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Amigo delayed results show widened loss as cash put away for scheme

Tue, 24th Aug 2021 19:20

(Alliance News) - Amigo Holdings PLC after the market close on Tuesday released its delayed annual results, showing the lender has put aside nearly GBP350 million to deal with its legacy customer complaint issues.

Amigo was scheduled to release its annual results in late July, but decided to hold them back after the UK regulator continued to raise concerns with its plans to seek approval for a new scheme of arrangement to deal with current and potential redress creditors.

The Financial Conduct Authority has yet to approve Amigo's plan, which the company maintains is the best outcome for customers, and the regulator has also confirmed it will not authorise a return to lending by Amigo until after the sanctioning of a new scheme.

The scheme was proposed by Amigo to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints.

"In considering the presentation of full year accounts, until there is greater certainty around a future scheme, the board has concluded that the amount recognised for complaints redress should be included for 2021 on the basis that known and expected future complaints are settled in full. The board is continuing to pursue a scheme and, despite material uncertainties, considers that it remains appropriate to prepare these financial statements on a going concern basis, as the continued pursuit of a scheme provides a realistic alternative to insolvency," Amigo said Tuesday.

In the year to March 31, the Bournemouth, England-based provider of guarantor loans recorded a pretax loss of GBP283.6 million, widened sharply from GBP37.9 million the year before.

The loss was expanded due to GBP344.6 million in complaints provisions, up from GBP117.5 million the year before. Amigo's complaint costs rose to GBP318.8 million from GBP126.8 million.

Revenue dropped 42% to GBP170.8 million from GBP294.2 million.

The company's net loan book dropped to GBP340.9 million at March 31 from GBP643.1 million at the same point the year before.

Amigo's customers fell to 136,000 from 222,000.

Chief Executive Gary Jennison said: "It has been an incredibly difficult year and, as a new team, we are fighting hard to address the problems of the past in order to save Amigo, compensate those customers affected and continue to offer essential finance to the growing number of ordinary people who can't access mainstream lending.

"The serious challenges we have faced from the high level of complaints received around historical lending primarily between 2016 and 2019, as reflected in today's results, have left the business with a significant liability for compensation payments and put our future under threat. We are working hard to rectify the detriment that this has caused some of our customers and the uncertainty for our people and our shareholders, and have been doing everything we can to find a solution since coming together as a team last Autumn."

Jennison said the scheme proposed by the company is the only way it "can survive and rebuild".

Shares in Amigo closed 4.8% higher in London on Tuesday at 8.38 pence each.

By Paul McGowan; paulmcgowan@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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