Smiles Inclusive: Crumbled company finally reports 2019-20 loss of $61m

Cracked Gold Coast dental company Smiles Inclusive has finally lodged financial reports for the 2019-2020 financial year, flagging a $61 million loss as it was suspended from the ASX for not paying its listing fees.

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Cracked Gold Coast dental company Smiles Inclusive has finally lodged financial reports for the 2019-2020 financial year, flagging a $61 million loss as it was suspended from the ASX for not paying its listing fees.

The company, which is subject to a deed of company arrangement after narrowly avoiding liquidation, said it had accumulated losses of $97.2m and liabilities of $62.9m as at June 30 2020.

It is yet to lodge a final report for the 2020-21 year. ASIC took the company to court last September after it failed to lodge its accounts on time.

In a preliminary final report released on Wednesday, Smiles said revenue was down 21.2 per cent to $27.3m for the FY20 year to June 30, 2020. Smiles said its final report was likely to change once its accounts had been audited as all of the directors, CEO or senior executives had left the company since that date.

“This is likely to result in a modified audit report, because the independent auditor may be unable to verify some information or may only be able to verify information by reference to documents,” the company said.

The company, which listed for $1 in 2018, last traded for 3.5c. It was suspended by the ASX last week over unpaid listing fees.

Creditors of the dental group voted in July to accept a deed of company arrangement proposed by Brisbane based Exit Solutions, which will eventually see that company own 90 per cent of shares in the battered Smiles.

Smiles Inclusive shareholders and joint venture partners have been drilled since the company listed. Photo: iStock

EARLIER, JULY 5

AFTER years of turmoil that has seen what was once one of the Gold Coast’s most successful listed companies slide into ruin, Smiles Inclusive Limited has narrowly avoided being tipped into liquidation.

The arrangement by Exit Solutions, which has a “mission to enable entrepreneurs a profitable exit from their exiting ventures” will provide $90,000 towards the administrators’ costs, and a payment to one or more secured creditors, but will leave unsecured creditors empty-handed.

Creditors voted on Wednesday to liquidate Smiles Inclusive subsidiary Totally Smiles, with the administrators, Deloitte’s Tim Heenan and Luci Palaghia appointed liquidators and no return expected for priority or unsecured creditors.

Smiles fell into voluntary administration in November 2020 after being unable to pay back a $20m loan to NAB. Dentists and joint-venture partners were owed $47m.

Since that time, the group has permanently closed 12 dental practices, sold 16 practices to Genesis Capital, and sold 21 practices to private purchasers.

In a statement to the ASX on Friday, administrators Deloitte said they had recommended creditors accept the Exit Solutions proposal.

“The DOCA is expected to result in a greater return to one or more secured creditors and reduce the overall loss to creditors as a whole as compared to liquidation,” the statement said.

Smiles Inclusive has sold most of its practices. Photo: iStock

“Unfortunately, the Administrators do not anticipate any distribution to unsecured creditors under the DOCA due to the terms of the DOCA and the financial position of SIL on appointment.”

Less than a week earlier, the administrators were recommending Smiles be placed into liquidation in the absence of a deed of company arrangement proposal.

In their report to creditors, the administrators said 92 Smiles staff had been picked up by Genesis, while another 90 staff “may have been offered employment” in the privately-sold dental clinics.

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