Axsesstoday Limited (ASX: AXL) is engaged in the Australian hospitality and transport sectors, providing financing facilities primarily to small and medium enterprises. AXL made its debut on Australian Exchange on 21 December 2016. In Hospitality, AXL provides services for coffee machines, commercial ovens, fryers and microwaves, dishwashers, commercial refrigerators and freezers, etc. In the transport segment, AXL facilitates for prime movers, rigids, vans, flatbed trailers, tippers, tankers, refrigerated trucks, etc.
In the process of finalisation of its results for the period of H1 FY19, management expects a loss of $13 million to $15 million for the same period. Management cited the reason behind such losses that the company’s transition to AASB9 resulting in an additional collective provision of ~$27 million. Management also withdrew the guidance for FY19 provided earlier with prohibiting earnings guidance until otherwise advised to the market.
The company observed that in the process of testing the ICR (Covenant Interest Cover Ratio) for the simple corporate bond as at 31 December 2018, ICR has gone below 1.75x, in breach of the ICR covenant in the Simple Corporate Bond. AXL is in the process of analysing the impact of such a breach under its Updated Strategic Review.
AXL has appointed Moelis Australia Advisory Pty Ltd (“Moelis Australia”) to assist the company for the Updated Strategic Review. For the matter, Moelis Australia has developed a financial model, which has been provided to the company’s secured lenders and FIIG. Secured lenders will extend their forbearance regarding AXL’s breaches of the debt facilities until 5th April 2019.
AXL in its earlier update communicated not to lodge the results for 1H FY19 by 28 February 2019 and anticipates to do so by 15 March 2019. The delay in finalising results was mainly on account of the adoption of AASB9 and changes in few policies in regard to recognition of impairments, which are likely to impact the numbers for the same period. On the expected date, AXL further updated ASX (Australian Stock Exchange) that results for the same period are not yet finalised and management will take enough time to check the adopted financial model and its impact on accounts.
In continuation to its previous request of 31 January 2019, AXL stated that its share and simple corporate bonds remain suspended from trading until 28th February 2019.
On 8th November 2018, AXL reissued its Annual Report 2018. In the same announcement, it communicated that the stock of the company had entered in a trading halt and then subsequently entered voluntary suspension due to a pending internal review of its Syndicated Facility Agreement.
Key Takeaways from Restatement of 2018 Financial Statements:
Identified breaches have led the impacts on reissued statements which are –
- Bank loan of $10,346,380 and Subordinated Notes of $ 78,877,510 had been classified as current liabilities for FY18.
- Additional borrowings amount to $3,801,542 had been considered as finance costs for FY18.
- Fair value of interest rate swaps of $661,383 related to Bank Loans and Subordinated Notes had been shifted from the Hedging reserve to finance costs.
- Recognition of a provision for receivables.
- Adjustments to income tax expense, current tax receivables and deferred tax liabilities.
The stock last traded at $1.625 with a market capitalisation of ~$105.95 million as of September 11, 2018.
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