TIDMAMGO
RNS Number : 0697X
Amigo Holdings PLC
18 December 2023
18 December 2023
Amigo Holdings PLC
Interim Financial Results for the six months ended 30 September
2023
Amigo Holdings PLC, ("Amigo" or the "Company"), provider of
mid-cost credit in the UK, announces results for the six-month
period ended 30 September 2023.
-- Amigo continues to be open to proposals for a reverse takeover
Danny Malone, Chief Executive Officer commented:
"Amigo was unable to raise the capital required under the New
Business Scheme and therefore, on 23rd March 2023 invoked the
fallback option. As a result, all lending ceased, and the business
went into wind down.
"We remain open to assessing other viable options that could be
beneficial for our shareholders, our people and wider stakeholders.
A number of tentative indications of interest have been received,
but none of these has as yet resulted in an executable proposal. We
believe that a reverse takeover is the only possible prospect of
delivering any future value for shareholders. In the meantime, we
are focused on the important task of delivering redress due to
those customers with a claim under our Scheme of Arrangement and
ensuring the orderly wind down of operations.
"I would like to once again take this opportunity to thank all
our people for their ongoing dedication and hard work."
Headlines
-- Amigo continues to operate the orderly wind down of
operations as previously announced under the Fallback Scheme. This
includes a reduction in staff in the first six months of the year
through a planned redundancy programme. We are very grateful to our
staff for the commitment and resilience they have shown through
this difficult period.
-- In June 2023 Amigo moved to a smaller office and shut the
main office as the space required reduced.
-- Processing of claims under the Scheme is ongoing. To date
over 99% of claims have been determined. c. 60% of claimants have
been informed of their outcome and we expect to issue substantially
all of the outcomes by the end of January 2024.
-- Sale of the RewardRate portfolio has been agreed, subject to
contract. Sales of Amigo Loans' charge-off portfolio has started
and is ongoing. The legacy Amigo live portfolio is expected to be
sold in early 2024.
-- Grant Thornton have been engaged as advisors and it is
intended that they will support with the dissolution of the Amigo
Group of companies during 2024, including being appointed as
members' voluntary liquidators of relevant entities .
-- Danny Malone will step down as Chief Executive Officer on 31
December 2023 and will be succeeded by Kerry Penfold, who will
manage the business through to handover to liquidators later in
2024. Kerry will not be replaced as Chief Financial Officer.
Financial headlines
-- Net loan book reduction of 69.6% to GBP24.5m (H1 FY2023:
GBP80.6m) and revenue reduction of 82.3% to GBP2.8m (H1 FY2023:
GBP15.8m), due to the ongoing run-off of the legacy loan book and
minimal new lending during the period.
-- Scheme provision up 8.7% to GBP208.0m (H1 FY2023: GBP191.4m).
The increase in provision is primarily driven by an increase in the
estimation of cash available to pay redress, which based on the
latest expectations and judgements applied has increased
approximately GBP9m to GBP106m. Further material increase to the
provision is due to incremental 8% compensatory interest that is
due to claimants with full cash refunds due which naturally
increases with the passage of time. The increase in the provision
substantially accounts for the income statement charge of
GBP14.8m.
-- The reduction in revenue as the book runs off, alongside the
increase in provision, led to a reported loss before tax of
GBP6.7m, (H1 FY2023: loss of 12.7m).
-- Overall collections, including early repayments and
recoveries from charged off accounts, have remained robust.
-- Net assets reduction of 84% to GBP5.8m as at 30 September
2023 (H1 FY2023: GBP36.1m). Net assets remain positive due to
certain items of expenditure which cannot be provided for under
accounting standards but will be used up in the orderly wind down
of the Group.
-- GBP121.6m of unrestricted cash and cash equivalents as at 30
September 2023 (H1 FY2023: GBP128.4m).
Analyst and investor conference call and webcast
Amigo will be hosting a Zoom meeting for investors today at
1.00pm (London time)
Meeting ID: 838 8472 8703
Passcode: 645098
Contacts:
Amigo
Kerry Penfold, Chief Financial Officer
Lansons amigoloans@lansons.com
Tony Langham 07979 692287
Ed Hooper
07783 387713
About Amigo
Amigo is a public limited company registered in England and
Wales with registered number 10024479. The Amigo Shares are listed
on the Official List of the London Stock Exchange. On 23 March 2023
Amigo announced that its subsidiary Amigo Loans Ltd had ceased
offering new loans, with immediate effect, and would start the
orderly solvent wind down of the business. Amigo Loans Ltd provided
guarantor loans in the UK from 2005 to 2020 and unsecured loans
under the RewardRate brand from October 2022 to March 2023,
offering access to mid -- cost credit to those who are unable to
borrow from traditional lenders due to their credit histories.
Amigo Loans Ltd's back book of loans is in the process of being run
off with all net proceeds due to creditors under a Court approved
Scheme of Arrangement. Amigo Loans Ltd and Amigo Management
Services Ltd are authorised and regulated in the UK by the
Financial Conduct Authority.
Forward looking statements
This report contains certain forward-looking statements. These
include statements regarding Amigo Holdings PLC's intentions,
beliefs or current expectations and those of our officers,
Directors and employees concerning, amongst other things, our
financial condition, results of operations, liquidity, prospects,
growth, strategies, and the business we operate. These statements
and forecasts involve risk, uncertainty and assumptions because
they relate to events and depend upon circumstances that will or
may occur in the future. There are a number of factors that could
cause actual results or developments to differ materially from
those expressed or implied by these forward-looking statements.
These forward-looking statements are made only as at the date of
this announcement. Nothing in this announcement should be construed
as a profit forecast. Except as required by law, Amigo Holdings PLC
has no obligation to update the forward-looking statements or to
correct any inaccuracies therein.
Chief Executive's Statement
Amigo was unable to raise the capital required under the New
Business Scheme's Preferred Solution and therefore, on 23 March
2023 invoked the Fallback Solution. As a result, Amigo Loans Ltd
ceased lending, and the business went into wind down.
Performance
With all new lending now ceased, Amigo Loans Ltd's book
continues to be wound down, with the result that both income and
customer numbers are substantially reduced versus the six months
ended 30 September 2022 (82.3% and 59.2% respectively). Our
obligation is now to focus on maximising cash recovery for Scheme
creditors. To that end, in the period we have recovered GBP4.4m
through the sale of previously charged-off loans. We anticipate
further sales of charged off loans, and ultimately the live
portfolios, as part of this strategy.
The Scheme provision has increased in the period, resulting in a
charge to the P&L of GBP14.8m. This is primarily the result of
better than anticipated recoveries resulting in a higher expected
amount available for the payment of redress to Scheme creditors.
There remains a degree of uncertainty in the final Scheme
outturn.
Scheme of Arrangement
The total number of claims submitted within the Scheme were just
under 210,000. The assessment of claims is a two-step process -
over 99% of claims have now been assessed as to whether they have
been upheld or not. The second stage is calculating the amount of
redress and issuing the Final Response Letters. We have now issued
over 120,000 Final Response Letters and expect to issue the
remainder by early 2024. The Credit Reference Bureaux have been
updated to remove all loans which had an upheld complaint, and we
have stopped collecting payments where redress is likely to exceed
the amount owing on the outstanding loan. We expect payments to
creditors to commence early in 2024 and for the Scheme p in GBP to
be not less than 17p.
Operations
As part of our commitment to maximise returns to Scheme
creditors Amigo has undertaken a cost reduction exercise. Staff
numbers have reduced from 195 as at 31 March to 124 at 30 September
as the planned redundancy programme rolls out.
Where possible, we have terminated supplier contracts and are
working closely with our remaining key suppliers to manage their
exit in a controlled manner.
In June, Amigo moved its operational centre and registered
office to its smaller overflow premises with more flexible
terms.
Possible Transactions
The Board concluded an extensive search to find new investment
when it announced the decision to enter the Fallback Solution on 23
March 2023. During the period, others have sought to find
investment to further the business and expressed interest in
reversing other businesses into the Amigo structure. On 17 October
2023, Amigo announced it had entered an exclusivity agreement with
Craven House Capital PLC and others in order to explore a potential
transaction. As announced on 16 November 2023 this agreement has
now terminated, because the investors concluded that they could not
build the sustainable revenue model that they had hoped to create
in the timeframe originally envisaged.
Amigo continues to be open to viable expressions of interest in
all parts of the business. Whilst we will continue to preserve the
structural possibility of a successful rescue plan, for as long as
possible, should there not emerge, very soon, a viable alternative
solution, the Company will need to hold a separate General Meeting,
at which shareholder approval will be sought to delist the Company
from the London Stock Exchange and to enter the Company into a
Members Voluntary Liquidation. Irrespective of whether shareholder
approval is obtained for an orderly wind down, in these
circumstances, there will be no value remaining for
shareholders.
The Scheme requires ALL to be wound up and liquidated, with all
of the liquidation proceeds, after expenses, used to pay Scheme
creditors. ALL owns all of the backbook loans and is the only
income and cash generating entity in the Group. The Group's
operating activities are carried out by Amigo Management Services
Ltd ("AMSL"), which pays all Group costs and it recovers the same
from ALL. Whilst the liquidation of AMSL is not required under the
Scheme, its only activity is intercompany servicing.
Amigo Holdings PLC ("PLC") has no assets, other than its
shareholding in AMSL, and has intercompany debts to ALL of GBP66m
which it has no capacity to pay. This amount is far in excess of
any value that might be derivable from the sale of its shareholding
in AMSL.
Currently, PLC's costs of maintaining its listing are paid by
ALL. This is sustainable for the short term, whilst a rescue plan
is capable of delivering value to Scheme creditors. In this
context, it is possible that a reverse takeover of PLC, or other
rescue plan, could be structured to satisfy the intercompany sums
due from PLC for a modest external contribution. The basis for this
view is that the chance of meaningful contribution to the Scheme
funds and/or liquidation cost savings, as compared with the current
costs of maintaining PLC's listing, is a better outcome for Scheme
creditors than the otherwise inevitable insolvency of PLC and the
remainder of the Group, when ALL is wound up.
Governance
As Amigo looked to streamline all aspects of its operations in
wind down, it was only appropriate to include governance
arrangements. In doing so we need to strike a balance between cost
saving and proper and effective governance. At the end of the last
financial year two Non-Executive Directors stood down from the
Board. The Chair and remaining Non-Executive Director have both
agreed a reduction in their remuneration.
I agreed to step down as CEO and will leave the business on 31
December. Having resigned and worked my notice period I have no
entitlement to redundancy and/or payment for loss of office. It is
intended that Kerry Penfold will manage the business through to
handover to liquidators later in 2024. The Board has appointed
Grant Thornton to advise on the wind down process ahead of their
intended appointment as liquidators in due course. Kerry will not
be replaced as Chief Financial Officer.
The Board have taken the decision, permitted within the listing
rules, not to have these interim results independently reviewed by
our external auditors. We believe this would not be an appropriate
use of resources at this time.
Financial Review
The decision to wind down the Amigo Loans Ltd business ("ALL"),
in line with the Court order associated with the Fallback Solution
of Amigo's Scheme of Arrangement, was announced on 23 March 2023.
As ALL is the only revenue-generating business within the Group, it
is envisaged that all businesses within the Group will be
liquidated. This process has begun and is likely to be
substantially completed in the first half of calendar year 2024,
following completion of the Scheme redress process. Over the course
of the wind down, we will continue to either collect out or dispose
of both the remaining legacy loan book and newer RewardRate loans.
The wind down is an orderly, solvent process and the business
remains in a positive net asset position, however, all net assets,
after the cost of collecting the loan book, are committed to Scheme
creditors.
In the six months to 30 September 2023, the net loan book
reduced by 69.6% to GBP24.5m (H1 FY2023: GBP80.6m). Revenue fell by
82.3% year on year to GBP2.8m (H1 FY2023: GBP15.8m), reflecting the
loan book reduction and no new lending in the period. Customer
numbers reduced by 59.2% compared to the prior year to 20,000 (H1
FY2023: 49,000). The reduction in revenue, alongside an increase in
the Scheme provision and the recognition of a restructuring expense
and onerous contract provision, led to a reported statutory loss
before tax for the period of GBP6.7m (H1 FY2023: loss of GBP12.7m).
Excluding the Scheme charge, restructuring expense and onerous
contracts provision, adjusted profit before tax was GBP9.5m (H1
FY2023: loss of GBP12.7m).
Net assets as at 30 September 2023 were GBP5.8m (H1 FY2023:
GBP35.2m). Although the results show a positive shareholder equity
position in accordance with accounting standards, all net assets,
after the cost of collecting the loan book, are committed to Scheme
creditors. Cash and cash equivalents, inclusive of restricted cash,
total GBP196.4m (H1 FY2023: GBP198.7m), have seen a small reduction
year on year. The reduction is due to the residual bond buyback of
GBP50m in March 2023, which has been offset by robust collections
and debt sales. The business remains debt free with all cash
pledged to Scheme creditors. There are certain items of expenditure
which cannot be provided for in advance of payment but will be used
up in the orderly wind down of the Group. Once this expenditure is
incurred, the Group will no longer report a positive shareholder
equity position. The cost reduction exercise undertaken by Amigo
aims to minimise this expenditure in order to maximise returns to
Scheme creditors.
Impairment
A credit in the period was recognised of GBP11.5m (H1 FY2023:
credit of GBP0.2m) primarily due to post-charge-off recoveries
continuing to remain robust alongside GBP4.4m of debt sale. Debt
sales in the period related entirely to charged off loans and
therefore the sale value is recognised immediately as a credit to
impairment on the income statement.
The impairment provision decreased to GBP9.3m (H1 FY2023:
GBP30.1m), primarily due to the reduction of the loan book;
coverage is in line with previous periods with the impairment
provision representing 27.5% of the gross loan book (H1 FY2023:
27.2%).
Scheme provision
The Scheme provision has increased from the prior year to
GBP208.0m (H1 FY2023: GBP191.4m), due to an increase in observed
uphold rates alongside the estimate of Scheme dividend, partly
offset by utilisation of outsourced Scheme handling costs.
The increase in the provision has resulted in a corresponding
charge to the income statement of GBP14.8m (H1 FY 2023: GBP11.3m).
Sensitivity analysis of the key assumptions is set out in note 2.2
to these financial statements.
Restructuring provision
A restructuring provision of GBP4.5m was recognised as at 31
March 2023 in respect of the expected cost of staff redundancies
and liquidator costs due to wind down of the business. At 30
September 2023 this provision has increased to GBP4.6m, reflecting
actual paid exit costs (GBP0.8m) and updated forecast future cost
expectations based on reasonable expectations on future resource
requirements and staff exit dates.
Tax
The tax charge for the half year ended 30 September 2023 of
GBP0.1m relates to Amigo's Luxembourg entity. Post period end this
entity has entered liquidation.
Funding and liquidity
In accordance with the Fallback Solution conditions, SchemeCo
has returned funds to ALL to ensure it is well funded for an
orderly wind down. On an ongoing basis, as part of the Scheme
conditions, ALL returns surplus collections to SchemeCo on a
monthly basis. Through this mechanism cash is made available for
the payment of redress, whilst ensuring ALL retains sufficient
unrestricted cash to pay staff, suppliers, and those Scheme
creditors who are due a direct refund of certain instalment
payments.
Unrestricted cash was GBP121.6m as at 30 September 2023 (H1
FY2023: GBP128.4m). Restricted cash was GBP74.8m (H1 FY2023:
GBP70.3m). This materially relates to cash held for the benefit of
customers in relation to payments arising out of the Scheme of
Arrangement.
Going concern
Given the cessation of trading on 23 March 2023, alongside no
apparent realistic strategic capital raise or viable alternative
solutions, and the requirement dictated by the Scheme to ultimately
liquidate Amigo Loans Ltd (the Group's sole cash-generating unit),
the Board has determined that the Financial Statements for the six
months to 30 September 2023 will be prepared on a basis other than
Going Concern.
Stresses have been applied to internal forecasts to create a
severe but plausible downside scenario. Despite the stresses
applied, the business maintains liquidity throughout the wind down
process.
Principal risks and uncertainties
Amigo's business performance is subject to a number of risks and
uncertainties that could materially impact the successful delivery
of our planned outcomes, namely the successful conclusion of the
Scheme and orderly wind down of the business. Amigo continues to
monitor and manage risks to ensure adequate controls are in place,
performance is enhanced, and that better customer and broader
stakeholder outcomes are achieved. The Board recognises that
opportunities and risks go hand in hand and so it puts time into
understanding which risks are the right ones to take or avoid at
any given time. Active monitoring of our risk profile is performed
against specific risk appetites.
Our principal risks and uncertainties are summarised below.
Credit risk
The risk that a counterparty fails to meet its debt obligations
in full and on time. It includes the calculated risks that Amigo
assumes by lending money to a customer and not receiving the owed
principal and interest. This includes:
-- Credit acquisition risk: this is inherent to loan origination
and tied to the credit analysis, where the Group verifies the
customer's capacity, character, cash flow, collateral and
conditions to repay the requested loan. A failure in credit
acquisition might result in issues such as high delinquency levels,
complaints and regulator fines.
-- Credit operation risk (collections/fraud): this is related to
the actions taken after a customer fails to make one or more
payments. Our ability and capacity to react to loan delinquency are
primarily controlled through customer contact. A failure on
collections/fraud actions could lead to unexpected credit losses
affecting profitability.
-- Concentration risk: This is the level of risk that arises
from exposure to a single market sector or segment, which has the
potential to produce material losses that may threaten core
operations. The risk results from more concentrated portfolios
lacking diversification , and therefore, the returns or debt
repayments are more correlated. Concentration risk can also apply
where there is a narrow portfolio e.g. bank deposits.
As a mid-cost lender, Amigo has taken a degree of credit risk
that is consistent with pricing. Our lending has been to customer
segments we understand well. Now that new lending has ceased, Amigo
is no longer exposed to credit acquisition risk. We expect to see
increased credit operational risk as the level of delinquency on
the remaining loan book increases with time. This may be compounded
by the continued increase in costs of living, and also customer
awareness that the business is in wind down.
The credit risk associated with new lending under RewardRate was
minimised by applying a strict set of creditworthiness and
affordability rules. The concentration risk associated with a
narrow portfolio (bank deposits) has been mitigated through
investment primarily in AAA rated money market funds (high
liquidity, low volatility).
Conduct risk
Conduct risks arise from inappropriate actions taken by
individuals or the Company that could lead to customer detriment.
They can arise at each stage of the customer journey, from product
design through to sales and post-sales servicing.
Amigo recognises that the financial vulnerability of customers
in its target market poses higher than average conduct risks and is
mindful of the impact of increasing inflation and the cost of
living on existing borrowers which continues to put additional
strain on customer finances and affordability.
Our strategy is underpinned by delivering good customer
outcomes. As we move through wind down and the Scheme of
Arrangement, we aim to maximise redress for claimants with upheld
claims and to provide responses, balance adjustments and payments
due as quickly as possible, while balancing this with the
development of the new technologies required to calculate and
deliver these outcomes.
The governance of our business is fundamentally important, and
we are committed to delivering high standards of oversight with
diligence and integrity, and a strong ethical culture.
Regulatory and political risk
This relates to the risk that the regulatory environment changes
in a way that has adverse impacts on our business (explicit changes
in regulation or legislation or changes in interpretation), or
where Amigo has introduced new products or approaches that do not
fully comply with regulatory requirements. At a minimum, the impact
would be the operational burden of adapting to changing regulation.
However, where we have failed to adapt to changes, the impact can
extend to regulatory action, including investigation, fines, or
loss of authorisation to operate. It includes regulation or
legislation specific to our product, applying to financial services
more generally, or not specific to our business at all.
Amigo is committed to a high level of compliance with relevant
legislation, regulation as well as internal policies and governance
requirements. Identified breaches are remedied as soon as possible.
Amigo has no appetite for deliberate or purposeful violations of
legislative or regulatory requirements.
Amigo maintains a constructive and open relationship with the
Financial Conduct Authority and other regulators and agencies, with
respect to all regulatory and risk matters. Amigo still operates
under a FCA Voluntary Requirement but has been removed from the
FCA's watchlist. We continue to work closely with the FCA as we
work through wind down and the Scheme of Arrangement.
Operational risk
This relates to the possibility of business operations failing
due to inefficiencies or breakdown in internal processes, systems,
people or from external events. Major examples include data
security and cyber risk, system availability, legal risk, and
failures of process execution. Other examples can include key
supplier failure, fraud, the risk of Amigo's product being used for
money laundering, or the risk of an error in the business's
decisioning models.
Amigo's operational risk includes the risk that it does not have
human capacity or system capacity to deliver on its business plans.
This may leave the Company unable to properly service its
customers, leading to customer harm. It may also result in the
Company being less able to perform key functions.
As an organisation in wind down, Amigo is balancing the need to
provide consistent and reliable operational performance with the
need to remain cost effective and adaptive. As the organisation
reduces and the number of processes operated decreases, Amigo is
reducing suppliers and staff numbers, whilst also considering
appropriate physical locations and infrastructure.
Amigo aims to have the quantity and quality of people necessary
to meet its objectives and to maintain its performance. Given
Amigo's limited future, people related risk has increased. As the
organisation progresses through the wind down process, key person
dependencies increase as the number of staff decreases. Measures
have been put into place to reduce the risk of single points of
failure. Retention of key personnel has also had an increased
focus.
Our operational resilience approach has been designed to ensure
highly available services, infrastructure and lending processes.
Over the last twelve months, operational resilience has been stable
with no significant disruptions to operations.
Strategic and competitive risk
Strategic risk refers to emerging internal and external events
that can disrupt or prevent the organisation from achieving its
objectives and strategic goals. These risks are present within
launching new products and services, or the failure to meet the
expectations of customers should they shift.
There is a risk that Amigo fails to achieve its objectives,
either due to poor decision making or failure to adapt to changes
in the environment.
Strategic focus has switched to the orderly wind down of the
business, collection of funds to contribute to customer redress,
processing of scheme claims and the application of redress and
refunds due. The Company needs to maintain the ability to evolve,
adapt, and be responsive, in the short-term, to changes in the
internal and external operating environment.
Financial risk
There are 3 main categories of financial risk: liquidity risk,
capital risk and market risk.
-- Liquidity risks relate to the organisation's ability to
convert an asset or security into cash so that it can meet its
contractual, regulatory and or internal liquidity requirements
needed to support business activities.
-- Capital risk relates to having an insufficient level of
capital to support normal business activities.
-- Market risk relates to the risk of losses on financial
investments caused by adverse price movements and potential adverse
changes in the value of the Group's assets and liabilities from
fluctuations in market variables including, interest rates and
foreign exchange. These risks are driven by economic and financial
market uncertainties.
Amigo was unable to raise the new capital required under the
Scheme conditions to enable it to restart sustained lending. Amigo
has, since March 2023, entered a solvent wind down of the Group.
While Amigo is no longer lending, the liquidity position remains
good against wind down forecasts, and we continue to meet our
obligations to fund redress for Scheme Creditors.
Amigo has no foreign currency holdings and has limited foreign
exchange exposure from purchases in other currencies. Amigo has no
external debt but is exposed to movements in interest rates through
its surplus liquidity holdings. When considering how to place
surplus liquidity Amigo has a low tolerance to risk and places
certainty of capital above available returns.
Responsibility statement of the Directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the UK, and give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group;
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
Kerry Penfold
Director
18 December 2023
Condensed consolidated statement of comprehensive income
for the 6 months to 30 September 2023
6 months 6 months Year to
ended ended
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
--------------------------------------------------- ----- --------- --------- --------
Revenue 3 2.8 15.8 19.3
Interest payable and funding facility fees 4 - (1.8) (3.6)
Interest receivable 2.8 0.3 1.5
Impairment of amounts receivable from customers 11.5 0.2 3.4
--------------------------------------------------- ----- --------- --------- --------
Administrative and other operating expenses (9.0) (15.9) (36.2)
Complaints expense 14 (14.8) (11.3) (19.1)
--------------------------------------------------- ----- --------- --------- --------
Total operating expenses (23.8) (27.2) (55.3)
--------------------------------------------------- ----- --------- --------- --------
(Loss) before tax (6.7) (12.7) (34.7)
Tax charge on (loss) 6 (0.1) - (0.1)
--------------------------------------------------- ----- --------- --------- --------
(Loss) and total comprehensive (loss) attributable
to equity shareholders of the Group 1 (6.8) (12.7) (34.8)
--------------------------------------------------- ----- --------- --------- --------
The (loss) is derived from continuing activities.
(Loss) per share
--------------------------------- ----- ----- -----
Basic (loss) per share (pence) 7(1.4) (2.7) (7.3)
Diluted (loss) per share (pence) 7(1.4) (2.7) (7.3)
--------------------------------- ----- ----- -----
The accompanying notes form part of these financial
statements.
1 There was less than GBP0.1m of other comprehensive income
during this period and any other period, and hence no consolidated
statement of other comprehensive income is presented.
Condensed consolidated statement of financial position
as at 30 September 2023
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
------------------------------------------ ----- --------- --------- -------
Non-current assets
Customer loans and receivables 8 - 15.3 -
Property, plant and equipment - 0.4 -
Right-of-use lease assets - 0.7 -
- 16.4 -
------------------------------------------ ----- --------- --------- -------
Current assets
Customer loans and receivables 8 24.5 66.2 45.7
Property, plant and equipment 0.2 - 0.3
Right-of-use lease assets - - 0.1
Other receivables 11 0.8 2.0 1.5
Current tax assets - 0.8 0.8
Cash and cash equivalents (restricted)(1) 74.8 70.3 107.2
Cash and cash equivalents 121.6 128.4 62.4
------------------------------------------ ----- --------- --------- -------
221.9 267.7 218.0
------------------------------------------ ----- --------- --------- -------
Held for sale assets 9 1.1 - 1.1
------------------------------------------ ----- --------- --------- -------
Total assets 223.0 284.1 219.1
------------------------------------------ ----- --------- --------- -------
Current liabilities
Trade and other payables 12 (4.6) (6.9) (6.0)
Lease liabilities - (0.3) (0.1)
Complaints provision 14 (208.0) (191.4) (195.9)
Restructuring provision 14 (4.6) - (4.5)
(217.2) (198.6) (206.5)
------------------------------------------ ----- --------- --------- -------
Non-current liabilities
Borrowings 13 - (49.8) -
Lease liabilities - (0.5) -
------------------------------------------ ----- --------- --------- -------
- (50.3) -
------------------------------------------ ----- --------- --------- -------
Total liabilities (217.2) (248.9) (206.5)
------------------------------------------ ----- --------- --------- -------
Net assets 5.8 35.2 12.6
------------------------------------------ ----- --------- --------- -------
Equity
Share capital 15 1.2 1.2 1.2
Share premium 207.9 207.9 207.9
Merger reserve (295.2) (295.2) (295.2)
Retained earnings 91.9 121.3 98.7
------------------------------------------ ----- --------- --------- -------
Shareholder equity 5.8 35.2 12.6
------------------------------------------ ----- --------- --------- -------
The accompanying notes form part of these financial
statements.
(1) Cash and cash equivalents (restricted) of GBP74.8m (H1 2023:
GBP70.3m) materially relates to cash held for the benefit of
customers in relation to payments arising out of the Scheme of
Arrangement.
The condensed consolidated financial statements of Amigo
Holdings PLC were approved and authorised for issue by the Board
and were signed on its behalf by:
Kerry Penfold
Director
18 December 2023
Company no. 10024479
Condensed consolidated statement of changes in equity
for the 6 months to 30 September 2023
Share Share Translation Merger Retained Total
capital premium Reserve(1) Reserve(2) earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------- ------- ----------- ---------- -------- ------
At 31 March 2022 1.2 207.9 0.1 (295.2) 133.9 47.9
Total comprehensive loss - - - - (12.7) (12.7)
Translation reserve - - (0.1) - - (0.1)
Share-based payments - - - - 0.1 0.1
------------------------- ------- ------- ----------- ---------- -------- ------
At 30 September 2022 1.2 207.9 - (295.2) 121.3 35.2
Total comprehensive loss - - - - (22.1) (22.1)
Share-based payments - - - - (0.5) (0.5)
At 31 March 2023 1.2 207.9 - (295.2) 98.7 12.6
Total comprehensive loss - - - - (6.8) (6.8)
At 30 September 2023 1.2 207.9 - (295.2) 91.9 5.8
------------------------- ------- ------- ----------- ---------- -------- ------
The accompanying notes form part of these financial
statements.
1 The translation reserve is due to the effect of foreign
exchange rate changes on translation of financial statements of the
Irish entities.
2 The merger reserve was created as a result of a Group
reorganisation in 2017 to create an appropriate holding company
structure. The restructure was within a wholly owned Group,
constituting a common control transaction.
Condensed consolidated statement of cash flows
for the 6 months to 30 September 2023
6 months 6 months Year
to to to
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
--------------------------------------------------------- --------- --------- -------
(Loss) for the period (6.8) (12.7) (34.8)
Adjustments for:
Impairment expense (11.5) (0.2) (3.4)
Complaints provision 12.9 16.3 28.8
Restructuring provision 0.9 - 4.5
Tax charge 0.1 - 0.1
Interest expense - 1.8 3.6
Interest receivable (2.8) (0.3) (1.5)
Interest recognised on loan book (4.2) (25.1) (30.8)
Share-based payment - 0.1 (0.4)
Loss on sale of Fixed Assets 0.1 - -
Depreciation of property, plant and equipment 0.1 0.3 0.5
--------------------------------------------------------- --------- --------- -------
Operating cash flows before movements in working capital (11.2) (19.8) (33.4)
--------------------------------------------------------- --------- --------- -------
Decrease/(increase) in receivables 0.7 (0.3) -
(Decrease)/increase in payables (1.3) 0.3 0.6
Complaints cash expense (0.8) (4.7) (12.7)
Restructuring cash expense (0.8) - -
Tax refunds/(tax paid) 0.8 (0.2) (0.2)
Interest received/(paid) 2.8 (1.6) (3.4)
Net cash (used in) operating activities before loans
issued and collections on loans (9.8) (26.3) (49.1)
--------------------------------------------------------- --------- --------- -------
Loans issued - - (2.5)
Collections 32.3 79.7 130.6
Other loan book movements 4.1 2.9 (2.1)
Decrease in deferred brokers' costs 0.3 1.4 1.9
--------------------------------------------------------- --------- --------- -------
Net cash from operating activities 26.9 57.7 78.8
--------------------------------------------------------- --------- --------- -------
Financing activities
Lease principal payments (0.1) (0.1) (0.3)
Repayment of external funding - - (50.0)
--------------------------------------------------------- --------- --------- -------
Net cash (used in) financing activities (0.1) (0.1) (50.3)
--------------------------------------------------------- --------- --------- -------
Net increase in cash and cash equivalents 26.8 57.6 28.5
Effects of movement in foreign exchange - (0.1) (0.1)
Cash and cash equivalents at beginning of period 169.6 141.2 141.2
--------------------------------------------------------- --------- --------- -------
Cash and cash equivalents at end of period(1) 196.4 198.7 169.6
--------------------------------------------------------- --------- --------- -------
The accompanying notes form part of these financial
statements.
1 Total cash is inclusive of cash and cash equivalents
(restricted) of GBP74.8m (H1 2023: GBP70.3m). Cash and cash
equivalents (restricted) materially relate to cash held for the
benefit of customers in relation to payments arising out of the
Scheme of Arrangement.
1. Accounting policies
1.1 Basis of preparation of financial statements
General information
Amigo Holdings PLC is a public company limited by shares
(following IPO on 4 July 2018), listed on the London Stock
Exchange
(LSE: AMGO). The Company is incorporated and domiciled in
England and Wales. With effect from 15 June 2023 the Company's
registered office is Unit 11a, The Avenue Centre, Bournemouth,
Dorset, United Kingdom BH2 5RP.
The principal activity of the Company is to act as a holding
company for the Amigo Loans Group of companies. The principal
activity of the Amigo Loans Group is to provide loans to
individuals. Previously, its principal activity was to provide
individuals with guarantor loans from GBP2,000 to GBP10,000 over
one to five years. No new advances on the legacy guarantor loans
have been made since November 2020. Following FCA approval to
return to lending, in October 2022, Amigo launched, on a pilot
basis, a new guarantor loan as well as an unsecured loan product
under the RewardRate brand. With the Fallback Solution being
implemented, leading to a cessation of trade and implementation of
a wind down plan in March 2023, there has been no new lending in
the six months to 30 September 2023.
The condensed interim financial statements do not constitute the
statutory financial statements of the Group within the meaning of
section 434 of the Companies Act 2006. The statutory financial
statements for the year ended 31 March 2023 were approved by the
board of directors on 27 July 2023 and have been delivered to the
Registrar of Companies. The consolidated financial statements of
the Group as at and for the year ended 31 March 2023 are available
upon request from the Company's registered office at Unit 11a, The
Avenue Centre, Bournemouth, Dorset, United Kingdom BH2 5RP. Those
accounts have been reported on by the Company's auditor, MHA. The
report of the auditor:
i) Drew attention to the fact that the Directors had taken the
decision to wind down the operations and subsequently liquidate the
Group and Parent Company and therefore do not consider it to be
appropriate to adopt the going concern basis of accounting in
preparing the financial statements. Accordingly, the financial
statements were prepared on a basis other than going concern.
The condensed interim financial statements for the six months
ended 30 September 2023 have not been audited or reviewed by
auditors and were approved by the board of directors on 18 December
2023.
Accounting policies
The interim financial statements have been prepared applying the
accounting policies and presentation that were applied in the
preparation of the Company's published consolidated annual
report for the year ended 31 March 2023. There are certain items of
expenditure which cannot be provided for under accounting standards
but will be used up in the orderly wind down of the Group. Once
this expenditure is incurred, the Group will no longer report a
positive shareholder equity position. The cost reduction exercise
undertaken by Amigo aims to minimise this expenditure in order to
maximise returns to Scheme creditors.
Basis of preparation
The condensed interim financial statements for the six months
ended 30 September 2023 have been prepared in accordance with IAS
34 'Interim Financial Reporting' as adopted for use in the United
Kingdom (UK). The condensed interim financial statements should be
read in conjunction with the statutory financial statements for the
year ended 31 March 2023. The figures for the financial year ended
31 March 2023 are not the Group's statutory accounts for that
financial year but are an extract from those statutory accounts for
interim reporting.
These interim financial statements have been prepared on a basis
other than going concern under the historical cost convention,
except for financial instruments measured at amortised cost or fair
value. The presentational currency of the Group is GBP, the
functional currency of the Company is GBP and these financial
statements are presented in GBP. All values are stated in GBP
million (GBPm) except where otherwise stated.
Going concern
In determining the appropriate basis of preparation for these
financial statements, the Board has undertaken an assessment of the
Group and Company's ability to continue as a going concern for a
period of at least twelve months from the date of approval of the
financial statements.
In undertaking a Going Concern review, the Directors considered
the Group's decision to switch the Scheme from the Preferred to the
Fallback Solution, announced on 23 March 2023.
The Directors believe there is no general dispensation from the
measurement, recognition and disclosure requirements of IFRS
despite the Group not continuing as a going concern. Therefore,
IFRS is applied accordingly throughout the financial statements.
The relevant accounting standards for each part of the Financial
Statements have been applied on the conditions that existed and
decisions that had been taken by the Board as at or prior to 30
September 2023.
The switch to the Fallback Solution required that the trading
subsidiary, Amigo Loans Ltd ("ALL"), stopped lending with immediate
effect and be placed into an orderly wind down, with the result
that all surplus assets after the wind down will be transferred to
the Scheme creditors. A further requirement of the Fallback
Solution is that ALL be placed into liquidation within two months
of payment of the final Scheme dividend. No value will be
attributed to the ordinary shares of the Company in this
scenario.
Given the cessation of trading on 23 March 2023, alongside no
apparent realistic strategic capital raise or viable alternative
solutions, and the requirement dictated by the Scheme to ultimately
liquidate Amigo Loans Ltd (the Group's sole cash-generating unit),
the Board has determined that the Financial Statements for the six
months to 30 September 2023 will be prepared on a basis other than
Going Concern.
The Board has prepared a set of financial projections for the
solvent wind down following the cessation of new lending in March.
Alongside a base scenario which indicates ample liquidity available
through the course of wind down, a downside scenario has been
collated that stresses the primary cash flow risks to the Group
that are considered severe but plausible. Stresses have been
applied to:
-- Removal of any prospective debt sales
-- Increased Scheme liabilities
-- Increased overhead spend
Despite the stresses applied, the Group maintains sufficient
liquidity in the period. It is therefore considered only a marginal
risk that the Group is unable to remain solvent during the orderly
wind down. The key risks that would prevent this from being
achieved can be considered the risks applied in the downside
scenario alongside potential regulatory action or intervention.
1.2 Amounts receivable from customers
i) Classification
IFRS 9 requires a classification and measurement approach for
financial assets which reflects how the assets are managed and
their cash flow characteristics. IFRS 9 includes three
classification categories for financial assets: measured at
amortised cost, fair value through other comprehensive income
("FVOCI") and fair value through profit and loss ("FVTPL"). Note,
the Group does not hold any financial assets that are equity
investments; hence the below considerations of classification and
measurement only apply to financial assets that are debt
instruments. A financial asset is measured at amortised cost if it
meets both of the following conditions (and is not designated as
FVTPL):
-- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest ("SPPI")
on the principal amount outstanding.
Business model assessment
In the assessment of the objective of a business model, the
information considered includes:
-- the stated policies and objectives for the loan book and the
operation of those policies in practice, in particular whether
management's strategy focuses on earning contractual interest
revenue, maintaining a particular interest rate profile, matching
the duration of the financial assets to the duration of the
liabilities that are funding those assets or realising cash flows
through the sale of the assets;
-- how the performance of the loan book is evaluated and reported to the Group's management;
-- the risks that affect the performance of the business model
(and the financial assets held within that business model) and its
strategy for how those risks are managed;
-- how managers of the business are compensated (e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cash flows collected); and
-- the frequency, volume and timing of debt sales in prior
periods, the reasons for such sales and the Group's expectations
about future sales activity. However, information about sales
activity is not considered in isolation, but as part of an overall
assessment of how the Group's stated objective for managing the
financial assets is achieved and how cash flows are realised.
The Group's business comprises primarily loans to customers that
are held for collecting contractual cash flows. Debt sales of
charged off assets are not indicative of the overall business model
of the Group. The business model's main objective is to hold assets
to collect contractual cash flows.
In light of the decision to enter into the Fallback Solution and
the trigger for an orderly wind down of the business the Board
re-evaluated this business model assessment, noting also that any
reclassification of financial assets identified as requiring
reclassification is the first day of the next accounting period.
The assessment was no longer considered appropriate for the
RewardRate portfolio for which a decision has been made to sell as
a result of the wind down strategy and has been classified as Held
for Sale at 30 September 2023 (see note 9). The RewardRate
portfolio has been reclassified under fair value through other
comprehensive income with effect from 1 April 2023.
Assessment of whether contractual cash flows are solely payments
of principal and interest
For the purposes of this assessment, "principal" is defined as
the fair value of the financial asset on initial recognition.
"Interest" is defined as consideration for the time value of money
and for the credit risk associated with the principal amount
outstanding during a particular period of time, as well as profit
margin.
In assessing whether the contractual cash flows are SPPI, the
Group considers the contractual terms of the instrument.
This includes assessing whether the financial asset contains a
contractual term that could change the timing or amount of
contractual cash flows such that it would not meet this condition.
The Group has deemed that the contractual cash flows are SPPI and
hence, loans to customers are measured at amortised cost under IFRS
9.
ii) Impairment
IFRS 9 includes a forward-looking expected credit loss ("ECL")
model with regards to impairment. IFRS 9 requires an impairment
provision to be recognised on origination of a financial asset.
Under IFRS 9, a provision is made against all stage 1 (defined
below) financial assets to reflect the expected credit losses from
default events within the next twelve months. The application of
lifetime expected credit losses to assets which have experienced a
significant increase in credit risk results in an uplift to the
impairment provision.
iii) Measurement of ECLs
Under IFRS 9 financial assets fall into one of three
categories:
Stage 1 - financial assets which have not experienced a
"significant" increase in credit risk since initial
recognition;
Stage 2 - financial assets that are considered to have
experienced a "significant" increase in credit risk since initial
recognition; and
Stage 3 - financial assets which are in default or otherwise
credit impaired.
Loss allowances for stage 1 financial assets are based on
twelve-month ECLs; that is the portion of ECLs that result from
default events that are estimated within twelve months of the
reporting date and are recognised from the date of asset
origination. Loss allowances for stage 2 and 3 financial assets are
based on lifetime ECLs, which are the ECLs that result from all
default events over the expected life of a financial
instrument.
At the reporting date, the Group held both guarantor and
personal loans on balance sheet. In relation to the guarantor
loans, in substance the borrower and the guarantor of each
financial asset have equivalent responsibilities. Hence, for each
loan there are two obligors to which the entity has equal recourse.
This dual borrower nature of the product is a key consideration in
determining the staging and the recoverability of an asset. The new
guarantor and unsecured loan products under the RewardRate brand
have been disclosed as held for sale assets as at 30 September 2023
and therefore does not attract ECL impairments.
The Group has assessed that ECLs on customer loans and
receivables is a key sensitivity, refer to note 2.1.1 for further
detail of the judgements and estimates used in the measurement of
ECLs and note 2.1.3 for detail on impact of forward-looking
information on the measurement of ECLs.
iv) Assessment of significant increase in credit risk (SICR)
In determining whether the credit risk (i.e. risk of default) of
a financial instrument has increased significantly since initial
recognition, the Group considers reasonable and supportable
information that is relevant and available without undue cost or
effort, including both quantitative and qualitative information and
analysis. The qualitative customer data used in this assessment is
payment status flags, which occur in specific circumstances such as
a short-term payment plans, breathing space or other indicators of
a change in a customer's circumstances. See note 2.1.2 for details
of how payment status flags are linked to staging, and judgements
on what signifies a significant increase in credit risk.
v) Derecognition
Receivable from customers are derecognised when the entity's
contractual rights to the financial asset's cash flows have
expired.
vi) Definition of default
The Group considers an account to be in default if it is more
than three contractual payments past due, i.e. greater than 61
days, which is a more prudent approach than the rebuttable
presumption in IFRS 9 of 90 days and has been adopted to align with
internal operational procedures. The Group reassesses the status of
loans at each month end on a collective basis. When the arrears
status of an asset improves so that it no longer meets the default
criteria for that portfolio, it is immediately cured and
transitions back from stage 3 within the Group's impairment
model.
vii) Forbearance
Where the borrower indicates to the Group that they are unable
to bring the account up to date, informal, temporary forbearance
measures may be offered. There are no changes to the customer's
contract at any stage. Depending on the forbearance measure
offered, an operational flag will be added to the customer's
account, which may indicate significant increase in credit risk and
trigger movement of this balance from stage 1 to stage 2 in
impairment calculation. See note 2.1.2 for further details.
2. Critical accounting assumptions and key sources of estimation
uncertainty
Preparation of the financial statements requires management to
make significant judgements and estimates.
Judgements
The preparation of the condensed consolidated Group financial
statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the reported
amounts of assets and liabilities at the consolidated statement of
financial position date and the reported amounts of income and
expenses during the reporting period. The most significant uses of
judgements and estimates are explained in more detail in the
following sections:
-- IFRS 9 - measurement of ECLs:
-- Assessing whether the credit risk of an instrument has
increased significantly since initial recognition (note 2.1.2).
-- Definition of default is considered by the Group to be when
an account is three contractual payments past due (note
1.2.vi).
-- Multiple economic scenarios - the probability weighting of
base, downside and severe downside scenarios to the ECL calculation
(note 2.1.3).
-- Complaints provisions:
-- Estimating the probability, timing and amount of any outflows (note 2.2.1) .
-- Restructuring provision:
-- Required resource plan and subsequent timing of staff exits
-- Assessing supplier requirements and recognition of onerous contracts
-- Accounts receivable from customers:
-- Judgement is applied in assessing whether the contractual
cash flows are "SPPI", the Group considers the contractual terms of
the instrument. This includes assessing whether the financial asset
contains a contractual term that could change the timing or amount
of contractual cash flows such that it would not meet this
condition
-- Held for sale assets:
-- Assessing probability and timing of an asset's prospective sale (note 9)
Estimates
Areas which include a degree of estimation uncertainty are:
-- IFRS 9 - measurement of ECLs:
-- Adopting a collective basis for measurement in calculation of
ECLs in IFRS 9 calculations (note 2.1.1).
-- Probability of default ("PD"), exposure at default ("EAD")
and loss given default ("LGD") (note 2.1.1).
-- Forward-looking information incorporated into the measurement of ECLs (note 2.1.3).
-- Incorporating a probability weighted estimate of external
macroeconomic factors into the measurement of ECLs (note
2.1.3).
-- Complaints provision:
-- Upheld Scheme claimants that have made payments post the
Scheme Effective Date which will be due a refund in full. This
estimate evaluates historical data and applies future assumptions
for the timing of refunds (note 2.2.1).
-- Estimation of the cash liability is based on assumptions
around net future collections which uses assumptions around credit
losses, valuation of impaired debt and future operating
expenses.
-- Restructuring provision:
-- Severance costs of staff exits which are contingent on the
timing of exit and therefore contingent on future resource
required.
-- Held for sale asset:
-- Estimate of expected fair value less costs to sell, valued via a market approach (note 9).
2 .1 Credit impairment
2.1.1 Measurement of ECLs
The Group has adopted a collective basis of measurement for
calculating ECLs. In the current year the loan book is bifurcated
into those customers who have had a Covid-19 forbearance plan and
those who have not.
The allowance for ECLs is calculated using three components: PD,
LGD and EAD. The ECL is calculated by multiplying the PD (twelve
month or lifetime depending on the staging of the loan), LGD and
EAD and the result is discounted to the reporting date at the
original EIR.
The twelve month and lifetime PDs represent the probability of a
default occurring over the next twelve months or the lifetime of
the financial instruments, respectively, based on historical data
and assumptions and expectations of future economic conditions.
EAD represents the expected balance at default, considering the
repayment of principal and interest from the balance sheet date to
the default date. LGD is an estimate of the loss arising in the
case where a default occurs at a given time. It is based on the
difference between the contractual cash flows due and those that
the Group expects to receive.
2.1.2 Assessment of significant increase in credit risk
(SICR)
To determine whether there has been a significant increase in
credit risk the following two step approach has been taken:
1) The primary indicator of whether a significant increase in
credit risk has occurred for an asset is determined by considering
the presence of certain payment status flags on a customer's
account. This is the Group's primary qualitative criteria
considered in the assessment of whether there has been a
significant increase in credit risk. If a relevant operational flag
is deemed a trigger indicating the remaining lifetime probability
of default has increased significantly, the Group considers the
credit risk of an asset to have increased significantly since
initial recognition. Examples of this include operational flags for
specific circumstances such as short-term payment plans and
breathing space granted to customers.
2) As a backstop, the Group considers that a significant
increase in credit risk occurs no later than when an asset is two
contractual payments past due (one payment past due is equivalent
to 30 days past due), which is aligned to the IFRS 9 rebuttable
presumption of more than 30 days past due. This is the primary
quantitative information considered by the Group in significant
increase in credit risk assessments.
The Group reassesses the flag status of all loans at each month
end and remeasures the proportion of the book which has
demonstrated a significant increase in credit risk based on the
latest payment flag data. An account transitions from stage 2 to
stage 1 immediately when a payment flag is removed from the
account.
2.1.3 Forward-looking information
The Group assesses the impact of forward-looking information on
its measurement of ECLs. While the Group has historically analysed
effects of a range of macro-economic variables it believes the most
significant factors likely to impact future credit losses will be
unemployment and inflation. These factors are considered on a
qualitative basis in estimating PDs and weighting scenarios and
ultimately reflect The Group's expectations of future credit
losses.
The Group has modelled and weighted three different
macroeconomic scenarios - a base, a downside and a severe downside
scenario.
-- The base scenario broadly represents probability of defaults
whereby historic performance is extrapolated with an expectation
for future deterioration applied on a judgemental qualitative basis
relating to expectations on the aforementioned macroeconomic
factors. A weighting of 25% has been applied to reflect the Group's
assumption that whilst the current macroeconomic environment has
the potential to improve based on Office for Budgetary Reporting
("OBR") forecasts, the rate of inflation is likely to remain higher
than recent historical levels throughout the remaining life of the
loan book and therefore likely to impact customers in an adverse
manner. Further consideration has been given to the rise in
interest rates, which are expected to remain materially above
recent prior year averages .
-- The downside scenario uplifts the base scenario probability
of default by an average of 17%. Incremental to the base scenario
assumptions, further consideration has been given to the
uncertainty surrounding macroeconomic forecasts and the potential
for a range of outcomes. In the downside scenario, the uplift to
PDs is modelled based on a further potential deterioration in the
economy and the macroeconomic factors that may impact the Group's
customer base, for example inflation and unemployment spike, which
would result in an income shock and rise in defaults. A weighting
of 50% has been applied to this scenario to reflect a prudent
judgement on future credit losses given the high level of
uncertainty in economic forecasts.
-- The severe downside applies a further uplift of 25% to the
probability of default in the downside scenario, weighted at 25%.
This scenario captures the income shock outlined in the downside
scenario along with incremental credit losses the Group may
reasonably expect to experience in the managed wind down of the
business.
The following table details the absolute impact on the current
ECL provision of GBP9.3m if each of the three scenarios are given a
probability weighting of 100%.
Impact
---------------- ------
Base -0.3m
Downside +0.1m
Severe downside +0.2m
---------------- ------
The scenarios above demonstrate a range of ECL provisions from
GBP9.0m to GBP9.5m.
As with any economic forecasts, the projections and likelihoods
of occurrence are subject to a high degree of inherent uncertainty
and therefore the actual outcomes may be significantly different to
those projected.
2.2 Complaints provisions
2.2.1 Complaints provision - estimation uncertainty
Complaints provision included in the statement of financial
position refers to a provision recognised for liabilities arising
from the Scheme. The provision represents an accounting estimate of
the expected future outflows arising from the Scheme, using
information available as at the date of signing these financial
statements.
Management evaluates on an ongoing basis whether the Scheme
provision should be recognised, revising previous judgements and
estimates as appropriate; however, there is a wide range of
possible outcomes.
Calculating the total liability associated with the Scheme
involves significant, complex management judgements and
estimations. While the population of Scheme claimants that have an
upheld claim is materially known, there is significant judgement
and estimation required in evaluating the range of possible
outcomes of potential Scheme cash redress available for those
claimants as the business winds down. Estimating the future cash
redress and recognising a provision for its value requires applying
judgement on both future cash inflows arising from loan book
collections and debt sales alongside expected future operating
expenses. Therefore, inherently any such future projections involve
a high level of uncertainty. The Scheme cash redress component of
the overall Scheme provision is estimated to be GBP106.1m, which as
per the Scheme, assumes all assets of the business are committed to
upheld Scheme claimants. The calculation of the Scheme provision in
total as at 30 September 2023 is based on Amigo's best estimate of
the future total obligation, which totals GBP208.0m.
The total Scheme liability has increased by GBP16.6m compared to
the prior year. The increase in provision is primarily due to an
increase in the estimation of the previously outlined cash redress,
which based on the latest expectations and judgements applied has
increased approximately GBP9m to GBP106.1m, alongside an increase
in observed uphold rates resulting in higher balance adjustments
and customer cash refunds, partly offset by utilisation of
outsourced Scheme handling costs.
Alongside the cash redress component, the Scheme provision is
also comprised of balance adjustments which have decreased with the
passage of time due to the collection of customer balances, and an
estimate of refunds to upheld Scheme claimants for collections made
since Scheme effective date, which will be redressed in full and
attract compensatory interest.
While uncertainty and judgement exist across the components that
comprise the overall Scheme provision, they ultimately are included
in the calculation of total available Scheme cash redress, itself a
component part of the provision. Therefore, applying sensitivity
analysis to the overall cash redress captures a number of possible
scenarios within the component parts.
The following table details the effect on the complaints
provision considering incremental changes on the key cash redress
assumption, should current estimates and estimates that are used to
derive its value prove too high or too low.
Sensitivity
Assumption used applied Sensitivity (GBPm)
--------------------------- ---------------- ----------- --------------------
Cash redress provision (1) GBP106.1m +/- 10 % +10.6m -10.6m
1. Cash redress. Sensitivity analysis shows the impact of a
10-percentage point change in the amount of the cash redress
provision.
The Board considers that this sensitivity analysis covers the
full range of likely outcomes based on the fact that a significant
portion of claims has been decisioned already.
It is possible that the eventual outcome may differ materially
from the current estimate and could materially impact the financial
statements as a whole. This is due to the risks and inherent
uncertainties surrounding the assumptions used in the provision
calculation.
3. Revenue and segment reporting
Revenue comprises interest income on amounts receivable from
customers. Loans are initially measured at fair value (which is
equal to cost at inception) plus directly attributable transaction
costs and are subsequently measured at amortised cost using the
effective interest rate method. Revenue is presented net of
amortised broker fees, which are spread over the expected
behavioural lifetime of the loan as part of the effective interest
rate method.
The effective interest rate ("EIR") is the rate that discounts
estimated future cash payments or receipts through the expected
life of the financial instrument (or a shorter period where
appropriate) to the net carrying value of the financial asset or
financial liability. The calculation takes into account all
contractual terms of the financial instrument and includes any
incremental costs that are directly attributable to the instrument,
but not future credit losses.
The Group has one operating segment based on the geographical
location of its operations, being the UK. IFRS 8 requires segment
reporting to be based on the internal financial information
reported to the chief operating decision maker. The Group's chief
operating decision maker is deemed to be the Group's Executive
Committee ("ExCo") whose primary responsibility is to support the
Chief Executive Officer ("CEO") in managing the Group's day-to-day
operations and analyse trading performance.
Amigo Loans Ireland Limited, registered in Ireland, was sold by
the Group to the CEO of the business in a management buy-out on 28
February 2023 . Amigo Loans Ireland Limited was not a reportable
operating segment, as it was not separately included in the reports
provided to the strategic steering committee. In the prior period
the results of these operations were included in the "other
segments" column.
For the six months to 30 September 2023 all the Group's
performance related to the UK operating segment, and therefore
segment information is not presented. The table below presents the
Group's performance on a segmental basis for the six months to 30
September 2022 in line with reporting to the chief operating
decision maker:
Period Period Period
to to to
30 Sep 30 Sep 30 Sep
22 22 22
GBPm GBPm GBPm
6 months to 30 September 2022 UK Other segments Total
------------------------------------------------ ------- --------------- -------
Revenue 15.7 0.1 15.8
Interest payable and funding facility fees (1.8) - (1.8)
Interest receivable 0.3 - 0.3
Impairment of amounts receivable from customers 0.1 0.1 0.2
------------------------------------------------ ------- --------------- -------
Administrative and other operating expenses (15.6) (0.3) (15.9)
Complaints expense (11.3) - (11.3)
------------------------------------------------ ------- --------------- -------
Total operating expenses (26.9) (0.3) (27.2)
Loss before tax (12.6) (0.1) (12.7)
Tax credit on loss - - -
------------------------------------------------ ------- --------------- -------
Loss and total comprehensive loss attributable
to equity shareholders of the Group (12.6) (0.1) (12.7)
------------------------------------------------ ------- --------------- -------
30 Sep 30 Sep 30 Sep
22 22 22
GBPm GBPm GBPm
Other
UK segments Total
-------------------------- ------- --------- -------
Gross loan book(1) 110.3 0.4 110.7
-------------------------- ------- --------- -------
Less impairment provision (30.0) (0.1) (30.1)
-------------------------- ------- --------- -------
Net loan book(2) 80.3 0.3 80.6
-------------------------- ------- --------- -------
1. Gross loan book represents total outstanding loans and excludes deferred broker costs.
2. Net loan book represents gross loan book less provision for impairment.
The carrying value of property, plant and equipment and
intangible assets included in the consolidated interim statement of
financial position materially all relates to the UK in the period
to 30 September 2022; hence the split between UK and Ireland has
not been presented. The results of each segment have been prepared
using accounting policies consistent with those of the Group as a
whole.
4. Interest payable and funding facility fees
Period Period Year to
to to
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
-------------------------------------- --------- --------- -------
Senior secured notes interest payable - 1.9 3.7
Funding facility fees - (0.1) (0.1)
- 1.8 3.6
-------------------------------------- --------- --------- -------
No interest was capitalised by the Group during the period.
Funding facility fees include non-utilisation fees and amortisation
of initial costs of the Group's senior secured notes.
5. Modification of financial assets
Covid-19 payment holidays and any subsequent extensions were
assessed as non-substantial financial asset modifications under
IFRS 9.
The carrying value of historical modification losses at the
period end was GBPnil (H1 2023: GBP1.7m).
Period Period Year to
to to
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
----------------------------------------------------- --------- --------- -------
Modification (loss)/release recognised in revenue (0.1) 0.2 -
Modification (loss)/release recognised in impairment (0.2) 0.3 0.1
----------------------------------------------------- --------- --------- -------
Total modification (loss)/release (0.3) 0.5 0.1
----------------------------------------------------- --------- --------- -------
6. Taxation
The applicable corporation tax rate for the period to 30
September 2023 was 25.0% (H1 2023: 19.0%) and the effective tax
rate is negative 1.5% (H1 2023: 0.0%).
The Finance Act 2021 increased the UK corporation tax rate from
19% to 25% with effect from 1 April 2023.
7. Profit/(loss) per share
Basic profit/(loss) per share is calculated by dividing the
profit/(loss) for the period attributable to equity shareholders by
the
weighted average number of ordinary shares outstanding during
the period.
Diluted profit/(loss) per share calculates the effect on
profit/(loss) per share assuming conversion of all dilutive
potential
ordinary shares. In the current period, following the closure of
the performance-related share incentive plans and
non-performance-related schemes, there were no dilutive potential
ordinary shares. Dilutive potential ordinary shares in the prior
year were calculated as follows :
i) For share awards outstanding under performance-related share
incentive plans such as the Share Incentive Plan ("SIP") and the
Long-Term Incentive Plans ("LTIPs"), the number of dilutive
potential ordinary shares is calculated based on the number of
shares which would be issuable if the end of the reporting period
is assumed to be the end of the scheme's performance period. An
assessment over financial and non-financial performance targets as
at the end of the reporting period has therefore been performed to
aid calculation of the number of dilutive potential ordinary
shares.
ii) For share options outstanding under non-performance-related
schemes such as the two Save As You Earn schemes ("SAYE"), a
calculation is performed to determine the number of shares that
could have been acquired at fair value (determined as the average
annual market share price of the Company's shares) based on the
monetary value of the subscription rights attached to outstanding
share options. The number of shares calculated is compared with the
number of share options outstanding, with the difference being the
dilutive potential ordinary shares.
Potential ordinary shares are treated as dilutive when, and only
when, their conversion to ordinary shares would decrease earnings
per share or increase earnings per share.
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
Pence Pence Pence
-------------------------------------------------- --------- --------- -------
Basic (loss) per share (1.4) (2.7) (7.3)
Diluted (loss) per share (1.4) (2.7) (7.3)
Basic adjusted profit/(loss) per share (basic and
diluted) 1 2.0 (2.7) (2.0)
-------------------------------------------------- --------- --------- -------
1. Adjusted basic profit/(loss) per share and earnings for
adjusted basic (loss)/earnings per share are non-GAAP measures.
The Directors are of the opinion that the publication of the
adjusted profit/(loss) per share is useful as it gives a better
indication of ongoing business performance. There are no profits
attributable to shareholders as net assets, after the cost of
collecting the loan book, are committed to Scheme creditors.
Reconciliations of the earnings used in the calculations are set
out below.
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
---------------------------------------------- --------- --------- -------
(Loss) for basic EPS (6.8) (12.7) (34.8)
Complaints provision expense 14.7 - 19.1
Restructuring expense 0.9 - 4.5
Onerous contract expense 0.6 - 1.9
Profit/(loss) for basic adjusted EPS 1 9.4 (12.7) (9.3)
---------------------------------------------- --------- --------- -------
Basic weighted average number of shares (m) 475.3 475.3 475.3
---------------------------------------------- --------- --------- -------
Dilutive potential ordinary shares (m) - - -
---------------------------------------------- --------- --------- -------
Diluted weighted average number of shares (m) 475.3 475.3 475.3
---------------------------------------------- --------- --------- -------
1. Adjusted basic (loss)/earnings per share and earnings for
adjusted basic (loss)/earnings per share are non-GAAP measures.
8. Customer loans and receivables
The table shows the gross loan book and deferred broker costs by
stage, within the scope of the IFRS 9 ECL framework.
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
--------------------------------------------- --------- --------- -------
Stage 1 21.8 74.8 42.2
Stage 2 5.8 20.0 11.0
Stage 3 6.2 15.9 10.2
--------------------------------------------- --------- --------- -------
Gross loan book 33.8 110.7 63.4
Deferred broker costs1 - stage 1 - 0.6 0.2
Deferred broker costs1 - stage 2 - 0.2 0.1
Deferred broker costs1 - stage 3 - 0.1 -
--------------------------------------------- --------- --------- -------
Loan book inclusive of deferred broker costs 33.8 111.6 63.7
Provision (9.3) (30.1) (18.0)
--------------------------------------------- --------- --------- -------
Customer loans and receivables 24.5 81.5 45.7
--------------------------------------------- --------- --------- -------
1. Deferred broker costs are recognised within customer loans
and receivables and are amortised over the expected life of those
assets using the effective interest rate ("EIR") method.
Ageing of gross loan book (excluding deferred brokers' fees and
provision) by days overdue:
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
---------------- --------- --------- -------
Current 22.5 76.8 43.7
1-30 days 3.5 12.9 6.7
31-60 days 1.6 5.1 2.7
>60 days 6.2 15.9 10.3
---------------- --------- --------- -------
Gross loan book 33.8 110.7 63.4
---------------- --------- --------- -------
The following table further explains changes in the gross
carrying amount of loans receivable from customers to explain
their
significance to the changes in the loss allowance for the same
portfolios.
Stage Stage Stage Total
1 2 3 GBPm
Period ended 30 September 2023 GBPm GBPm GBPm
--------------------------------------------------- ------------ ----------- ----------- ------------
Gross carrying amount as at 31 March 2023 42.2 11.0 10.2 63.4
Deferred brokers fees 0.2 0.1 - 0.3
--------------------------------------------------- ------------ ----------- ----------- ------------
Loan book inclusive of deferred broker costs 42.4 11.1 10.2 63.7
Changes in gross carrying amount attributable
to:
Transfer to stage 1 1.1 (1.1) - -
Transfer to stage 2 (2.6) 3.0 (0.4) -
Transfer to stage 3 (1.8) (1.5) 3.3 -
Passage of time(1) (11.6) (2.8) (0.7) (15.1)
Customer settlements (5.3) (1.1) (1.0) (7.4)
Loans charged off (0.6) (1.7) (5.3) (7.6)
Modification loss relating to Covid-19 payment
holidays 0.4 - 0.1 0.5
Net movement in deferred broker fees (0.2) (0.1) - (0.3)
--------------------------------------------------- ------------ ----------- ----------- ------------
Loan book inclusive of deferred broker costs
as at 30 September 2023 21.8 5.8 6.2 33.8
--------------------------------------------------- ------------ ----------- ----------- ------------
Stage Stage Stage Total
1 2 3 GBPm
Period ended 30 September 2022 GBPm GBPm GBPm
--------------------------------------------------- ---------- --------- ---------- ----------
Gross carrying amount as at 31 March 2022 128.8 32.4 24.2 185.4
Deferred brokers fees 1.5 0.4 0.3 2.2
--------------------------------------------------- ---------- --------- ---------- ----------
Loan book inclusive of deferred broker costs 130.3 32.8 24.5 187.6
Changes in gross carrying amount attributable
to:
Transfer to stage 1 4.4 (4.3) (0.1) -
Transfer to stage 2 (11.6) 12.3 (0.7) -
Transfer to stage 3 (6.6) (5.8) 12.4 -
Passage of time(1) (26.3) (6.2) (1.4) (33.9)
Customer settlements (14.9) (2.4) (0.6) (17.9)
Loans charged off (2.0) (6.2) (18.8) (27.0)
Modification loss relating to Covid-19 payment
holidays 3.0 0.2 0.9 4.1
Net movement in deferred broker fees (0.9) (0.2) (0.2) (1.3)
--------------------------------------------------- ---------- --------- ---------- ----------
Loan book inclusive of deferred broker costs
as at 30 September 2022 75.4 20.2 16.0 111.6
--------------------------------------------------- ---------- --------- ---------- ----------
1 Passage of time relates to amortisation of loan balances over
the course of the financial year, due to cash payments partially
offset by interest accruals.
As shown in the table above, the loan book inclusive of deferred
broker cost decreased from GBP111.6m to GBP33.8m at 30 September
2023. This was primarily driven by the effect of passage of time
(loan balances amortising throughout the period), customer
settlements and no originations on these loans in the year. The
originations in the year to 31 March 2023 related to the RewardRate
brand. These are shown as held for sale assets (note 9).
The following tables explain the changes in the loan loss
provision between the beginning and the end of the period:
Stage Stage Stage Total
1 2 3 GBPm
Period ended 30 September 2023 GBPm GBPm GBPm
--------------------------------------------------- --------- --------- --------- ---------
Loan loss provision as at 31 March 2023 6.1 3.3 8.6 18.0
--------------------------------------------------- --------- --------- --------- ---------
Changes in loan loss provision attributable
to:
Transfer to stage 1 0.3 (0.3) - -
Transfer to stage 2 (0.4) 0.9 (0.3) 0.2
Transfer to stage 3 (0.3) (0.4) 2.7 2.0
Passage of time(1) (1.6) (0.7) (0.6) (2.9)
Customer settlements (0.7) (0.3) (0.9) (1.9)
Loans charged off (0.1) (0.7) (4.3) (5.1)
Modification loss relating to Covid-19 payment
holidays 0.1 - - 0.1
Remeasurement of ECLs (1.1) (0.1) 0.1 (1.1)
--------------------------------------------------- --------- --------- --------- ---------
Loan loss provision as at 30 September 2023 2.3 1.7 5.3 9.3
--------------------------------------------------- --------- --------- --------- ---------
Stage Stage Stage Total
1 2 3 GBPm
Period ended 30 September 2022 GBPm GBPm GBPm
--------------------------------------------------- --------- --------- ---------- ----------
Loan loss provision as at 31 March 2022 18.1 8.9 20.4 47.4
--------------------------------------------------- --------- --------- ---------- ----------
Changes in loan loss provision attributable
to:
Transfer to stage 1 0.6 (0.9) (0.1) (0.4)
Transfer to stage 2 (1.6) 3.7 (0.6) 1.5
Transfer to stage 3 (0.9) (1.7) 10.2 7.6
Passage of time(1) (3.7) (1.5) (1.1) (6.3)
Customer settlements (2.0) (0.6) (0.5) (3.1)
Loans charged off (0.3) (2.5) (15.4) (18.2)
Management overlay 0.1 0.1 0.5 0.7
Modification loss relating to Covid-19 payment
holidays 0.4 - 0.1 0.5
Remeasurement of ECLs 0.8 (0.5) 0.1 0.4
--------------------------------------------------- --------- --------- ---------- ----------
Loan loss provision as at 30 September 2022 11.5 5.0 13.6 30.1
--------------------------------------------------- --------- --------- ---------- ----------
1 Passage of time relates to amortisation of loan balances over
the course of the financial year, due to cash payments partially
offset by interest accruals.
As shown in the above tables, the allowance for ECL decreased
from GBP30.1m at 30 September 2022 to GBP9.3m at 30 September 2023.
The overall provision has reduced as the book amortises and ages in
the absence of new originations on these loans.
The following table splits the gross loan book by arrears
status, and then by stage respectively for the period ended 30
September 2023.
Stage Stage Stage 3 Total
1 2 GBPm GBPm
GBPm GBPm
----------- -------- ------- ------- --------
Up to date 20.4 2.1 - 22.5
1-30 days 1.4 2.1 - 3.5
31-60 days - 1.6 - 1.6
> 60 days - - 6.2 6.2
----------- -------- ------- ------- --------
21.8 5.8 6.2 33.8
----------- -------- ------- ------- --------
The following table splits the gross loan book by arrears
status, and then by stage respectively for the period ended 30
September 2022.
Stage Stage Stage 3 Total
1 2 GBPm GBPm
GBPm GBPm
----------- -------- -------- -------- ---------
Up to date 69.6 7.2 - 76.8
1-30 days 5.2 7.7 - 12.9
31-60 days - 5.1 - 5.1
> 60 days - - 15.9 15.9
----------- -------- -------- -------- ---------
74.8 20.0 15.9 110.7
----------- -------- -------- -------- ---------
The following table further explains changes in the net carrying
amount of loans receivable from customers to explain their
significance to the changes in the loss allowance for the same
portfolios.
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
Customer loans and receivables GBPm GBPm GBPm
------------------------------- --------- --------- -------
Due within one year 24.5 65.5 45.4
Due in more than one year - 15.1 -
------------------------------- --------- --------- -------
Net loan book 24.5 80.6 45.4
Deferred broker costs 1
Due within one year - 0.7 0.3
Due in more than one year - 0.2 -
------------------------------- --------- --------- -------
Customer loans and receivables 24.5 81.5 45.7
------------------------------- --------- --------- -------
1. Deferred broker costs are recognised within customer loans
and receivables and are amortised over the expected life of those
assets using the effective interest rate ("EIR") method.
9. Held for sale assets
Following FCA approval to return to lending, in October 2022,
Amigo launched, on a pilot basis, a new guarantor loan as well as
an unsecured loan product which feature dynamic pricing to reward
on-time payment with reducing interest rates and penalty-free
annual payment holidays. The new products were released under the
RewardRate brand. Following the implementation of the wind down
plan on 23 March 2023, new lending immediately ceased. It is
considered that, under IFRS 5, the RewardRate loan book meets the
criteria as a held for sale asset. This conclusion has been reached
in the assessment of the following criteria outlined in IFRS 5:
-- Carrying amount to be recovered principally through the sale
- given the loan book will run for approximately five years based
on loan term, this far exceeds the current wind down plan timeline
and any period that would be economical to collect. The only
reasonable solution to maximise creditor returns is to sell the
RewardRate loan book rather than collect it to term.
-- Asset is available for immediate sale - The loan book is
considered to be available for sale reasonably imminently.
-- Sale is highly probable - It is considered given the nascency
of the book and the robustness of creditworthiness, alongside firm
indications of interest, a sale is highly probable.
Given the Group expects to sell the RewardRate loan book at a
discount (i.e. below carrying value) it will be measured at the
fair value less costs to sell.
It is not expected to incur costs to sell the asset and
therefore can recognise the asset at fair value - i.e. the price it
expects to receive from a third party purchasing the asset.
10. Financial instruments
The below tables show the carrying amounts and fair values of
financial assets and financial liabilities, including the levels in
the fair value hierarchy. The tables analyse financial instruments
into a fair value hierarchy based on the valuation technique used
to determine fair value:
a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
b) Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices).
c) Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
30 Sep 23 30 Sep 22 31 Mar 23
---------------- ---------------- ----------------
Fair Carrying Fair Carrying Fair Carrying Fair
value amount value amount value amount value
hierarchy GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ----------- -------- ------ -------- ------ -------- ------
Financial assets not measured
at fair value(1)
Amounts receivable from Level
customers(2) 3 24.5 9.4 81.5 75.1 45.7 17.2
Level
Held for sale assets 3 1.1 1.1 - - 1.1 1.1
Level
Other receivables 3 0.8 0.8 2.0 2.0 1.5 1.5
Cash and cash equivalents Level
(restricted) 1 74.8 74.8 70.3 70.3 107.2 107.2
Level
Cash and cash equivalents 1 121.6 121.6 128.4 128.4 62.4 62.4
--------------------------- ----------- -------- ------ -------- ------ -------- ------
222.8 207.7 282.2 275.8 217.9 189.4
--------------------------------------- -------- ------ -------- ------ -------- ------
Financial liabilities not
measured at fair value(1)
Level
Other liabilities 3 (4.6) (4.6) (6.9) (6.9) (6.0) (6.0)
Level
Senior secured notes(3) 1 - - (49.8) (47.3) - -
(4.6) (4.6) (56.7) (54.2) (6.0) (6.0)
--------------------------------------- -------- ------ -------- ------ -------- ------
1. The Group has disclosed the fair values of financial
instruments such as short-term trade receivables and payables at
their carrying value because it considers this a reasonable
approximation of fair value.
2. The unobservable inputs in the fair value calculation of
amounts receivable from customers are balance adjustments arising
from upheld Scheme claims, expected credit losses, forecast cash
flows and discount rate. As both balance adjustments and lifetime
expected credit losses are embedded in the calculation, this
results in a fair value lower than the carrying amount.
3. Senior secured notes are presented in the financial
statements net of unamortised fees. As at 30 September 2023, the
gross principal amount outstanding was GBP0m (H1 2022: GBP50.0m).
The fair value reflects the market price of the notes at the end of
the period.
Financial instruments not measured at fair value
The fair value of amounts receivable from customers has been
estimated using a net present value calculation using discount
rates derived from the blended effective interest rate of the
instruments. As these loans are not traded on an active market and
the fair value is therefore determined through future cash flows,
they are classed as Level 3 under IFRS 13 Fair Value
Measurement.
The fair value of senior secured notes as at 30 September 2022
has been taken at the Bloomberg Valuation Service ("BVAL") market
price.
All financial instruments are held at amortised cost. There are
no derivative assets in the current or prior period.
The Group's activities expose it to a variety of financial
risks, which can be categorised under credit risk and treasury
risk. The objective of the Group's risk management framework is to
identify and assess the risks facing the Group and to minimise the
potential adverse effects of these risks on the Group's
performance. Financial risk management is overseen by the Group
Risk Committee alongside other principal risks: operational,
regulatory, strategic and conduct risks.
30 Sep
30 Sep 23 22 31 Mar 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
Maturity analysis of financial liabilities
Analysed as:
- due within one year
Other liabilities (4.6) (6.9) (6.0)
- due in one to two years
Senior secured note liability - (49.8) -
(4.6) (56.7) (6.0)
------------------------------------------- --------- --------- ---------
11. Other receivables
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------- --------- --------- -------
Current
Other receivables 0.1 0.6 0.2
Prepayments and accrued income 0.7 1.4 1.3
0.8 2.0 1.5
------------------------------- --------- --------- -------
12. Trade and other payables
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------------- --------- --------- -------
Current
Accrued senior secured note interest - 0.8 -
Trade payables 1.5 0.4 0.9
Taxation and social security 0.2 0.4 0.3
Other creditors(1) 1.3 0.9 1.9
Accruals and deferred income 1.6 4.4 2.9
------------------------------------- --------- --------- -------
4.6 6.9 6.0
------------------------------------- --------- --------- -------
(1) Other creditors include an onerous contract provision of
GBP1.1m in relation to the RewardRate (RR) product. The product has
a number of associated supplier contracts that cannot either be
terminated, or a termination fee has been negotiated to end the
contract early. These unavoidable costs are expected to be greater
than the economic benefits of collecting or selling the RR loan
book.
13. Bank and other borrowings
30 Sep 30 Sep 31 Mar
23 22 23
Unaudited Unaudited Audited
GBPm GBPm GBPm
------------------------------------ --------- --------- -------
Current and non-current liabilities
Amounts falling due in 1-2 years
Senior secured notes - 49.8 -
- 49.8 -
------------------------------------ --------- --------- -------
The Group's Senior secured notes in the form of GBP49.7m high
yield bonds with a coupon rate of 7.625% which were due to expire
in January 2024, were redeemed early in March 2023.
14. Provisions
Provisions are recognised for present obligations arising as the
consequence of past events where it is more likely than not
that
a transfer of economic benefit will be necessary to settle the
obligation, which can be reliably estimated.
30 Sep 23 30 Sep 22 31 Mar 2023
Complaints Restructuring Total Complaints Restructuring Total Complaints Restructuring Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ---------- ------------- ----- ---------- ------------- ----- ---------- ------------- -----
Opening
provision 195.9 4.5 200.4 179.8 - 179.8 179.8 - 179.8
Provisions made
during period 16.8 0.9 17.7 16.3 - 16.3 19.1 4.5 23.6
Net utilisation
of the
provision (4.7) (0.8) (5.5) (4.7) - (4.7) (3.0) - (3.0)
---------------- ---------- ------------- ----- ---------- ------------- ----- ---------- ------------- -----
Closing
provision 208.0 4.6 212.6 191.4 - 191.4 195.9 4.5 200.4
---------------- ---------- ------------- ----- ---------- ------------- ----- ---------- ------------- -----
Current 208.0 4.6 212.6 191.4 - 191.4 195.9 4.5 200.4
---------------- ---------- ------------- ----- ---------- ------------- ----- ---------- ------------- -----
208.0 4.6 212.6 191.4 - 191.4 195.9 4.5 200.4
---------------- ---------- ------------- ----- ---------- ------------- ----- ---------- ------------- -----
Customer complaints redress
The total Scheme liability has increased by GBP16.6m compared to
the prior year. The increase in provision is primarily due to an
increase in the estimation of the previously outlined cash redress,
which based on the latest expectations and judgements applied has
increased approximately GBP9m to GBP106.1m, alongside an increase
in observed uphold rates resulting in higher balance adjustments
and customer cash refunds, partly offset by utilisation of
outsourced Scheme handling costs. Utilisation in the period
totalled GBP4.7m, primarily relating to the cost incurred in
processing decisioning of Scheme claims.
The Group continues to monitor its policies and processes to
ensure that it responds appropriately to customer complaints.
The Group will continue to assess both the underlying
assumptions in the calculation and the adequacy of this provision
periodically using actual experience and other relevant evidence to
adjust the provisions where appropriate.
The Group anticipates the redress programme will be complete, or
substantially complete, within nine months of the period end.
Uncertainties exist around the timing of completion of the redress
programme due to operational complexity and the potential for
customer appeals .
Restructuring provision
As at 30 September 2023, the Group recognised a restructuring
provision totalling GBP4.6m in respect of the expected cost of
staff redundancies and liquidator costs due to wind down of the
business.
15. Share capital
On 4 July 2018 the Company's shares were admitted to trading on
the London Stock Exchange. Immediately prior to admission the
shareholder loan notes were converted to equity, increasing the
share capital of the business to 475 million ordinary shares and
increasing net assets by GBP207.2m. No additional shares were
issued subsequent to conversion of the shareholder loan notes.
Ordinary Number Total Number
At 31 March 2023 475,333,760 475,333,760
--------------------- --------------- -------------------
At 30 September 2023 475,333,760 475,333,760
--------------------- --------------- -------------------
Ordinary shares
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at general meetings of the Company. Each ordinary share in
the capital of the Company ranks equally in all respects and no
shareholder holds shares carrying special rights relating to the
control of the Company. The nominal value of shares in issue is
shown in share capital, with any additional consideration for those
shares shown in share premium.
Deferred shares
At the time of the IPO and subdivision the 41,000 ordinary B
shares were split into 16,400,000 ordinary shares of 0.25p and
41,000 deferred shares of GBP0.24.
The deferred shares do not carry any rights to receive any
profits of the Company or any rights to vote at a general meeting.
Prior to the subdivision the ordinary B shares had 1.24 votes per
share; all other shares had one vote per share. The Group plans to
cancel these deferred shares in due course.
Dividends
Dividends are recognised through equity, on the earlier of their
approval by the Company's shareholders or their payment.
The Board decided that it would not propose a final dividend
payment for the year to 31 March 2023 or an interim dividend for
the period to 30 September 2023. Total cost of dividends paid in
the period is GBPnil (2022: GBPnil).
16. Immediate and ultimate parent undertaking
The immediate and ultimate parent undertaking is Amigo Holdings
PLC, a company incorporated in England and Wales. The consolidated
financial statements of the Group as at and for the year ended 31
March 2023 are available upon request from the Company's registered
office at Unit 11a, The Avenue Centre, Bournemouth, Dorset, United
Kingdom BH2 5RP.
17. Share-based payments
The Group issued share options and awards to employees as part
of its employee remuneration packages. The Group operated three
types of equity settled share scheme: Long Term Incentive Plan
("LTIP"), employee's savings-related share option schemes referred
to as Save As You Earn ("SAYE") and the Share Incentive Plan
("SIP").
Share-based payment transactions in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity settled share-based payments. At the
grant date, the fair value of the share-based payment is recognised
by the Group as an expense, with a corresponding entry in equity,
over the period in which the employee becomes unconditionally
entitled to the awards. The fair value of the awards granted is
measured based on Company specific observable market data,
considering the terms and conditions upon which the awards were
granted. Following the implementation of the wind down plan in
March 2023, the fair value of all share-based payments was GBPnil.
The charge to the consolidated statement of comprehensive income
was GBP0m in the six months to 30 September 2023 (H1 2023: charge
of GBP0.1m).
18. Investment in subsidiaries and structured entities
The following are subsidiary undertakings of the Company at 30
September 2023 and includes undertakings registered or incorporated
up to the date of the Directors' Report as indicated. Unless
otherwise indicated all Group owned shares are ordinary. All
entities are subsidiaries on the basis of 100% ownership and
shareholding.
The Irish entity, Amigo Loans International Limited, together
with its subsidiary, Amigo Loans Ireland Limited, was sold by the
Group to the CEO of the business in a management buy-out on 28
February 2023. Following write off of the intercompany balances
there were net liabilities in the Irish entities of less than
GBP0.1m. Consideration for the disposal was GBP1.
As part of the ongoing orderly wind down of activities the Group
commenced proceedings to dissolve dormant companies in the
structure. The formal dissolution of six previously dormant
entities was confirmed on 30 October 2023. Amigo Loans Luxembourg
S.A. was also dissolved on 1 December 2023.
Class of
Country of Shares Ownership Ownership
Name incorporation held 2023 2022 Principal activity
----------------------------- ---------------- --------- --------- --------- ------------------
Direct holding
Amigo Loans Group Ltd1 United Kingdom Ordinary 100% 100% Holding company
Special purpose
ALL Scheme Ltd1 United Kingdom Ordinary 100% 100% vehicle
Indirect holdings
Amigo Loans Holdings Ltd1 United Kingdom Ordinary 100% 100% Holding company
Amigo Loans Ltd1 United Kingdom Ordinary 100% 100% Trading company
Amigo Management Services
Ltd1 United Kingdom Ordinary 100% 100% Trading company
Amigo Luxembourg S.A.2 Luxembourg Ordinary 100% 100% Financing company
Special purpose
AMGO Funding (No.1) Ltd(3*) United Kingdom n/a - "SE" vehicle
Amigo Car Loans Limited1* United Kingdom Ordinary 100% 100% Dormant
Vanir Financial Limited1* United Kingdom Ordinary 100% 100% Dormant
Vanir Business Financial
Limited1* United Kingdom Ordinary 100% 100% Dormant
Amigo Store Limited1* United Kingdom Ordinary 100% 100% Dormant
Amigo Group Limited1* United Kingdom Ordinary 100% 100% Dormant
Amigo Finance Limited1* United Kingdom Ordinary 100% 100% Dormant
Amigo Loans International
Limited(4) Ireland Ordinary - 100% Holding company
Amigo Loans Ireland
Limited(4) Ireland Ordinary - 100% Trading company
---------------------------- ----------------- --------- --------- --------- ------------------
1 Registered at Unit 11a, The Avenue Centre, Bournemouth, Dorset BH2 5RP, England.
2 Registered at 9, Rue de Bitbourg, L-1273 Luxembourg.
3 Registered at 40a Station Road, Upminster, Essex, RM14 2TR, England.
4 The Irish entity, Amigo Loans International Limited, together
with its subsidiary, Amigo Loans Ireland Limited, was sold by the
Group to the CEO of the business in a management buy-out on 28
February 2023.
-- Under liquidation
19. Related party transactions
The Group had no related party transactions during the six-month
period to 30 September 2023 that would materially affect the
performance of the Group. Details of the transactions for the year
ended 31 March 2023 can be found in note 24 of the Amigo Holdings
PLC financial statements.
20. Post Balance Sheet events
Dissolution of entities - As part of the ongoing orderly wind
down of activities the Group commenced proceedings to dissolve
dormant companies in the structure. The formal dissolution of six
entities identified as dormant in note 18 was confirmed on 30
October 2023. Amigo Loans Luxembourg S.A. was also dissolved on 1
December 2023.
Proposed transaction and suspension of listing - On 17 October
2023 Amigo announced that it has entered into an exclusivity
agreement with Craven House Capital plc and others, to enable them
and the Company to further explore a potential transaction. On 16
November 2023 the Company announced that the exclusivity
arrangement has been terminated with immediate effect, and that all
work on the proposed transaction had ceased. During the period 17
October - 17 November
the FCA had suspended the Company's listing on the Premium
segment of the Official List and trading on the Main Market of the
London Stock Exchange because of the lack of information about the
assets in relation to the proposed transaction, which could prevent
the smooth operation of the market in the shares of the
Company.
Appendix: alternative performance measures
Given the implementation of the Fallback Scheme and the winding
down of the Group's business, the Board believes that disclosure of
alternative performance measures ("APMs") is no longer relevant,
and therefore they are no longer disclosed.
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END
IR FFDESWEDSEDE
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December 18, 2023 02:00 ET (07:00 GMT)
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