8th Jul 2022 09:09
(Alliance News) - Amigo Holdings on Friday saw revenue almost halve in its recently ended financial year as it awaits for UK Financial Conduct Authority's green light to restart lending.
Amigo is a Bournemouth, England-based guarantor loan provider.
For the year ended on March 31, Amigo swung to a pretax profit of GBP167.9 million from a significant loss of GBP283.6 million a year ago. This was due to it taking a GBP156.6 million complaints provision release following the sanction of its latest scheme to settle customer claims after probes from UK regulators into mis-sold loans.
It cautioned the profit figure "should not be taken as an indication of company performance or shareholder benefit."
"It's important to make clear that the shareholder equity we have reported today will be substantially absorbed by future costs of the scheme and administering the legacy portfolio, leaving working capital of circa GBP8 million," it added.
The company's new scheme was approved by the UK high court in late May this year. At a meeting in early May, 88% of Amigo creditors approved the scheme, though 83% also approved a back-up scheme to wind down the company.
Revenue for the year was down 48% to GBP89.5 million from GBP170.8 million. It was as a result of the "ongoing pause in lending throughout the year", Amigo explained.
Chief Executive Officer Gary Jennison said: "We are continuing to engage with the FCA on the terms of Amigo's return to lending, and we are thankful to them for working closely with us over such a long period of time. As a company, we have learnt the lessons of the past. Our executive team has changed the culture of the company and we have developed new lending products built to serve the needs of a clearly defined set of customers."
Amigo cautioned that "hurdles remain" before it can secure the continuation of the business.
The preferred outcome under the new business scheme is contingent on new lending restarting and Amigo completing an equity raise, which it will release details of in the second half of this year.
The preferred outcome requires Amigo to issue at least 19 new shares for every existing share in issue, resulting in "significant dilution" for existing shareholders.
"Whilst the quantum of the fundraising has not yet been determined, we are cognisant that minimising the equity raised by utilising higher gearing will make it more feasible for existing shareholders to participate in any rights issue. Amigo will publish equity raise specifics as well as detail of its future business plan and new lending performance ahead of a shareholder vote to approve the raise," said Amigo.
Shares were down 2.4% at 4.74 pence each on Friday morning in London, and the stock has fallen 46% over the past 12 months.
By Xindi Wei; [email protected]
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