AMA Group has provided its Appendix 4C Quarterly Cash Flow and Activities Report for the quarter ended 31 March 2022 (Q3 FY2022). According to the report, while repair volumes increased, the business continues to be impacted by COVID-19 issues including a slower than expected return of volumes, customer ‘no-shows’ and isolation-related employee absenteeism.
The Group reported total cash used in operating activities over the quarter of $15.3 million, and total cash used in the quarter of $22.9 million. There were positive operating cash flows in February and March 2022, with total available funding of $63.6 million at 31 March 2022.
Operating cash flow was lower in Q3 FY2022 compared to Q2 FY2022, largely driven by slower than anticipated repair volumes, repair mix and an increase in staff payments as more employees returned to work to support the expected volume recovery.
AMA ended Q3 FY2022 with a cash balance of approximately $58.3 million and unused available finance facilities of approximately $5.3 million.
“Based on the approximately $15.3 million net cash used in operating activities in [Q3 FY2022], the total available funding of $63.6 million provides an estimated four quarters of funding available at the March period end,” AMA said.
“The Group recognises, however that this does not consider total cash outflows of $22.9 million during the quarter, largely driven by soft operating cash flows in January 2022, and the $5.3 million in unused available finance facilities relates to unused bank guarantees which are not available to fund operations. Calculated using total cash outflows and excluding the unused bank guarantees from available funding, there are less than three quarters of funding available.”
The estimates are based on the continuation of challenging conditions experienced in Q3 FY2022. However, AMA said positive cash flows in February and March 2022 reflect the ongoing improvement in operating conditions and the Group expects this trend to continue as conditions normalise.
AMA said it hoped the six months ending 30 June 2022 would bring a more normal set of operating conditions, but the impact of COVID-19 on the Australian and New Zealand economies continue to challenge all labour dependent businesses.
Throughout the quarter, the Group said it was significantly impacted by COVID-19 related isolation of team members who tested positive to the virus and / or those deemed close contacts. With approximately 100 full time equivalent absences per day on average across the three-month period, the Group estimated subsequent reduced volume resulted in a negative revenue impact of approximately $10 million to $15 million across Q3 FY2022.
January repair volumes remained significantly COVID-19 affected, with recovery slower than anticipated, but volumes continued to increase across the quarter. AMA said improved net cash from operating activities from January to March is reflective of the ongoing improvement in trading conditions and increase in repair volumes.
Third quarter volumes were up approximately 13 per cent on Q2 FY2022, and trending upwards month on month, but quarter volumes remain significantly down (27 per cent) on the comparable calendar year 2019 period.
“Like many businesses that rely on labour for revenue generation, we have continued to be impacted by COVID-19,” said Carl Bizon, AMA Group CEO. “It is pleasing to see returning repair volumes despite these factors. I am heartened by the trend we have seen and the return to positive operating cash flows.
“Recently announced changes to isolation rules in Victoria and New South Wales should support ongoing volume recovery as the impact of staff absenteeism is expected to reduce.”