REG - Amigo Holdings PLC - Interim Financial Results
18/12/2023 07:00
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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 £24.5m (H1 FY2023: £80.6m) and
revenue reduction of 82.3% to £2.8m (H1 FY2023: £15.8m), due to the ongoing
run-off of the legacy loan book and minimal new lending during the period.
· Scheme provision up 8.7% to £208.0m (H1 FY2023: £191.4m). 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 £9m to £106m. 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 £14.8m.
· The reduction in revenue as the book runs off, alongside the increase
in provision, led to a reported loss before tax of £6.7m, (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 £5.8m as at 30 September 2023 (H1
FY2023: £36.1m). 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.
· £121.6m of unrestricted cash and cash equivalents as at 30 September
2023 (H1 FY2023: £128.4m).
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 £4.4m
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 £14.8m. 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 £ 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 £66m 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
£24.5m (H1 FY2023: £80.6m). Revenue fell by 82.3% year on year to £2.8m (H1
FY2023: £15.8m), 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 £6.7m (H1 FY2023: loss of £12.7m). Excluding the Scheme charge,
restructuring expense and onerous contracts provision, adjusted profit before
tax was £9.5m (H1 FY2023: loss of £12.7m).
Net assets as at 30 September 2023 were £5.8m (H1 FY2023: £35.2m). 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 £196.4m (H1 FY2023: £198.7m), have seen a small
reduction year on year. The reduction is due to the residual bond buyback of
£50m 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 £11.5m (H1 FY2023: credit of £0.2m)
primarily due to post-charge-off recoveries continuing to remain robust
alongside £4.4m 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 £9.3m (H1 FY2023: £30.1m), 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 £208.0m (H1 FY2023:
£191.4m), 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 £14.8m (H1 FY 2023: £11.3m). Sensitivity analysis of the
key assumptions is set out in note 2.2 to these financial statements.
Restructuring provision
A restructuring provision of £4.5m 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 £4.6m, reflecting actual paid exit costs (£0.8m) 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 £0.1m 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 £121.6m as at 30 September 2023 (H1 FY2023: £128.4m).
Restricted cash was £74.8m (H1 FY2023: £70.3m). 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
(https://corporatefinanceinstitute.com/resources/management/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 ended 6 months ended Year to
30 Sep 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
Notes £m £m £m
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 (6.8) (12.7)
the Group1
(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 £0.1m 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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
Notes £m £m £m
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 £74.8m (H1 2023: £70.3m)
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
£m £m £m £m £m £m
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 to 6 months to Year to
30 Sep 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
(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 (9.8) (26.3) (49.1)
loans
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 £74.8m (H1 2023: £70.3m). 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 £2,000 to £10,000 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
£ million (£m) 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 £9.3m 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 £9.0m to
£9.5m.
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 £106.1m,
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 £208.0m.
The total Scheme liability has increased by £16.6m 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 £9m to
£106.1m, 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.
Assumption used Sensitivity applied Sensitivity (£m)
Cash redress provision(1) £106.1m +/- 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:
6 months to 30 September 2022 Period to Period to Period to
30 Sep 22 30 Sep 22 30 Sep 22
£m £m £m
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 (12.6) (0.1) (12.7)
Group
30 Sep 22 30 Sep 22 30 Sep 22
£m £m £m
UK Other 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 to Period to Year to
30 Sep 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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
£nil (H1 2023: £1.7m).
Period to Period to Year to
30 Sep 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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 23 30 Sep 22 31 Mar 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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
(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 EPS1 (9.3)
9.4 (12.7)
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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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 0.2
- 0.6
Deferred broker costs1 - stage 2 0.1
- 0.2
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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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.
Period ended 30 September 2023 Stage 1 Stage 2 Stage 3 Total
£m £m £m £m
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
Period ended 30 September 2022 Stage 1 Stage 2 Stage 3 Total
£m £m £m £m
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 £111.6m to £33.8m 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:
Period ended 30 September 2023 Stage 1 Stage 2 Stage 3 Total
£m £m £m £m
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
Period ended 30 September 2022 Stage 1 Stage 2 Stage 3 Total
£m £m £m £m
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 0.1 0.1 0.5 0.7
overlay
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 £30.1m at
30 September 2022 to £9.3m 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 1 Stage 2 Stage 3 Total
£m £m £m £m
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 1 Stage 2 Stage 3 Total
£m £m £m £m
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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
Customer loans and receivables £m £m £m
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 costs1
Due within one year 0.3
- 0.7
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 value Carrying amount Fair Carrying amount Fair Carrying amount Fair
hierarchy £m value £m value £m value
£m £m £m
Financial assets not measured at fair value(1)
Amounts receivable from customers(2) Level 3 24.5 9.4 81.5 75.1 45.7 17.2
Held for sale assets Level 3 1.1 1.1 - - 1.1 1.1
Other receivables Level 3 0.8 0.8 2.0 2.0 1.5 1.5
Cash and cash equivalents (restricted) Level 1 74.8 74.8 70.3 70.3 107.2 107.2
Cash and cash equivalents Level 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)
Other liabilities Level 3 (4.6) (4.6) (6.9) (6.9) (6.0) (6.0)
Senior secured notes(3) Level 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 £0m (H1 2022: £50.0m). 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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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 £1.1m 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 23 30 Sep 22 31 Mar 23
Unaudited Unaudited Audited
£m £m £m
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 £49.7m 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
£m £m £m £m £m £m £m £m £m
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 £16.6m 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 £9m to
£106.1m, 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 £4.7m,
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 £4.6m 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 £207.2m. 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
£0.24.
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 £nil (2022: £nil).
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 £nil. The charge to the consolidated statement of
comprehensive income was £0m in the six months to 30 September 2023 (H1 2023:
charge of £0.1m).
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 £0.1m. Consideration for the disposal was £1.
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.
Name Country of incorporation Class of Ownership 2023 Ownership 2022 Principal activity
Shares held
Direct holding
Amigo Loans Group Ltd1 United Kingdom Ordinary 100% 100% Holding company
ALL Scheme Ltd1 United Kingdom Ordinary 100% 100% Special purpose 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
AMGO Funding (No.1) Ltd(3*) United Kingdom n/a - "SE" Special purpose 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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