Smiles results fail to remove uncertainty

GOLD Coast-based dental group Smiles Inclusive has finally announced its half-year results for FY20, close to eight months after they were due to be released.

The results showed a net statutory loss of $13.6m for the six months to December 31 – up from a $1.6m loss for the previous period. Included in the loss were non-cash items including impairment of goodwill, property, plant and equipment totalling $5.5m.

Auditor KPMG refused to issue a conclusion on the report because it was not able to gather sufficient evidence to support assumptions upon which Smiles claimed to be a going concern. KPMG said these assumptions included potential financiers to fund the repayment of Smiles’ NAB facility and raise additional working capital.

“A binding written agreement regarding the quantum, timing, terms and conditions of this arrangement was not available to us,” KPMG said.

“Additionally, evidence regarding the ability of the potential financiers to honour the commitment, in the time frames required by the group, was not available to us.”

Smiles said it was in advanced negotiations with potential funders to repay NAB $12m plus credit card and other expenses by November 3 – a deadline six days earlier than previously announced.

KPMG also raised concerns about a proposed rights issue where Smiles was seeking to raise $8m ($7.6m net of fees) to pay back NAB.

KPMG said there was uncertainty on whether Smiles could successfully raise the minimum amount of funds to complete the capital raising.