The Australian Securities Exchange has demanded AMA Group provide quarterly cash flow and quarterly activity reporting in accordance with ASX Listing Rules 4.7B and 4.7C. AMA reluctantly complied, declaring the request was because of attention drawn to material uncertainty regarding the Group’s ability to continue as a going concern, identified by its auditors in its FY21 Annual Report.
“The board considers this matter resolved following the successful capital raising and enhanced banking facility arrangements announced in September and completed in October 2021. However, as these financing activities occurred following the release of the FY21 Annual Report, they are not reflected in the Annual Report nor taken into consideration by the auditors in the preparation of their opinion,” AMA said. The Group added that it “welcomed the opportunity to keep the market abreast of ongoing activities”.
CAPITAL RAISING AND ENHANCED BANKING STRUCTURE UPDATE
In the report, AMA said that during Q1 FY22, it successfully completed its accelerated 1 for 2.80 pro rata non-renounceable entitlement offer and a $50 million senior unsecured convertible notes offer.
The institutional component of the offer raised gross proceeds of $53 million at 37.5 cents per new ordinary share, experiencing take-up of 99.6 per cent of eligible shareholders. The retail component received less enthusiasm, raising $46 million with an overall take up rate of approximately 62 per cent.
AMA said it also successfully priced $50 million of subordinated notes which are convertible into ordinary shares and will mature in March 2027 unless otherwise redeemed, repurchased or converted earlier in accordance with their terms and conditions.
AMA added that it was pleased with the support for both the entitlement and convertible notes offers and positive feedback to management with respect to its strategy for the business. According to AMA, $72.5 million of the proceeds were used to permanently repay a portion of the company’s debt during the period.
Approximately $46 million relating to the retail entitlement offer was received after quarter end.
BUSINESS UPDATE
The business was significantly affected by COVID-19 during Q1 FY22, with lockdowns in New South Wales and Victoria continuing to be reflected in depressed repair volumes. AMA said that as at mid-October 2021, weekly national averages for drive and non-drive show up to 41 per cent and up to 20 per cent unutilised booking capacity, respectively. In New South Wales, drive and non-drive show up to 47 per cent and up to 60 per cent in unutilised capacity, respectively. In Victoria, drive and non-drive show up to 53 per cent and up to 35 per cent in unutilised capacity, respectively.
PAYMENTS TO RELATED PARTIES
AMA engaged with Leath Nicholson’s firm, Nicholson Ryan Lawyers, to retain his services as the outsourced General Counsel for the Group. AMA said given this appointment, Nicholson – currently a Non-Executive Director – will quit the AMA Group board at the 2021 AGM.
According to AMA, during Q1 FY22, approximately $333,000 of legal and advisory fees were paid to Nicholson Ryan Lawyers, a significant portion of which related to the capital raising activities.
SUMMARY OF CASH POSITION
AMA said it ended Q1 FY22 with a cash balance of approximately $63 million and unused finance facilities of approximately $8 million. Based on approximately $13 million net cash used in operating activities in the quarter, the total available funding of $71 million provides an estimated six quarters of funding available at September period end.
The company said the estimate of available funding is based on continued financial performance at the reduced repair volumes under New South Wales and Victorian lockdowns experienced during Q1 FY22, adding that the total available funding of $71 million does not include the receipt of $46 million related to the Retail Entitlement Offer after quarter end.
COVID-19
AMA believes it is well placed for the future, with COVID-19 restrictions beginning to ease in New South Wales and Victoria in the current quarter. AMA said Apple mobility trends data for Sydney shows increased private vehicular mobility as their recent lockdown restrictions began to ease and, consistent with the Group’s experience in 2020 post the easing of lockdowns, increased mobility is expected to drive increased repair volumes in the near future.
AMA CEO Carl Bizon said the company looks forward to the future with confidence.
“As the impacts of COVID-19 restrictions continue to lift, we can turn our focus to the execution of our strategy which will unlock the value inherent in AMA Group,” Bizon said.
AMA Group’s 2021 Annual General Meeting is scheduled for 18 November 2021 and will be held virtually.