Gold Coast dental group Smiles Inclusive reports $18.9 million loss after writedowns, legal battles

Shares in Gold Coast dental group Smiles Inclusive have been drilled after the company revealed a worse-than-expected loss for the financial year.

Smiles Inclusive shareholders are feeling the pain. Photo: iStock

SHARES in struggling Gold Coast dental group Smiles Inclusive have brushed an all-time low after the company revealed a decaying financial position and ongoing legal battles had lead to an $18.9 million net loss — 281 per cent down from the previous year.

The company flagged a full-year loss of “at least $4 million” in May, off the back of a previous profit downgrade from $2.3 million profit to a $500,000 to $1 million loss.

Shares in Smiles, worth $60 million when it listed at $1 in April last year, were at 7.2c after the market closed today, with market capitalisation dipping below $4.8 million.

In its unaudited full-year results for the 12 months to June 30, released two hours after the market closed on Friday, Smiles reported increased revenue, from $6.06 million in FY18 to $30.59 million in FY19, but revealed a $13.7 million impairment of its assets had caused a cavity on its bottom line.

Despite a share issue that raised $1.2 million in June, Smiles said it had cash balances of $1.6 million and drawn debts of $24 million.

Smiles reported a sharp increase in receipts from patients — from $7.3 million to $47.06 million — but its payments to suppliers and employees grew faster — up from $8.53 million to $52.96 million.

Smiles Inclusive Chair David Usasz.

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The company said it had been drilled by a “breakdown of relationships” with some of its joint venture partners, as well as “unsuccessful integration of the business and associated ongoing business approach”.

Smiles said it had also been hurt by operational issues with its mobile division, and litigation issues which had “distracted management from the operations of the business and resulted in significant legal costs”.

“The unsuccessful implementation of the business model has resulted in poor financial performance and required the development of a turnaround plan,” Smiles said.

“The turnaround plan has been independently reviewed on behalf of our financiers and is being implemented.

“Turnaround initiatives have included a substantial reduction in support offices staffing levels, the benefits of which will flow through in FY20.”

Smiles Inclusive Ltd's dramas have been like pulling teeth. Photo: iStock

Smiles said it reviewed its goodwill balance at June 30, resulting in a net impairment of $13.7 million, leaving a goodwill balance of $49.2 million.

In April, after months of turmoil, Smiles said it was losing money and removed its founding CEO Mike Timoney, sparking a 22 per cent share price rally.

However, the trouble wasn’t over for the company, which has faced multiple legal battles, challenges to its board makeup and repeated public attacks by current and former shareholders and joint venture partners.