Buy now pay later company Laybuy has appointed adviser NOR Capital to help it work through options to put its business on a more secure footing, as it reports mounting losses and questions about its ability to continue as a going concern.
Laybuy Group released its financial report for the 12 months to March yesterday, detailing runaway expense growth and a doubling of receivables write-offs.
Income of NZ$47.1 million was up 44.6 per cent on the previous year, on the back of 23 per cent growth in active customer numbers to 931,000 and 50 per cent growth in active merchants to 13,700.
Expenses were up 43.2 per cent to NZ$92.6 million.
The loss for the year was NZ$51.6 million – up from NZ$41.3 million the previous year.
The consumer receivables impairment expense increased from NZ$15.1 million to NZ$30.8 million. That included $28.4 million of write-offs plus an increase in the expected credit loss provision.
The company had previously reported that it has been hit with “prolonged, elevated credit and fraud losses” in its UK business since the start of the year.
It said it has introduced new credit risk and fraud management tools and it has “deactivated” merchants attracting high levels of fraud. It has also appointed a new chief risk officer.
Net cash used in operating activities was up from NZ$47.8 million in 2020/21 to NZ$51.9 million in the year to March.
Cash and cash equivalents at the end of March were $12.1 million.
The company said it will undertake a review of expenses and slow the growth of the business in the UK until further capital is sourced.
It will work with NOR Capital “to seek a strategic investor to provide capital to support the current business model and growth aspirations”.
It said it expects improvement in default loss rates.
The company said it has a proven track record in obtaining capital but its performance in this area is mixed. It raised A$40 million in June last year via a share placement and share purchase plan.
But in August it agreed to an early termination of a credit facility with Victory Park Capital Advisors.
In October it secured a new revolving credit facility with Partners for Growth to support the growth of the UK business and an increase in its Kiwibank revolving facility.