AMA : 4Q22 Quarterly Cash Flow and Activities Report

ASX Announcement

For personal use only

29 July 2022

4Q22 Quarterly Cash Flow and Activities Report

AMA Group Limited (ASX: AMA) (AMA Group) today provides its Appendix 4C Quarterly Cash Flow and Activities Report for the quarter ended 30 June 2022 (4Q22) (unaudited).

Highlights

• Increased full year normalised EBITDA1 (post-AASB 16) guidance by approximately 30% to $20-22 million
• $52.2 million closing cash balance at 30 June 2022 exceeded $50.0m guidance by $2.2 million
• Cash from operating activities $9.7 million for the quarter, including one-off items accounting for approximately $10 million cash inflow
• Total cash used in the quarter of $6.1 million, including earn-out payments of approximately $4.4 million
• Negotiations with all insurance customers commenced with strong acknowledgement of the need for improved pricing
• Network optimisation continues with scarce human resources redeployed and net structural cost savings achieved
• ACM Parts opened new 20,000 M2 distribution facility in Somerton, a critical strategic enabler
• Partnered with Defib for Life to install public access defibrillators in all sites and donate eight devices to local sporting clubs

Business update

As previously noted, AMA Group had hoped the six months ending 30 June 2022 would bring a more "normal" set of operating conditions. However, labour constraints associated with COVID-19, related isolation requirements, and additional non-COVID-19 related illness, combined with a constrained labour market has continued to impact productivity. This impact is expected to continue into FY23, although AMA Group is seeking to address its workforce needs through a combination of increased apprenticeship numbers and the commencement of a targeted multi-country skilled migration program.

AMA Group Repair Volumes (7 day rolling average rebased to 100): 1 July 2020 - 30 June 2022

120

100

100

80

60

40

20

0

1 Jul 20

1 Aug 20

1 Sep 20

1 Oct 20

1 Nov 20

1 Dec 20

1 Jan 21

1 Feb 21

1 Mar 21

1 Apr 21

1 May 21

1 Jun 21

1 Jul 21

1 Aug 21

1 Sep 21

1 Oct 21

1 Nov 21

1 Dec 21

1 Jan 22

1 Feb 22

1 Mar 22

1 Apr 22

1 May 22

1 Jun 22

Source: AMA Group data

1 Normalised EBITDA is Earnings before interest, tax, depreciation, amortisation, impairment, fair value adjustments and non- recurring items for continuing operations.

AMA Group Limited

Level 13, 484 St Kilda Road, Melbourne, VIC 3004 ABN 50 113 883 560 [phone] [e-mail] amagroupltd.com

4Q22 repair volumes were similar to 3Q22. As the Group continues network optimisation activities, historical volumes analysis becomes less meaningful, as the business is reset to a new capacity baseline in the absence of additional acquisitions in the current period.

For personal use only

Pricing Negotiations

During May and June 2022, AMA Group contacted all insurer partners and advised of updated labour rates and, where relevant, average cost models across the Non-Drive and Drive networks (excluding Capital S.M.A.R.T) which reflect the increased cost of repairs, driven by labour force and inflationary pressures. Further the Group advised of additional charges for cost imposts previously absorbed without charge by the business.

The effect of pricing negotiations is expected in FY23 and beyond. Negotiations for adjustments to rates with several insurers are ongoing into FY23. During this time, repair volumes at some sites are expected to be impacted.

AMA Group CEO, Carl Bizon said, "It is critical that we are paid fairly for the value we deliver to our insurer partners. Insurers understand the pressures the industry is facing, and I look forward to concluding our negotiations with them, as we seek to continue our long-term partnerships which deliver value to all parties."

Network Optimisation

AMA Group is committed to the optimisation of its network, and to ensuring fair compensation for the value of work delivered. Adjustments to the network, and redeployment of AMA Group's highly skilled and valued Team members has commenced, to maximise the efficiency of the network and focus on profitable work.

As previously noted, AMA Group decided to close the Gemini business in Prestons, New South Wales after commercial negotiations failed to achieve a fair price that reflects the value of work delivered at that site. All Team members from Gemini Prestons have been redeployed to AMA Group sites in the surrounding area. The exit is expected to deliver an annualised benefit of approximately $1 million EBITDA.

In Western Australia, the Group has consolidated existing operations at Gemini Melville and Gemini Welshpool Assessment Centre into a super site at Booragoon, creating a co-located Capital S.M.A.R.T and Gemini (Drive and Non-Drive) business. The Team at Melville have relocated to Booragoon, and the Team at Welshpool have been redeployed to other AMA Group sites in the local area. The consolidation is expected to deliver annual expense savings of over $0.6 million.

AMA Group has relocated the Capital S.M.A.R.T Riverwood (New South Wales) operations to RPM Milperra (New South Wales). The Milperra site offers superior operating conditions to Riverwood but had been underutilised for some time. All Riverwood Team members are transferring to Milperra or alternative sites within the Sydney Capital S.M.A.R.T network. The existing Milperra staff have been redeployed to other Non-Drive sites. This move will save the Group approximately $0.6 million in expenses associated with the Riverwood site.

In New South Wales, the Group has decided to exit three hibernated sites, which had been fully provisioned for at the Half Year. These sites are Luxury Bodyworks in Five Dock, Gemini Campbelltown and JPV Smash Repairs in Kogarah. The closure of these sites will deliver annualised expense savings of $1.2 million. All Team members originally based at these sites had previously been redeployed.

Californian Smash Repairs in Botany has been operating with inadequate volumes for some time, and the decision has been made to exit this site. All Team members will be redeployed across the AMA Group network as at early August. Annual expense savings of $0.5 million are expected at the conclusion of this lease.

In Victoria, Gemini Sunshine will close at the end of July and the Group will save $0.2 million per annum associated with expenses on this site. All Team members will be redeployed across the AMA Group network.

AMA Group CEO, Carl Bizon said, "Our skilled technicians are our most precious resource. With a vast, and in several sites, understaffed, network, it is critical that our Team is deployed in the most efficient manner across our network.

2

Partnership with Defib For Life

For personal use only

AMA Group is committed to the safety of its Team, customers, contractors, and local communities. This is why the Group partnered with not-for-profit foundation, Defib For Life to install defibrillators in all sites across its network. Commencing in 4Q22, the rollout is expected to be completed by September 2022. In addition, the Group has donated eight defibrillators to clubs nominated by Team members around the network, which are being rolled out throughout the quarter ending 30 September 2022 (1Q23).

ACM Parts official opening

On 22nd June, ACM Parts officially opened the new distribution centre in Somerton, Victoria. This was a key step in the execution of the AMA Group Supply strategy, as it provided the opportunity to showcase new releases in ACM Parts' four product ranges: Genuine, Reclaimed, Aftermarket parts, and collision repair Consumables.

Payments to related parties

There were no payments to related parties during 4Q22.

Summary of cash position

AMA Group ended 4Q22 with a cash balance of approximately $52.2 million and unused available finance facilities of approximately $5.6 million. Based on the net cash from operating activities of approximately $9.7 million, the Group is not required to provide the "Estimated quarters of funding available" under item 8.5 in the attached Appendix 4C.

4Q22 operating cash flows included approximately $10 million of one-off cash inflows, including prepayment of future revenues, which will not carry forward into future trading periods. 4Q22 also included $4.4 million in earn out payments. Whilst operating cash flows are projected to be positive in FY23 (subject to no significant changes to population movement as it relates to COVID-19), the early part of the year will continue to be affected as the benefits of easing labour constraints and the phasing of new commercial pricing arrangements are realised.

Results for the 12 months to 30 June 2022

AMA Group will release its results for the 12 months to 30 June 2022 on 23 August 2022. A teleconference and webcast will be held at 11:00am AEST on that day, and registration is available via the AMA Group website.

AMA Group expects normalised EBITDA (post-AASB 16) in the range of $20 - $22 million, exceeding previous market guidance of $12 - 17 million.

Other than these matters there were no other material developments or material changes in business activities during 4Q22.

This announcement has been authorised by the Board of AMA Group Limited.

ENDS.

Investors and Media:

Alexandra Holston, Director Investor Relations and Corporate Affairs

1. [e-mail]: [phone]

3

			Appendix 4C
			Quarterly cash flow report for entities
			subject to Listing Rule 4.7B
	Name of entity
	AMA GROUP LIMITED
only					Quarter ended
ABN				("current
				quarter")
	50 113 883 560		30-Jun-22
	Consolidated statement of cash flows		Current Quarter	Year to date
		(12 months)
					$A'000	$A'000
	1	Cash flows from operating activities
	1.1	Receipts from customers (inclusive of GST)		227,313	946,798
use	1.2	Payments to suppliers and employees (inclusive of GST)		(209,761)	(948,183)
	(a)	research and development		0	0
	(b) product manufacturing and operating costs		(112,528)	(548,017)
	(c)	advertising and marketing		(487)	(1,340)
		(d)	leased assets		(5,643)	(26,869)
		(e)	staff costs		(82,461)	(335,318)
		(f) administration and corporate costs		(8,642)	(36,639)
	1.3	Dividends received (see note 3)		0	0
	1.4	Interest received		97	198
	1.5	Interest and other costs of finance paid	Interest elements of	(7,957)	(26,387)
	lease payments
personal	1.6	Income taxes paid		0	(1,158)
1.7	Government grants and tax incentives		0	501
1.8	Other (provide details if material)		0	0
	1.9	Net cash from / (used in) operating activities		9,692	(28,231)
	2	Cash flows from investing activities
	2.1	Payments to acquire or for:
		(a)	entities		0	0
		(b)	businesses		(4,364)	(10,840)
		(c) property, plant and equipment		(2,564)	(6,793)
		(d)	investments		0	0
		(e)	intellectual property		(486)	(546)
		(f)	other non-current assets		0	0
	2.2	Proceeds from disposal of:		0	0
		(a)	entities		0	0
		(b)	businesses		0	0
		(c) property, plant and equipment		2	229
		(d)	investments		0	0
		(e)	intellectual property		0	(0)
		(f)	other non-current assets		0	0
	2.3	Cash flows from loans to other entities		0	0
	2.4	Dividends received (see note 3)		0	0
	2.5	Other (provide details if material)		0	0
	2.6	Net cash from / (used in) investing activities		(7,412)	(17,950)
For
3	Cash flows from financing activities
3.1	Proceeds from issues of equity securities (excluding convertible debt		0	95,285
securities)
3.2	Proceeds from issue of convertible debt securities		0	50,000
3.3	Proceeds from exercise of options		0	0
3.4	Transaction costs related to issues of equity securities or convertible debt		(3)	(6,006)
securities
3.5	Proceeds from borrowings		0	0
3.6	Repayment of borrowings		0	(72,500)
	3.7	Transaction costs related to loans and borrowings		0	0
	3.8	Dividends paid		0	0
	3.9	Other (provide details if material)	Principal elements of	(8,369)	(32,531)
	lease payments
	3.1	Net cash from / (used in) financing activities		(8,372)	34,248

	4	Net increase / (decrease) in cash and cash equivalents for the period
	4.1	Cash and cash equivalents at beginning of period			58,336	64,203
	4.2	Net cash from / (used in) operating activities (item 1.9 above)		9,692	(28,231)
only	4.3	Net cash from / (used in) investing activities (item 2.6 above)		(7,412)	(17,950)
4.4	Net cash from / (used in) financing activities (item 3.10 above)		(8,372)	34,248
4.5	Effect of movement in exchange rates on cash held			(55)	(81)
4.6	Cash and cash equivalents at end of period			52,189	52,189
	5	Reconciliation of cash and cash equivalents				Current quarter	Previous quarter
		at the end of the quarter (as shown in the consolidated statement of cash		$A'000	$A'000
		flows) to the related items in the accounts
	5.1	Bank balances			52,189	58,336
	5.2	Call deposits			0	0
	5.3	Bank overdrafts			0	0
	5.4	Other (provide details)			0	0
use		Cash and cash equivalents at end of quarter (should equal item 4.6
5.5 above)				52,189	58,336
6	Payments to related parties of the entity and their associates				Current quarter
								$A'000
	6.1	Aggregate amount of payments to related parties and their associates				0
	included in item 1
	6.2	Aggregate amount of payments to related parties and their associates				0
	included in item 2
		Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity
personal		report must include a description of, and an explanation for, such
	payments.
						Total facility	Amount drawn at
	7	Financing facilities				amount at quarter
							end	quarter end
		Note: the term "facility' includes all forms of financing arrangements			$A'000	$A'000
		available to the entity.
		Add notes as necessary for an understanding of the sources of finance
		available to the entity.
	7.1	Loan facilities				182,500	176,923
	7.2	Credit standby arrangements
	7.3	Other (please specify) CONVERTIBLE NOTES				50,000	50,000
	7.4	Total financing facilities				232,500	226,923
	7.5	Unused financing facilities available at quarter end					5,577
		Include in the box below a description of each facility above, including the
		lender, interest rate, maturity date and whether it is secured or
	7.6	unsecured. If any additional financing facilities have been entered into or
		are proposed to be entered into after quarter end, include a note
		providing details of those facilities as well.
		Facility	Lender	Interest rate	Maturity Date	Secured
					5 years (Oct
		182,500	Australia and New Zealand Banking Group Limited	BBSY+365bps*	2024)	Secured
			National Australia Bank Limited ABN 12 004 044 937
For			Bank of China Limited
		Bendigo and Adelaide Bank Limited
		First Commercial Bank
		Perpetual Corporate Trust Limited ACF The Metrics Credit
			Partners Diversified Australian Senior Loan Fund
			Westpac Banking Corporation
					5.5 years (Mar
		50,000	Various - Notes listed on SGX-ST	4%pa Coupon	2027)	Unsecured
		*Margin to be determined pursuant to a sliding scale w ith reference to Net Senior Leverage Ratio first tested in Jun-
		22. (Max Margin: 365bps; Min Margin 225bps)
	8	Estimated cash available for future operating activities				$A'000
	8.1	Net cash from / (used in) operating activities (item 1.9)					9,692
	8.2	Cash and cash equivalents at quarter end (item 4.6)					52,189
	8.3	Unused finance facilities available at quarter end (item 7.5)				5,577
	8.4	Total available funding (item 8.2 + item 8.3)					57,766