Half Year Report 2011

When I invest, I look for companies that are run by people whom I can have complete trust in. I particularly avoid companies whose communication is confusing, misleading, ambiguous and evasive.

I am of the opinion that ONT is rather selective in the information that it shares with shareholders. It tends to focus only on the good news and try to much to explain or even avoid altogether any kind of bad news or setbacks.

There was one thing that happened with ONT that I never understand. I am hoping that followers of ONT whose opinions I value greatly can provide some light into this matter.

Please refer to the Half Year Report 2011.

On page 3 of the Letter From The Managing Director, under the section New Opportunities:



In Note. 9: Individually Significant Items of the same Half Year Report 2011:


As far I know, this Half Year Report was the only time ONT ever mentioned this initiative. By the time the Full Year Report 2011 was released, there was no mention whatsoever about this supposedly exciting development. Does anyone know what happened to this arrangement?

Looking at the above Note. 9, am I correct to assume that the accounting treatment of this is as follows:

On the Debit Side:
License Fee Receivable (Assets) +$900,000
Cash (Assets) +$116,000

On the Credit Side:
License Fee Revenue (Revenue recognised through P&L) +$183,000
Income in Advance (Liability) +$833,000

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There are other things that I'm not too sure:

- I know ONT holds 33% of Dental Members Australia. Does anyone know who holds the remaining 67%? Is it the CEO himself?


- As for the accounting treatment of the treatment plans, does this mean that if the customer fails to take up his/her entitlement for a dental check up during the 6 month period, he/she will forfeit his/her entitlement? If the customer doesn't forfeit it, that means in the future, there is a possibility of ONT having to render a service where no revenue can be recognised as it was already recognised in prior periods. Any insight into this is also appreciated.

- The above table is from the latest annual report. If we measure the percentage of OTC revenue retained by self employed dentists, this is what I get:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11	Column 12	Column 13	Column 14
0		'05	'06	'07	'08	'09	'10	'11	'12	'13	'14	‘15	‘16	‘17
1	OTC Revenue ($m)	7	8.3	11.2	18.6	27.6	30.7	35.7	45.9	48.5	43.3	53.2	51.4	51
2	Less amount retained by self-employed Dentists ($m)	1.6	2.1	2.8	3.4	5.3	6.8	6.9	9.2	12.3	11.5	16.6	14.9	14.8
3	Statutory Revenue ($m)	5.4	6.2	8.4	15.2	22.4	23.9	28.7	36.7	36.2	31.8	36.6	36.5	36.2
4	% retained	22.86%	25.30%	25.00%	18.28%	19.20%	22.15%	19.33%	20.04%	25.36%	26.56%	31.20%	28.99%	29.02%

I see a trend of increasing percentage of dentists opting to work as a self-employed dentists instead of an employee of ONT. Does anyone have any opinion whether this trend is beneficial or not to ONT? My feeling is this is not a favourable trend for ONT as more of the benefits have to be shared with the dentists instead of kept by the company.

- As for the sale of a few practices in the past few years, can anyone share any light the reasons behind this, what happened to these practices and how much ONT actually got from the sale? I might have missed these but I simply can't find anything about the sale.

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I think I've asked enough for a single post, if I think of something else, I will post it at a later time. In the mean time, than you all in advance!

Cheers