Buy now pay later company Openpay faces an uncertain future, with material uncertainty about its ability to continue as a going concern triggering a review of its A$65 million Australian receivables funding facility.
It has two other facilities maturing in the next couple of months that may not be renewed.
Openpay has taken action to cut its losses, announcing its exit from the UK market in January and shutting down its US operation in July.
These changes were not enough to slow the growth in expenses and losses in the year to June but will have a positive impact on the 2022/23 result, if the company gets that far.
Openpay reported a loss for $82.4 million for the year to June, following a loss of $63.1 million in 2020/21.
Revenue grew from $26.3 million in 2020/21 to $34.2 million in the year to June but the employee benefit expense alone was $44.1 million, other operating expenses were $33.3 million, finance costs were $17.7 million and the receivables impairment expense was $9.4 million.
Net cash used in operating activities was $81.2 million. Cash and cash equivalents on the balance sheet fell from $52.1 million in 2020/21 to $10.3 million at June 30. The company has a net liability of $14.9 million, making it technically, or balance sheet, insolvent.
The company said it is negotiating amendments to all three of its Australian facilities to ensure ongoing funding but it conceded “this is not guaranteed”.
The financial report, which is not audited, says: “There is a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
“The directors believe that the funds available from existing cash reserves and debt facilities, combined with sourcing new funds through (but not limited to) securing additional debt facilities and/or the issue of new shares, would provide the group with sufficient working capital to carry out its stated objectives for at least the next 12-month period.”
Following the release of the company’s December half-year financial report a review of its $65 million receivables funding facility was commenced. The review is ongoing.
“It is not expected, nor has there been any indication, that this review would result in withdrawal of the facility. However, it is possible under this term,” the company said.
It also has a $10 million working capital facility, which is drawn to $3.8 million. It has a maturity date of October 2022.
And it has a $30 million corporate debt facility with a related party, drawn to $25 million. $15 million of the committed balance matures in October 2022.
It has a receivables funding facility in the UK that is in runoff and a facility in the US that is being terminated.
The company presented a pro forma Australian and New Zealand profit and loss statement at its results briefing yesterday to show what the business looks like without the big costs of investment in the UK and the US.
Pro forma revenue was