreditation standards for immigrating dentists that received their degrees from outside of Canada, which means that they will have to take additional coursework in order to be able to practice in Canada. Ironically, the demand for qualified dentists is at an all time high in Canada, as the population ages and proper oral hygiene continues to be increasingly accepted by the general population. With Canada’s growing need for geriatric dentistry, many new graduates will be able to quickly establish a client base and set up their own practice rather than purchasing an established office. Thereby, in the words of the CDA, “It becomes clear that there will likely be a shortage of full­ time dentists across Canada. This shortage may lead to lower selling prices for established practices when combined with normal death, disability and retirement rates.”

In terms of finding a solution, there are no creative strategies for overcoming the current market condition. The best course of action remains to follow traditional guidelines and maintain a healthy business while awaiting the sale. The following four steps are widely considered the most appropriate for efficiently and effectively selling a practice:

1) Plan 3-5 years in advance. Giving yourself plenty of time to find an adequate buyer and set yourself up for retirement will ensure that this crucial career stage is handled properly with ample due

diligence. During this time it is also important to access professional legal advice to ensure the

process is handled properly. Setting a deadline also ensures that you continuously take steps in reaching your goal, rather than constantly putting it off.

2) Enhancement of the practice and aesthetic details can greatly increase the value of a practice. Equipment renewal should only be considered if it is absolutely necessary to keep the practice running safely.

3) Choose an appropriate buyer. Sometimes it is not necessarily best to sell to the highest bidder. For example, if you accept the financing in order to make the deal go through, there is a chance the buyer will not be able to make their payments. Additionally, the whole sale process might be streamlined if the practice can be sold to an associate.

4) Access the professional help of an accountant and dental attorney. As the buyer and seller will

want to present the assets in different ways for tax purposes, it is important that a tax accountant handles the matter fairly and professionally. Also, in order to be protected from future legal repercussions, it is wise to seek the help of a dental attorney when finalizing the sale.

5. Retirement- Affording the Lifestyle Your Family Deserves

The sum of all these pains that are plaguing dentists is that the average practitioner will see a diminishing return on time invested towards his or her practice. Dentists that chose not to own their own practice might even be at an advantage in some cases, as selling a practice is becoming increasingly frustrating. As there are dwindling numbers of dental practitioners, many retiring dentists will be forced to sell their practice at a much lower price than desired. Similarly, as a practice’s number of patients continues to grow over time, more and more administrative expenses will amass and decrease the overall profit margin.

As most practice owners will seek to avoid this profit spiral, they will end up taking on more and more administrative responsibilities themselves, which means even more time will be dedicated to their practice instead of to their family.

According to research conducted by Woolhandler, Campbell and Himmelstein, the final drain on profits that most dental practitioners encounter is an extremely high tax bracket. The average annual income for a dentist in Canada, working full time, is $105, 800; hence, the average dentist will have a solid portion of their earnings fall into the highest provincial income tax bracket and the second highest federal bracket. For the average British Columbia dentist, this means that over 27% of profits are lost to federal and provincial taxes. Through investments such as RRSPs and TFSAs, many will be able to protect a part of their earnings from taxes. Unfortunately, RRSPs are fully taxable upon withdrawal while contributions to a TFSA are not tax deductible. Additionally, Canadians are only able to contribute $5000 a year to their TFSA, which essentially rules them out as a retirement financing vehicle.

Traditional investment strategies that have been embraced by dental practitioners in the past have also added to the grief of securing long-term financial security for practitioners and their families. The last few months of 2009 have seen even the most conservative investments plummet in value. Although all mutual funds have been devastated by the after-effects of the sub-prime credit crisis, the CDSPI (the investment arm of the CDA) has shown that even its low-risk investments are a gamble.

While dropping at rates comparable to the market average over the past year, most CDSPI funds show negative or marginally negative value increases even over a ten year time frame (see table below). This volatility is due to the fact most investment funds depend on the US stock exchanges, which have always been extremely susceptible to speculation. CDSPI’s conservative investment options share a common characteristic with most conservative mutual funds -their portfolio is made up largely of bonds. As seen from the graph below, the most steady (bond based) funds provided a minimal return on investment (about 4% over five years).

Alternative investment methods, such as investing in emerging markets or investment trusts, have also proven to be unreliable when retirement is at stake. Emerging markets will often require qualitative analysis due to a lack of relevant historical data. While this strategy has been known to discover diamonds in coal mines, it has also been prone to much higher, longer-term uncertainty than most investments, due to limited availability of information, political instability, and market limitations. Investment trusts, though a staple of the Canadian investing for many years, seem to have reached their peak. Due to recent government legislation, they will no longer be able to benefit from the same tax protection. Consequently, the Canadian Real Estate Investment Trust announced in its 2008 management discussion on operations and financial condition that it is expecting an 11% decrease on its return on investment.

Protect Yourself in Uncertain Times

As we all know, it can be stressful time in today’s busy world. Terrorism, natural disasters, bankruptcies, world hunger, global warming- the list of frightening events goes on. These are just a ew of the issues that bombard us every time we turn on the TV, open our newspaper, or log onto the nternet. Let’s face it: our world is changing at an astoundingly rapid pace. Technology is advancing a speeds we never could have imagined, and seismic shifts in global economic powers are happening overnight. In fact, we’re even walking faster than we used to.

An experiment conducted by Professor Wiseman in his book, Quirkology, revealed that in a sample of

32 cities, average walking speeds have increased by about ten per cent since 1994. Psychologists said the findings reflected the way that technology such as the internet and mobile phones had made people more impatient, leading them to cram more and more activities into a day.

The steepest acceleration was found in Asian “tiger” countries such as Hong Kong and Singapore, which have experienced particularly marked social and economic change. Pedestrians in these nations walk between 20 and 30 percent faster than they did in the early 1990s. Singapore has the quickest walkers in the world.

Such rapid change has brought along with it more uncertainty about our own lives, practices and financial situations. The more unpredictable the world becomes, the more we strive for a sense of control over our practice, our investments and our life.

As for, Geoff, he has recently been able to diversify his portfolio between well selected CDA advised investments and investments in private equity opportunities such as real estate investment firms. He currently took the initiative to protect his investment funds in five positive cash flow rental properties and believes this is helping secure his future should it become too much of a challenge to sell his practice. By diversifying his portfolio into real estate, Geoff has effectively eliminated the market uncertainties that plague other dentists while continuing to steadily increase his wealth.

Collins Acquisitions brokers another Victorian group

Collins Acquisitions are pleased report a new acquisition brokered in Victoria. Below are the importatn details published by G8′s press.

Queensland based childcare and education operator, G8 Education Limited (ASX:GEM) has acquired three childcare and education centres in Victoria for $6.2 million, boosting the number of centres it owns to more than 130.

The acquisition will be funded from existing cash and bank finance facilities.

G8’s Managing Director says the acquisition continues its expansion into Victoria.

The three centres are expected to contribute to earnings before interest and tax post settlement.

Separately, the company announced it increased its quarterly dividend from 1.5 to 2 cents per share.

G8 generated a net profit of $6.8 million in the first half of the 2012 financial year.

Dental Partners success in a recession

Mike Timoney opened up about Dental Partners model and how it has benefited owners during difficult times in the last few years. Collins Acquisitions was able to gain a good incite in to what Mike has spoken about below and can ensure your decision get tehri desired results. Read below to hear from CEO of Dental Partners on what they are dong to beat the recession with owners.

As growth in our economy grinds to a halt – some would argue is already going backwards – there is one sector that is still expanding rapidly and investing millions of dollars in the process: the dental corporate.

In my case, running one of the groups.A few months ago the banks had all but stopped lending and even after the Rudd government’s stimulus packages and guarantees, lending criteria has stiffened tremendously and investments in new ventures are rare. This is with the exception of the dental sector where not only have the banks honored their previous commitments to fund the growth of some of the dental groups, but also vastly increased their investment in the sector. This is an unprecedented move by the banks and should be viewed positively by all involved in the profession, whether in private practice or

Even in a recession, money needs to move. Banks need to lend, business need to borrow and expand and we all need to stay focused on staying optimistic and positive. What does change however is the way money flows as the banks will only invest in areas they believe to be tremendously secure. A flight to the health- care sector by the banks and corporate investors is a clear indication how secure our profession is currently viewed. So amidst a sea of depression, one area of the economy is still looking strong: ours.

Saying all of this, we need to be as vigilant as every other sector. Dentistry is not totally recession proof and I am sure you have all noticed some change within your practice over the past year. This may be a reluctance to comply with regular recall visits, or a more conservative take up of treatment plans and I am sure you have all had at least one patient not go ahead with work, blaming the current economic situation.

At Dental Partners, we are confronting these challenges head on with the full knowledge that improving efficiencies at this time, will not only safeguard us now, but as the economy eventually improves we will be more effective and profitable than our competitors. As one of the largest dental groups in Australasia, one of the ways we can improve the profitability of every practice within our group is with economies of scale.

There is strength in numbers and although all the dentists within Dental Partners are totally free to choose their choice of lab, equipment, consumables etc. we are able to provide these services at reduced rates, which drop directly to the bottom line. This is an important factor right now as these savings can easily offset a small downturn caused by the current economic situation.

Economies of scales are only one of the benefits of joining Dental Partners at this time. A few commentators predicted that our group and others would not be able to continue to expand at such a rapid rate. Well as previously stated, the support of banks only gets stronger and with the additional support of our major shareholder, Abano Healthcare Ltd, in New Zealand we are continuing to look for successful practices to become part of Dental Partners throughout the country. The current economic outlook has not changed the way we value a practice and practitioner and one of the unforeseen benefits of joining Dental Partners at this time is how you can use the equity released to you from the transaction. Property prices are dropping rap- idly, there are great deals to be done on items such as prestige cars and other luxuries and as the year progresses this will become even more acute. Doctors joining Dental Partners this year are going to be highly liquid at a time when they can really benefit for this liquidity.

Releasing the equity trapped within your business is certainly a major benefit of the Dental Partners model, but we truly believe so is the collegiate. Running a business, in particular a professional business, where you are providing both the actual service as well as managing the business can be a lonely job. Running a dental practice in my opinion is a full time job, but currently you do this as well as eight hours or more of dentistry per day. As part of the Dental Partners model, we can help remove some of the more mundane tasks you currently have to do allowing you to concentrate on the more rewarding aspect of running a vibrant practice.

Dr Gavin Clarke joined Dental Partners in 2008 and has this to say about his involvement:

“I would like you to know how pleased I am with the transition which has been totally seamless. From a daily clinical view, all continues as before – for both staff and patients. The Dental Partners team has at all times been extremely helpful, courteous and efficient. I look forward to the continuing working relationship between myself and Dental Partners.” Dr Gavin Clarke (Tweed Dental

Centre)

Whether the Dental Partners model is the correct opportunity for you and your goals, and indeed if your practice is the right fit for Dental Partners, can only be truly assessed through private and confidential discussions. Should you wish to organize a preliminary discussion, simply contact us on the details below and we will be delighted to arrange a time to visit you.

As for this year, we intend to be diligent but remain optimistic in the knowledge we are possibly better placed than any other sector in society to not only maintain our businesses, but expand them. I wish you well with the challenges 2009 may hold, and if appropriate I look forward to helping you with these.

Crown land perfect for child care shortages

An interesting article written by PATRICIA KARVELAS From: The Australian appeared today which having dealt with Tom in the past agree with his suggestion.

THE chief executive of Australia’s largest privately owned operator of childcare centres has called on governments to offer up crown land for new centres in areas with chronic shortages.

The intervention by Tom Hardwick of Guardian Childcare Alliance comes after the Gillard government last week flagged in The Australian that it wished to overhaul planning and taxation laws to create more childcare places.

Mr Hardwick said the most useful way governments at all levels could expand the availability of childcare would be the identification of suitable land to accommodate centres in areas where land is in short supply or the values too high.

The federal government last week said suburbs with childcare shortages faced an overhaul of planning, land and tax laws. It revealed it would widen its planned childcare reforms to push states and local governments to alter the system because of a crisis in places which was stopping some women from returning to work.

Mr Hardwick said while planning laws could be frustrating, the issue of land availability was the single-biggest impediment.

“Federal, state and local governments own a lot of land and potentially they could make some of that available to facilitate setting up new centres in areas of high demand,” he said.

“For example, if there is surplus land surrounding schools or hospitals, or open reserves with spare capacity, governments could make this land available for new centres to be built, whether by private operators or community groups. I am not aware of anything that has been done to make more land available to help with this issue.”

In respect of town planning, the key issue was the time it took to move through the process, especially when centres were being located in residential areas and residents were opposed.

“If there was a process that fast-tracked childcare centre development applications so they didn’t get caught up in the politics of local council planning that would also help solve this dilemma.”

Mr Hardwick said Sydney was the most challenging city in which to open new centres because the suburbs within a 5km to 10km range of the CBD were densely populated and land prices were high. “If you can find a site where the economics . . . add up, the town planning issues can be difficult in residential areas due to traffic issues and residents not wanting a childcare centre,” he said.

“If you buy a $3 million piece of land and that sits for two years while you go through the planning process with a 7 per cent interest rate, that is $200,000 a year just to hold the land while you go through the process with council.

“Never mind the consultant and legal fees that you end up paying, especially when you need to go to town planning tribunals because local politics overrides sensible town planning.”

The Coalition’s childcare spokeswoman, Sussan Ley, said she did not support the federal government’s planned changes to state and local planning.

“Instead of handballing the problem to local government, the Coalition’s Productivity Commission inquiry will also assess and then address any issues regarding a shortage of childcare places,” Ms Ley said.

Moves to increase childcare flexibility come after Tony Abbott vowed to have the Productivity Commission examine the possibility of extending the 50 per cent childcare rebate capped at $7500 a year to in-home carers, a move that gained traction with parents.

While the Opposition Leader announced plans for an inquiry after the election, Labor is planning a policy change in coming months.

Guardian Childcare Alliance has recently expanded its business by acquiring Jigsaw Corporate Childcare, Australia’s leading provider of corporate childcare.

European Dental Partners look to be taken over

Swedish based Lifco Group,has signed an agreement to purchase European Dental Partners (EDP) from private equity firm Silverfleet Capital. Lifco will then be one of Europe´s biggest dental group distributing consumables, equipment and technical services with market presence in 15 European countries.

Lifcos activities include subsidiaries in 29 countries with sales in more than 40 countries. The Group is divided into six business areas: Dental Products, Machinery & Tools, Sawmill Equipment, Contract Manufacturing, Interiors for Vehicles and Environmental Technology. According to the company, Lifco Dental Group for many years has been the market leading distributor in Sweden, Denmark, Finland, Norway, Estonia, Latvia and Lithuania.
In January 2011, Lifco entered the German market when acquiring the majority of the shares in NetDental GmbH, an internet based distributor of consumables to dentists and dental laboratories. With the addition of EDP, Lifco wants to expand its market presence in Germany and establish market positions in Switzerland, Austria, Hungary, Czech Republic, Slovakia, Slovenia and Croatia.

Furthermore, the acquisition of EDP ought to make Lifco one of Germany´s largest import based dental laboratories. After the acquisition, Lifco Dental Group will have a combined turnover of approximately SEK 3000 million (€336 million) and 1100 employees. The transaction is subject to regulatory approvals.
EDP, based in Lübeck, has an annual turnover of approximately 120 million Euros and employs around 630 people in nine countries. The company consists of two business areas, both within the dental industry – business area dental distribution and business area dental laboratory production.

Lifco states, after the acquisition of EDP the Lifco Group will have a total turnover of approximately SEK 6100 million (€638 million) and employ about 3000 people.