Smiles flags loss, sacks its founder

DECAYING Gold Coast dental group Smiles Inclusive has sacked its founder and flagged a crippling loss as a mortifying boardroom showdown approaches.

Shares in the listed company have been savaged in recent months, plummeting from 28.5c on February 28 to close at 15.5c yesterday.

In two statements to the ASX after the market closed, Smiles flagged an expected statutory loss of “at least $4 million” for the financial year and said it had terminated the employment of former CEO Mike Timoney (pictured) “for cause in accordance with his executive services agreement”.

“This follows the completion of an interim investigation into matters relevant to Mr Timoney’s employment as a senior executive of the company,” the statement said.

Mr Timoney remains a non-executive on the company’s board, from where he has mounted a mutiny aimed at ousting fellow directors David Usasz, Peter Evans and Tracy Penn.

Smiles had already downgraded its guidance for FY19 from a net profit of $2.3 million to a loss of between $500,000 and $1 million.

The company has launched court action against Mr Timoney, which he intends to defend.

In its statement last night, Smiles said it was implementing a turnaround plan with the company’s joint venture partners, financiers and other stakeholders to maximise prospects of a long-term solution.

It said recommencement of operations of its Smiles Onsite business, acquired as part of the Company’s IPO, had been slower than expected, and “a number of” the mobile trailers remain inoperative.

Smiles also flagged “a number of ongoing litigations” with the vendor of the mobile business and problems with “reconciliation and collection of debtors by the Company and its dental practices” and “reliance on external financiers”.

“The company has received a number of less material claims, including a claim by a former employee,” the statement said.

“The company does not consider these to be individually material however they are a distraction for management and an expense.

“Given the ongoing uncertainty in relation to these matters, the Company withdraws all previous guidance and does not consider it is appropriate to provide earnings guidance at this time.”

THE COMPANY WITHDRAWS ALL PREVIOUS GUIDANCE AND DOES NOT CONSIDER IT IS APPROPRIATE TO PROVIDE EARNINGS GUIDANCE AT THIS TIME COMPANY STATEMENT