Buy now pay later company Laybuy is in breach of covenants for both its revolving credit facility with Kiwibank and a term loan facility with UK lender Provident Financial Group.
Meanwhile, Laybuy’s auditor PricewaterhouseCoopers has qualified the company’s latest financial report, saying there is material uncertainty “that may cast significant doubt on the group’s ability to continue as a going concern”.
And the company has conceded that its expansion into the UK BNPL market might be over.
At the end of May, Laybuy released an unaudited financial report for the year to March, detailing heavy losses, growing cash outflow and rising bad debts.
Now the company has released its audited accounts, which paint an even bleaker picture, along with a strategy update that flags a likely exit from its UK operations.
Laybuy lost A$51.6 million over the 12 months to March, compared with a loss of $41.3 million in 2020/21.
The consumer receivables impairment expense increased from $15.1 million to $30.8 million. That included $28.4 million of write-offs plus an increase in the expected credit loss provision.
Net cash used in operating activities was up from an outflow $47.8 million in 2020/21 to an outflow of $51.9 million in the year to March.
Cash and cash equivalents at the end of March were $12.1 million and net assets were $26 million.
The company has a $30 million revolving facility with Kiwibank. The facility agreement requires Laybuy to hold minimum cash balances or 12 months operating cash outflows across its bank accounts.
In February the bank accounts fell below the required level and the covenant was breached. In May Kiwibank granted a waiver.
Last October, Laybuy entered into a £30 million term loan facility with Provident. The facility agreement requires Laybuy to stay within a set 30-day arrears ratio. In February the company breached the covenant level.
Provident granted a waiver in April.
In its strategy update, the company said that if it is not able to raise additional capital it will “exit or restructure (through either joint venture or sale)” its UK business.
The company also disclosed that its net transaction margin fell from 1.8 per cent in 2020/21 to 60 basis points in the year to March.
Of total income of $47.1 million, $20.9 million was from late fees – up from $14.7 million the previous year.