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(Alliance News) - Guarantor loans provider Amigo Holdings on Friday posted a sharp drop in first-quarter earnings due to the granting of payment holidays, a day after its disgruntled founder made a formal bid to return.
Amigo Holdings reported a drop in first-quarter revenue which it said primarily reflected the effects of Covid-19 payment holidays that it granted to its borrowers. The revenue fall all but wiped out profit.
For the first quarter to June 30, revenue was down 32% to GBP48.8 million from GBP71.5 million in the first quarter last year, and pretax profit tumbled to GBP1.4 million from GBP22.6 million.
The company attributed the performance to Covid-19-related payment holidays granted to 47,000 customers and the temporary pause in all new lending activity. Amigo said that, due to Covid-19, payment holidays were granted to borrowers during the period for up to three months with no increase in monthly instalments when the payments resume.
"We are preparing to restart lending on a prudent basis by the end of 2020. However, until we do so, and until we have more clarity on the financial impact of Covid-19, the board considers it too early to issue guidance for this financial year. We have a strong cash position. Despite the special Covid-19 relief programme, cash collection has remained robust, and we are well-positioned to manage the challenges of the Covid-19 pandemic," Amigo said.
After the London market close on Thursday, Amigo had said it received a general meeting requisition notice from Richmond Group for appointing James Benamor as a director of the company.
The notice also proposed removal of Chief Financial Officer Nayan Kisnadwala, Interim Chair Roger Lovering and Chief Executive Glen Crawford as directors of Amigo and resolutions in relation to Amigo's unit Amigo Loans, the sub-prime lender noted.
Amigo said it is consulting with its advisors in relation to the resolutions.
On Friday last week, the Financial Times newspaper had reported that Benamor, founder of Amigo, was seeking to return as chief executive despite having recently offloaded much of his majority holding in the company.
In April, Benamor had called for the sub-prime lender's entire board to be ousted after saying the company is "committing slow motion suicide", but shareholders rejected Benamor's resolutions.
Amigo and Benamor settled their dispute in June, with Benamor deciding to sell his entire 61% stake in the company.
On Monday, Amigo hit back at Benamor, saying that he should not waste time or money in his bid to return.
For the financial year that ended in March, Amigo swung to a loss due to the costs of addressing customer complaints. Amigo in July said it had entered into an amended voluntary requirement, or VReq, with the UK Financial Conduct Authority. Amigo agreed to reach a position by October 30 where all customer complaints are dealt with within eight weeks of them being made.
"The whole team at Amigo is focused on addressing our legacy issues and building a sustainable business for the long term. Operationally we have turned a corner in our handling of complaints. We are on track to meet the agreement reached with the FCA to resolve our complaints backlog and continue to work with the FCA on its ongoing investigation. We have adequate liquidity and funding to support our ongoing business activity," CFO Kisnadwala said on Friday.
"We are updating our lending processes and policies to enable Amigo to restart lending in a prudent manner by the end of 2020."
Amigo shares were up 24% early Friday, though the stock still is worth little more than a tenth of its value a year ago.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.2% at 6,011.26
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Hang Seng: up 1.5% at 25,680.22
Nikkei 225: closed down 1.4% at 22,882.65
DJIA: closed up 160.35 points, or 0.6%, at 28,492.27
S&P 500: closed up 5.82 points, or 0.2%, at 3,484.55
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GBP: up at USD1.3263 (USD1.3192)
EUR: up at USD1.1870 (USD1.1798)
Gold: up at USD1,943.72 per ounce (USD1,919.95)
Oil (Brent): up at USD45.66 a barrel (USD44.68)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
Bank of England Governor Andrew Bailey speaks at Jackson Hole event.
1100 BST Ireland retail sales index
1100 CEST EU business & consumer surveys
0830 EDT US advance international trade in goods
0830 EDT US personal income and outlays
0945 EDT US ISM-Chicago business survey - Chicago PMI
1000 EDT US University of Michigan survey of consumers
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Japan's Prime Minister Shinzo Abe is to resign over health problems, local media reported, in a bombshell development that will end a record-setting tenure with no clear successor yet in place. There was no immediate confirmation of the reports, which came hours before Abe was due to give a press conference to address speculation about his health. Rumours about Abe's possible resignation had intensified after two recent surprise hospital visits for unspecified medical checks, but in recent days, senior government officials had suggested he would serve out the rest of remaining year in office. The resignation would be a bitterly familiar scenario for Abe, who stepped down just one year into his first term, in 2007, over health problems. He was subsequently diagnosed with ulcerative colitis, which he said upon return to office in 2012 was under control with the help of new medication.
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BROKER RATING CHANGES
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SOCGEN CUTS ROLLS-ROYCE PRICE TARGET TO 201 (246) PENCE - 'SELL'
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BARCLAYS RAISES WPP PRICE TARGET TO 800 (760) PENCE - 'OVERWEIGHT'
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CREDIT SUISSE RAISES WPP PRICE TARGET TO 600 (565) PENCE - 'UNDERPERFORM'
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COMPANIES - FTSE 250
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Plastic and fibre products manufacturer Essentra cancelled its dividend as it reported a drop in half-year earnings due to the effects that the coronavirus crisis has had on its end markets. Essentra said it delivered a resilient performance in the first half of 2020, with revenue and order intake trends improving towards the end of the period. For the half-year to June 30, revenue fell 12% to GBP448 million from GBP507 million a year ago. Pretax profit was GBP8 million, down 85% from GBP53.1 million. The company did not declare an interim dividend, having paid a dividend of 6.3 pence last year. Essentra said it will keep under review the possibility of a resumption of dividends for 2020. Separately, Essentra said it will target carbon neutrality by 2040 through a programme of energy efficiency improvements and emissions reductions across its manufacturing and other sites.
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COMPANIES - GLOBAL
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Chinese consumers could boycott Apple if the US bans Tencent Holdings' WeChat, China's foreign ministry spokesman warned, as the clock ticks down on a US order to block the popular social app. US President Donald Trump this month announced a ban from mid-September on WeChat and another Chinese-owned app, TikTok, accusing them of threatening national security, further stoking tensions between Beijing and Washington. But foreign ministry spokesman Zhao Lijian tweeted Friday that "If WeChat is banned, then there will be no reason why Chinese shall keep iPhone and Apple products".
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Toyota Motor said sales and production recovered more quickly than expected in July but still remains below prior year's level. The Tokyo-headquartered automotive manufacturer said global sales -including subsidiaries Daihatsu Motor Co and Hino Motors - in July were down 12% to 821,719 units from the previous year, recovering at a faster than expected pace. The recovery is being driven primarily by China, where sales were up 19% year-on-year, and Europe, with sales up 15%. In the US, sales were down 19%, while in Japan it fell by 17% on the prior year.
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Friday's Shareholder Meetings
Total Produce
Bigblu Broadband - GM re disposal
Kropz
Distil
SIMEC Atlantis Energy
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
