First Dental Laboratories says it 'will buy one or two other laboratories before year end' after turning round its lossmaking £4.9 million Benchmark acquisition in four months.


AIM-quoted First Dental, which cut its losses from £107,000 to £55,000 in the six months to May on turnover up £3.5 million to £5.9 million, blames its problems on managerial lapses discovered at Benchmark Dental Laboratories, which it bought for shares and cash in December. That deal established Loughborough-based First Dental as market leader in Britain's fragmented £400 million false teeth market, but, says executive chairman Andrew Garner, although Benchmark had itself taken over several good businesses, 'it was very poorly run'.


'All the Benchmark managers, bar one, were sacked on day one,' recalls Garner, who maintains 'we turned the business round on four months and won back all the clients the company had previously lost.' The key to success in the teeth business, he explains, is maintaining a close relationship between the company's technicians and the dentists, dental surgeons, orthodontists and other professionals it supplies and delivering bespoke products to order and on time.


Acquisitions have fuelled growth at First Dental, which made £109,000 pre-tax in the full year to last November on £5.1 million turnover (less than in the current year's first half). One consequence of the acquisitions was a nearly-quadrupled £395,000 depreciation and amortisation charge, which, with interest bills up from £37,000 to £109,000, turned an operating profit of £412,000 into an interim loss of £55,000.


Even so, the company, which raised £4.5 million at 30p at the time of the Benchmark acquisition, closed the first six months with cash of £2.3 million. Garner says 'we are still acquisitive now Benchmark is up to scratch and we are talking already.'


He claims First Dental is on track for annual turnover of £14 million and adds 'I can see us taking that to the mid-£20 millions and beyond without having to go back to the stock market.' Garner argues a business where National Health Service margins are 30 per cent and private sector margins 50 per cent is robust – though he hopes the British middle classes will soon develop the same concern for cosmetic dentistry as their counterparts in the USA, who spend five times as much beautifying their teeth.


A volatile AIM performer this year, First Dental is 2.25p up this morning at 36.25p. If planned deals please, it should go further.

1st Dental Laboratories	AIM	£1.68m	4.00p	0.00p
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