RBA rate call of no interest to former governor Phil Lowe as he celebrates with family in Brisbane

Philip Lowe was spotted at lunch in Brisbane on Tuesday showing no interest in the latest RBA rates call, while the property types at the table next to him were glued to their screens.

Former Reserve Bank governor Philip Lowe is living the high life. As the market was waiting for Tuesday’s interest rate decision, Lowe was enjoying a relaxed family lunch in Brisbane.

While his ex-board colleagues were announcing they were holding the cash rate target at 4.1pc, Lowe was chilling over a summer-style luncheon with his wife Australian Prudential Regulation Authority principal analyst Jocelyn Parker and family.

The lunch was nevertheless still a special occasion for Lowe, who turns 62 on Wednesday, October 4.

Monetary policy would have been the last thing on Lowe’s mind at the “laidback convivial taverna” Greca at Howard Smith Wharves, but he couldn’t completely get away from it.

The interest rate decision was all the rage at the table next to him where News Corp real estate digital editor Sophie Foster, Ray White chief economist Nerida Conisbee, the property firm’s media manager Alex Tilbury and writers Shannon Cook and Cassandra Glover could talk about nothing else and its impact on property prices.

Sore point

A trip to the dentist proved particularly painful for investors in failed dental group Smiles Inclusive. Now the truth behind the $91m collapse of the Gold Coast firm is being laboriously extracted in a public examination in the Federal Court. Former chairman David Usasz was first off the rank this week when he was asked about discrepancies in revenue figures given to the board’s due diligence committee compared with marketing material provided to investors prior to its IPO in April 2018. The committee was told Smiles would have revenue of $65m and 61 clinics. However, investors were promised revenue of $110m with 95 clinics. Usasz, who served as director and later chairman of the group, laid the blame at the feet of founding chief executive Michael Timoney who he said was “running this whole thing and unfortunately what was true and repeated by him wasn’t always the case.”

He later went on to say Timoney was an “excellent salesman who said he could make every one of those (clinics) much more efficient.” Timoney, who is not appearing in the examination, contacted your diarist from the UK to deny he did anything wrong.

Light being shone on failure of Smiles inclusive

Usasz is not the only Brisbane corporate high-flyer set to appear at the public examination. Morgans executives Philip Lee, Brian Sheahan and Tim Crommelin will appear on Wednesday. City Beat readers will recall that Morgans underwrote the Smiles IPO and its clients subscribed to the majority of the $35m capital raising. There was more from the examination yesterday about Smiles’ unusual business practices including using Bartercard dollars to help boost revenue projections ahead of its $35m initial public offering in 2018.

But promised revenue of $3.8m from the Bartercard deal failed to materialise with only $300,000 worth of Bartercard dollars used following the IPO in March 2018. The court heard that Smiles Inclusive shared a building with Bartercard.

Yesterday examining barrister Vicki Bell asked former Smiles Inclusive chief financial officer Paul Innes whether he recalled advising the board on the risks of using Bartercard to prop up revenue assumptions. Bell said that in February 2018 just before the stock market listing, Innes had advised that there were risks related to liquidity and redemption of vouchers.

“Given these risks and the fact it was an unusual type of system do you think the Bartercard revenue should have been included in the prospectus?” Bell asked.

David Usasz

Innes conceded that there were risks associated with Bartercard but they were correctly identified in the prospectus. He later advised the board that there was “very little certainty” that the promised Bartercard value could be achieved despite it being included in budget assumptions. He said both Smiles and Bartercard had planned to extract more value from the arrangement in time. Innes denied that he should have pursued more robust interrogation of assumptions in the company’s financial reports.

Although the IPO was an oversubscribed success story, Smiles swiftly fell victim to board infighting, the departure of key executives, profit downgrades and a crippling debt burden. Among the company’s many troubles was court action by ASIC, lawsuits, suspension from the ASX and the sudden death of a dentist. There are no allegations of wrongdoing by those called to appear at the public examination