27th Aug 2021 08:02
(Alliance News) - Amigo Holdings PLC on Friday noted "material uncertainty" over its future, though the guarantor loans provider reported a better than expected first quarter.
Amigo's revenue in the three months to June 30 dropped 33% year-on-year to GBP32.5 million from GBP48.8 million. However, pretax profit surged to GBP15.0 million from GBP1.4 million.
The Bournemouth, England-based firm said its pause in lending, which continued throughout the three-month period, led to a 41% decline in customer numbers and a 48% reduction in the net loan book. As such, revenue fell compared to the prior year period, primarily driven by the reduction in the loan book, it explained.
Complaints provisions stood at GBP338.0 million, largely unchanged from its year end.
"Key judgements regarding future volumes, uphold rates and average redress remain in line with year-end," the lender added.
Active Covid-19 related payment holidays as at June 30 amounted to 3,000 in the period, down sharply from 42,000 in the first quarter of 2020. All Covid-19 payment holidays have now ended, Amigo said.
Chief Financial Officer Mike Corcoran said: "The extremely challenging situation facing Amigo, resulting from the significant liability for compensation payments for historical lending, provides the context for our first quarter results. Within this context, the performance of the business in the first quarter has been better than anticipated. As Amigo is not currently lending, the business is cash generative and our cost reduction programme has been effective.
"The level of collections remains robust with the impact of Covid-19 less than originally projected. The overall net liability position reflects the remaining complaints provision on the balance sheet. A material uncertainty over the group's ability to continue as a going concern remains."
On Tuesday, the company reported its delayed annual results, showing the lender has put aside nearly GBP350 million to deal with its legacy customer complaint issues.
It reported a pretax loss of GBP283.6 million, widened sharply from GBP37.9 million the year before.
Amigo was scheduled to release its annual results in late July, but decided to hold them back after the UK regulator continued to raise concerns with its plans to seek approval for a new scheme of arrangement to deal with current and potential redress creditors.
The Financial Conduct Authority is yet to back Amigo's plan, which the company maintains is the best outcome for customers, and the regulator has also confirmed it will not authorise a return to lending by Amigo until after the sanctioning of a new scheme.
The scheme was proposed by Amigo to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints.
The stock was up 3.9% at 8.20 pence in early trade on Friday.
By Eric Cunha; [email protected]
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