Amigo Holdings Plc: FY20 Results and Appointment of Chairman

Amigo Holdings PLC, (Amigo or the Company), the leading provider of guarantor loans in the UK, announces results for the year ended 31 March 2020.

Financial Headlines

  • Net loan book reduction of 9.1% year on year to £643.1m (2019: £707.6m)
  • Revenue growth of 8.7% (2019: £270.7m) to £294.2m
  • Impairment:revenue ratio at 38.5% (2019: 23.7%) reflecting material impact from Covid-19
  • Operating cost:income ratio (excluding complaints) of 20.2% (2019: 17.5%) due to increased investment
  • Complaints cost of £126.8m and complaints provision of £117.5m as at 31 March 2020 driven by an increase in complaints volumes (complaints cost 2019: £0.1m; complaints provision 2019: £nil)
  • Reported statutory loss after tax for the period of £27.2m, (2019: £88.6m profit)
  • Total dividend per share relating specifically to the financial year: 3.1p (2019: 1.87p) as paid in January 2020. To conserve capital the Board is not recommending a final dividend
  • Net borrowings/adjusted tangible equity: 2.4x (2019: 1.9x). Gearing remains low at around pre-IPO levels
  • £64.3m of cash and cash equivalents as at 31 March 2020 (2019: £15.2m); unrestricted cash balance of over £135m as at 30 June 2020
  • The Board notes that a material uncertainty exists relating to going concern due to Covid-19 and the potential for either a sustained high level of customer complaints redress or a negative outcome of the FCA investigation (see note 1.1 to the financial statements). Despite this, the Board considers there to be adequate liquidity to continue to support the ongoing business activity

Operational Headlines

  • Lowering of overall Group risk appetite as the regulatory landscape continued to evolve resulting in lower levels of repeat lending and increased lending to new customers, as a proportion of originations
  • All new lending temporarily paused on 24 March 2020 in response to Covid-19, except to key workers in exceptional circumstances
  • Formal sale process (FSP), launched in January 2020, terminated following withdrawal of potential acquirer. A strategic review is ongoing
  • Shareholders voted against all resolutions to remove the Board and appoint new directors at the General Meeting on 17 June 2020, which was requisitioned by Richmond Group Limited (RGL)
  • Post-year-end agreement reached with FCA on resolving complaints backlog by 30 October 2020, and FCA investigation into Amigo’s creditworthiness assessments initiated

Commenting on the Full Year results, Roger Lovering, Acting Chair of Amigo, said: “The last 12 months have been a challenging and difficult period, which is reflected in our results today. We are operating against an evolving regulatory picture, while facing economic uncertainty due to the Covid-19 pandemic. Subsequent to our year-end, we have seen a substantial increase in the volume of complaints and this has led us to make a significant provision, which resulted in an overall loss for the financial year. We continue to engage productively with our regulators to understand the evolution in their approach and anticipate that this will remain an ongoing focus for the new Board members of Amigo.

“The statements from our major shareholder in January 2020 led to the launch of a strategic review and a formal sale process. The formal sale process has now concluded with the withdrawal of the potential acquirer. With the recent General Meeting now behind us and Glen Crawford reappointed as CEO, Amigo will move forward with more clarity and a determination to resolve the challenges we face.

“Amigo plays an important role in the lives of its customers, providing access to finance to those unserved by mainstream lenders, and this proposition remains as relevant as ever. Our dedicated teams at Amigo truly believe in our product and I would like to thank them all for their continued commitment, particularly through this unprecedented and challenging time.”