AMA Group has recorded a net loss after tax of $146.8 million for the financial year ending 30 June 2023, a $1.2 million improvement on the $148 million loss posted for the corresponding period in 2022. This year’s result incorporates the impact of non-cash impairment expenses of $116.8 million, including $57.7 million and $52.6 million in goodwill impairments related to Capital S.M.A.R.T and AMA Collision, respectively.
Normalised post-AASB 16 EBITDA was $64.6 million (FY 2022: $21.6 million), while revenue and other income from continuing operations improved to $869.6 million (FY 2022: $844.9 million). Vehicle Collision (Capital S.M.A.R.T and AMA Collision) accounted for 88 per cent of revenue, while Heavy Motor was responsible for eight per cent and Supply four per cent. The group repaired 260,000 vehicles during the period in its 140 centres.
Revenue increases were largely the result of revised pricing arrangements with major insurers taking place during the period, impacted by five per cent lower repair volumes resulting from network optimisation.
The company ended the year with $28.9 million in cash and cash equivalents (FY 2022: $52.2 million), with operating cash inflows of $17.6 million for the year, a substantial improvement on the $28.2 million operating cash outflows in FY 2022. This includes the positive impact of a $15.3 million tax refund and outflows of $5.8 million in make-good costs associated with closed sites and a $3.7 million inventory build in ACM Parts.
“FY 2023 was expected to be a transition year, with several operational initiatives undertaken during the period,” said Carl Bizon, Executive Director and CEO of AMA Group. “FY 2023 was characterised by strong repair volume demand, adversely impacted by industry-wide labour constraint-related throughput challenges. In [H2 2023], industry participants sought to fill vacancies from a limited labour pool, which led to elevated lateral hiring activity and contributed to higher employee costs per hour and operational disruption.
“Whilst we led the market in achieving pricing increases with many of our insurance customers, many industry contracts still do not contain appropriate dynamic adjustment mechanisms to insulate parties from external pressures such as inflation or increasing repair severity. This remains a key characteristic of the current operating environment.
“These factors, combined with the supply strategy progressing slower than anticipated, meant the Group did not achieve our original guidance, but delivered a normalised post-AASB 16 EBITDA result slightly more than the middle of the revised guidance provided in April 2023. Further, we delivered a $43 million increase in normalised, post-AASB 16 EBITDA, thanks to the hard work and dedication of our teams across Australia and New Zealand,” said Bizon, who will retire at the company’s 2023 AGM on 23 November.
The FY 2023 result means AMA has lost more than $450 million since 2020, but Bizon said the company is preparing for profitable growth in line with its strategic objectives, with strong trading results from May to August 2023 providing confidence in its FY 2024 guidance.
The company describes key issues for FY 2024 as including:
- Growing the workforce in a continued labour constrained environment, domestically and internationally
- Pricing remaining a focus, with ongoing inflation and severity changes needing to be recovered
- Capital S.M.A.R.T being reset through commercial price resets, and operational initiatives that will improve customer and profit outcomes
- Continued expansion of ACM Parts’ strategy, with an aftermarket focus
- Conservative approach to cash management, with tight controls on discretionary and capital expenditure
- Growth in core repair activity maximising existing infrastructure and expanding where appropriate
- Refinancing of residual debt facilities through FY 2024 being a priority
The company issued FY 2024 guidance of $86 to 96 million in normalised post-AASB 16 EBITDA.
AMA has also successfully raised $55 million in new capital. The cash will be applied to the principal repayment of $35 million of existing senior bank debt by 31 December 2023, provide liquidity and working capital in accordance with the company’s strategy, and support the execution of refinancing of residual debt facilities throughout FY 2024.
“The equity raising and proposed financing initiatives will provide AMA the ability to focus our attention on the growth strategy and drive value enhancement initiatives. We are pleased with the strong support provided by existing shareholders and new investors,” said Bizon.