Amigo Holdings swings to interim loss as revenues tumble

Lender Amigo Holdings said on Tuesday that it had swung to an interim loss amid falling revenues and a halt to new lending.

Amigo posted a pre-tax loss of £12.7m for the six months ended 30 September, down from a pre-tax profit of £2.1m a year earlier, as revenues fell 72% to £15.8m. It also reported a basic loss per share of 2.7p, a marked turnaround from the prior year's 0.7p earnings per share.

The London-listed group's net loan book plummeted from £224.1m to £80.6m and customer numbers more than halved from £102.0m to £49.0m. Net unrestricted cash, on the other hand, rose from £2.1m to £78.6m.

Amigo said its net loan book reduction was the result of the ongoing run-off of its legacy loan book and a complete lack of new lending during the period.

Overall collections, including early repayments and recoveries from written-off accounts, remained "robust" despite the increased cost of living and an expected rise in delinquency as the book runs off.

Amigo also highlighted that on 13 October, following the end of the first half, the Financial Conduct Authority granted the group approval to return to lending under certain agreed conditions after the watchdog confirmed that it was satisfied Amigo had met the threshold conditions required for it to return to lending, initially through the operation of a pilot lending scheme which will limit the level of new loans issued for at least two months.

"The FCA's decision to approve a return to lending is an important milestone for creditors owed redress by Amigo, as it meets one of two Scheme conditions which must be fulfilled to meet the 'preferred' solution. The second condition is the completion of a capital raise by 26 May 2023. If Amigo fails to meet this final condition, the Scheme will revert to the 'fallback' solution which is an orderly wind-down of the Amigo Loans Ltd business," said the firm.

Amigo also said meetings with potential investors in relation to a capital raise were already underway, with the company expecting to propose a capital raise of approximately £40.0m as it also looks to raise debt to support future growth.

As of 1030 GMT, Amigo shares were down 5.42% at 4.62p.

Reporting by Iain Gilbert at Sharecast.com