Confidence returns to bridgeand crown maker 1st Dental

BRIDGE and crown maker 1st Dental Laboratories insists it can still lead consolidation of the dental laboratory industry, despite its recent fall into administration and subsequent buyout.

The Harrogate-based group was last week bought out of administration by Richard Hughes, co-founder of investment firm Zeus Group.

The former AIM-listed company called in administrators Leonard Curtis Recovery late last month when it became apparent a slump in private dental work was unlikely to reverse. Creditors including HM Revenue & Customs piled on pressure, leaving the group at risk of trading while insolvent.

1st Dental said a working capital injection from Mr Hughes means the group can now look forward with confidence.

“We still believe there will be consolidation in the industry, and the group remains best placed to take advantage of this,” said Nigel Spring, the group’s former chief executive and now managing director.

“Zeus provided the capital for the business with the confidence in the strategy and direction of the business going forward.”

The company leads the UK dental laboratory market with a five per cent share, competing with about 3,500 small laboratories across the UK, who serve the nation’s 28,000 dentists.

Mr Spring said tough conditions in the dental industry show little sign of easing, and believes there will be casualties from the army of small laboratories. He said this will provide opportunities to grow market share, although 1st Dental has no plans for acquisitions.

The group first warned of a weakness in private dental work at its half-year results in July, but at the time was “cautiously optimistic” for the full year. However, the slump continued through August and into September and 1st Dental was unable to raise extra funds.

“All of our large customers and suppliers were seeing the same thing,” said Mr Spring. “They were seeing a 10 to 20 per cent decline in private revenues while the NHS was holding up.

“It’s a very tough and very competitive industry that’s seeing an element of globalisation with competitors from the Far East trying to get into the UK market.

“If there’s a volume decrease the smaller players are less likely to be able to ride through the problems and issues.”

Since calling in the administrators 1st Dental has closed its Blackpool laboratory with the loss of a handful of jobs, moving work to Stourport.

Mr Spring said this will leave the group with 13 laboratories and 214 staff, a position he broadly expects to maintain.

“We see that the regional nature of the industry is hugely important that we were pursuing was one of regional centres of excellence,” he said. “We still believe that this is absolutely sound strategy.”

He added the group will continue to invest in training and developing its staff, and continue to hold professional development sessions for its dentist clients.

It has also revamped its products and services with a range of prices. These cover the NHS, private and “premier” products, with both UK manufactured and foreign-made options.

The group is pioneering design and innovation in the industry. It recently launched a range of computer-designed crowns and bridges made from chromium cobalt.

Mr Spring said suppliers have been supportive, nor has 1st Dental seen disruption among its customers. “It’s not impacted on service,” he said.

He added Mr Hughes will adopt an arm’s length approach to his new investment, and has backed its current management.

Leonard Curtis Recovery recently said it will need to contact shareholders and creditors to spell out 1st Dental’s finances and how much they are likely to receive from its collapse.

Mr Spring was unable to say what this could mean for parties left out of pocket by the group’s collapse, and added he does not know how much it was sold for.

1st Dental’s shares floated in 2002 at 27p but were suspended last month at 4.25p.