AMA Group was required to provide quarterly cash flow and quarterly activity reporting to the ASX, reflecting the attention drawn to material uncertainty regarding AMA Group’s ability to continue as a going concern, as identified by the Auditors in the FY21 Annual Report.
However, the AMA board said in a statement that it 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.
In the report the Group highlighted that their recent capital raising has been completed, they have an enhanced banking structure including repayment of $72.5 million of bank debt and have total available funding of $71 million. Details of this have previously been reported.
The board also highlighted that the business was significantly COVID-19-affected during Q1 with lockdowns in New South Wales and Victoria continuing to be reflected in depressed repair volumes, supporting this assertion with mobility trend data.
The Group also reported on the details of related party transactions with current non-executive director Leath Nicholson’s firm, Nicholson Ryan Lawyers, to retain his services as the outsourced General Counsel for AMA Group. Given this appointment, Nicholson, will step off the AMA Group Board at the 2021 AGM. During Q1, Nicholson Ryan Lawyers received approximately $333,000 of legal and advisory fees.
However, the crux of the matter is the cash position. The Group ended the quarter with a cash balance of approximately $63 million, and unused finance facilities of approximately $8 million. However, on receipts of a quarter of a billion dollars, the operation burned through $13 million of cash reserve, which based on total available funding of $71 million provides an estimated six quarters of funding.
AMA Group CEO, Carl Bizon said: “We look 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.” Other than these matters there were no other material developments or material changes in business activities during the Q1.”
Editor: Not for the first time AMA Group is in the spotlight for all the wrong reasons. It will be interesting to see if the Group can deliver for their long-suffering shareholders when the economy is back on track.