Opinion And Analysis

LatAm Autos Limited releases quarterly cash flow statement

By Michael Hunt 0 Comments NEWS, Opinion And Analysis

LatAm Autos Limited is pleased to announce its quarterly cash flow statement for the September 2018 quarter.

3Q18 Highlights:

  • LAA reports its highest ever cash collections combined with lowest ever net quarterly cash
    outflows, including record revenues in 5 of the last 6 months
  •  First ever overall operational cash flow positive month in September 2018, with Ecuador continuing to be cash flow and EBITDA positive on a stand-alone basis. Sustainable full-quarter overall cash flow break even is not expected prior to the end of 2018 calendar year
  •  AUD cash receipts increased 56% (constant currency) versus prior corresponding period (pcp) in core markets of Mexico (67%) and Ecuador (50%)
  •  Reductions in net operational cash outflows (incl. capex) of 34% vs pcp
  • Cross-sell product sales volumes increased 27% on 2Q18
  •  Successful completion of institutional placement raising $8 million, strengthening the

Company’s balance sheet to $12.1m cash balance as at 30 September 2018 and pro-forma $9.2m after partial redemption of convertible notes

Financial Overview:

The Company reported its best ever monthly revenues and cash inflows in the September quarter from continuing operations, with total AUD cash inflows from operations during 3Q18 of A$2.8m. In AUD constant currency terms, Mexico and Ecuador’s cash inflows increased by 56% on pcp.
Operational Cash Positive in the Month of September The Company is pleased to announce it achieved operational cash flow breakeven in the month of September, marking an important milestone for the Company. Reaching this goal was largely due to an improvement in the working capital cycle combined with record monthly revenues. The Company has successfully negotiated ongoing favourable payment terms from several suppliers and Motorfy partners.

Reaching operational cash flow neutral or positive on a sustainable full-quarter basis is likely to occur
after the end of the 2018 calendar year. The timing (after the end of the 2018 calendar year) for
reaching operational cash flow neutral or positive on a sustainable full-quarter basis is dependent on
the following key drivers:

  • Increased loan application conversion rates through the addition of new loan products to Motorfy, with advanced negotiations currently underway to ensure that the entire spectrum of loan applicant credit quality can be serviced by Motorfy
  • Continued growth in car dealers using Motorfy
  • Seasonality, with December and January traditionally being slower months and December incurring additional statutory end of year employee salary entitlements. LAA reports growth in AUD cash receipts of +56% in constant currency for Mexico and Ecuador, and a decrease of 34% in net operational cash outflows (vs pcp) 17 October 2018

Cross Sell Products (Motorfy):

The September quarter saw record revenues for Motorfy on a stand-alone basis. The Company achieved record unit sales 3Q18, which resulted in 27% growth versus the previous quarter.

Cash Balance:

The Company had a cash position of $12.1m at 30 September 2018 ($9.2m post convertible note

Convertible Note Redemption:

The Company has commenced the process of redeeming outstanding Convertible Notes.

In 2017, the Company issued 10,000,000 Convertible Notes with a face value of $1.00 each, which are held primarily by Directors of the Company. Key terms of the Note are:

  • conversion at 16 cents per share at the holder’s option
  • term to 30 April 2020
  • 8% compounding yield
  • the Company can bid to redeem the Notes at its discretion which then requires holders to either convert or accept the redemption amount. The redemption amount is the face value plus any accumulated interest. The Company confirms it has issued redemption notices in respect of 3,405,159 convertible notes.

The Company has received conversion notices for $0.9m, which means that:

  • $2.9m will be used to redeem convertible notes and associated interest
  • 5.3m new shares will be issued to convertible note holders under the terms of the conversion process
  • The Company has a pro-forma 30 September 2018 cash balance of $9.2m post-redemption.

Car transaction marketplace:

Each quarter, LAA is continuing its transformation to a complete vehicle transaction marketplace (VTMP), providing a range of cross sell products to vehicle buyers. Consequently, LAA expects that cross sell revenues will continue to grow both in absolute terms and as a proportion of total group


The month of October has started stronger than any previous month, in terms of loans disbursed, month to date. The Company expects the following key trends to continue:

  • Cross Sell sales unit volumes to increase
  • New products added to the VTMP, with a particular focus on car loans
  • More car dealers overall will be added to the VTMP
  • More existing car dealers will use the VTMP

CEO and Executive Director of LatAm Autos Jorge Mejia commented, “We delighted that our overall cross-sell sales have continued to increase. Our focus is continuing to expand our cross-sell product offering, add more dealers to our platform and increase the take-up of existing dealers of cross-sell products. We look forward to launching a prime credit loan product so that we will be able to offer car loans across the credit quality spectrum including prime credit, near-prime and non-conforming loans.”

SOURCE LatAm Autos Limited
Edited by M. Hunt

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