(Alliance News) - Amigo Holdings PLC on Tuesday reported that it had swung to a loss alongside reporting that the number of redress claims is about 25% more than anticipated.
In the six months that ended September 30, Amigo swung to a pretax loss of GBP12.7 million from a GBP2.1 million profit in the same period last year.
The Bournemouth-based guarantor loan provider's revenue plummeted to GBP15.8 million from GBP56.5 million as there was no new lending during the period. Its number of customers more than halved to 49,000 from 102,000 last year.
It faced complaints expenses worth GBP11.3 million, up from GBP5.3 million last year, and administrative and operating expense of GBP15.9 million, widened from GBP13.5 million.
Chief Executive Officer Danny Malone said: "Amigo's recovery continues to make good progress. We recently started a pilot of our new RewardRate product and meetings with potential investors in relation to a capital raise are now also underway."
In May, the High Court sanctioned Amigo's scheme of arrangement. The scheme allows Amigo to pay compensation to customers with a valid claim for redress for mis-sold loans prior to November 2020.
All claims were submitted by November 26. Although the final number of claims is being verified, the indication is that the volume of claims are about 25% ahead of previous expectations.
Amigo returned to lending in October 2022, post period end, following approval from the Financial Conduct Authority for a pilot phase to proceed. This satisfied one of the conditions of its scheme of arrangement.
The second condition is the completion of a successful capital raise, including issuing 19 shares for every one share in issue at the work. The company said this process must be complete by May 2023, it noted "work on this is underway".
Looking forward, the company said the next six months are "critical for Amigo's ongoing survival".
"If we are successful in raising capital, we move forward with a very different business to that of the past and with a business model that is well positioned for the future regulatory environment and for growth as a responsible and valuable contributor to the mid-cost specialist credit market," the company said.
Malone said: "It has been a long process of renewal but I'm proud of the journey we have been on. We've built a better company with the right culture and strong underwriting standards. We're now well positioned to support people through this cost-of-living crisis with responsible lending."
Shares in Amigo were trading 5.0% lower at 4.66 pence each in London on Tuesday afternoon.
By Chris Dorrell; chrisdorrell@alliancenews.com
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Amigo (AMGO)