Comeback hopes of ex-Smiles boss suffer a blow RBA puts hold on cash rate

OUSTED Smiles CEO Mike Timoney’s chances of retaking control of the dental group he founded have been dealt a blow after Morgans threw its weight behind current management.

The stockbroking firm, which was underwriter for last year’s float, is directing clients to vote against the removal of

executive director Tracy Penn and chair David Usasz and for

the removal of Mr Timoney and former chair David Herlihy as directors.

Morgans executive director Phillip Lee said the company was disappointed with the performance of Smiles under Mr Timoney and Mr Herlihy and supports the measures outlined by current management, including CEO Tony McCormack, to turn the company around.

Morgans picked up $1.75 million in fees for last year’s initial public offering, which was several times oversubscribed.

While the float was successful, with the share price hitting a high of $1.16 soon afterwards, the company’s performance quickly went into a downward slide after its first half-year results.

Those results included an after-tax loss of $1.59 million on practice revenue of $16.1 million.

Smiles blamed a number of reasons for the loss, including the nondisclosure of a court case by one of the vendors that sold to the dental group, as well as delays in physical and key branding, poor rostering systems and integration costs.

After Mr Timoney was

dumped as CEO following the poor first-half results, he mounted a challenge to the new board, stating he, as well as Mr Herlihy, were victims of “renegade” directors who had resisted attempts to renew the board with executives with dental experience.

Morgans is also directing clients to vote against the appointment of Mr Timoney’s ally Dr John Camacho to the board. Dr Camacho is a paediatric dentist and Smiles management has previously said, that while it supports the appointment of dentists to the board, specialist dentists make up a small number of Smiles employees.

The EGM where the motions will be voted on will be held on May 22. Shares closed yesterday down 15 per cent, or 2.5¢, at 13.5¢.