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Amigo Holdings PLC on Thursday reported a further shrinking of its loan book but said it continues to ‘engage positively’ with the UK Financial Conduct Authority over its lending restart.
Shares in Amigo were down 18% at 4.51 pence in London on Thursday morning.
Amigo's net loan book stood at £105.9 million at June 30, down 63% from £288.7 million a year before. At March 31, 2022, the loan book stood at £138.0 million.
Revenue tumbled 68% to £10.4 million in the three months to June from £32.5 million a year before, and pretax profit reduced 85% to £2.2 million from £15.0 million.
This was all due to Amigo's continued pause in lending, which resulted in a 48% decline in customers to 61,000.
However, it hailed the court sanction of its scheme of arrangement during the quarter, in May, as a ‘turning point’ for the business.
‘We have made significant progress in preparing to return to lend. While the scheme condition is that we return to lending by 26 February 2023, we aim to do so far sooner. Engagement with the FCA has continued to be positive,’ it said.
Amigo said it will initiate lending with a limited pilot, building to a maximum of £35 million net originations until its capital raise has been completed.
Amigo's scheme requires the company to complete a capital raise by May 26, otherwise it risks being wound down. The firm is yet to decide on the scale, but expects to propose a capital raise to fund both the minimum £15 million additional scheme contribution and to support future lending.
The scheme requires Amigo to issue at least 19 new shares for every existing one.
When it returns to lending, it will not be doing so under the Amigo brand.
‘Our revised guarantor loan product and new non-guarantor unsecured loan will be released under our new brand, RewardRate. This represents a new start for our business,’ it explained.
Amigo promised an ‘improved’ underwriting process with enhanced affordability checks.
‘The board is confident that its future lending proposition meets a strong demand in the market for a competitively priced, mid-cost, specialist credit product and that Amigo can be a responsible and valuable contributor to the sector. Amigo is preparing and looking forward to returning to lending as soon as possible and fulfilling its obligations under the scheme,’ it said.
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