Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Yuri.F
In the context of the FOS themselves placing claims on hold (please refer to previous posts) :
“The particular intricacies of this product area have needed to be reviewed in a lot of detail, for us to be confident that the decisions our ombudsmen reach are correct, fair and reasonable to both our consumers and businesses. This in turn has meant our ombudsman aren’t able to issue decisions on cases such as yours until these considerations are fully looked into and resolved. These are currently under review at a higher level and as soon as these things are sorted the ombudsman will be able to start issuing their decisions.”
(Could be a 25% to 50% reduction in 126.8 Million provisions made in the 2020 annual report)
This could indicate that the VREQ involves Amigo agreeing to implement the restriction such that the surplus cash from those allocated to "Genuine Claims" would not be allocated to dividends or bonuses.
The impact of the FOS placing a hold on claims is such that in the near to mid term, Amigo Holdings could potentially have an unrestricted cash flow as estimated in the region of 240 Million.
Perhaps the "Or else" option was that due to the FOS placing claims on hold in the interests of being "fair and reasonable to both our consumers and businesses", it is prudent for all parties to have an insurance policy pending the situation where the FOS are "currently under review at a higher level".
Yuri.F
The headline I feel is somewhat misleading and confuses Vreq with an OIreq:
‘Own Initiative Requirements’ (OIREQ) and ‘Voluntary Requirements’ (VREQ) are part of the FCA’s ‘early intervention’ programme. These are designed to eliminate or reduce an ongoing risk to consumers or markets.
An OIREQ imposes a restriction on the firms’ business activities, whereas a VREQ involves the firm agreeing to implement the restriction.
https://citywire.co.uk/new-model-adviser/news/your-guide-to-the-fcas-db-transfer-permission-restrictions/a1103497
Therefore the agreement was entirely voluntary.
Possibly brought about as an insurance policy for the FOS and FCA, that excess funds (allocated in the annual budget circa 126.8 Million) as a direct result of the FOS placing holds on claims would not be used for dividends and bonuses.
Vorag
Exactly, my thoughts..
The recent Vreq (19th October) that the markets reacted to negatively, with a voluntary mandate from Amigo to not pay dividends etc, is exactly in line with Rishi Sunak's statement that "Britain's biggest firms have been told they cannot pay dividends, dish out bonuses or sack staff" on the 24th September.
Although this was aimed at companies that claim the furlough scheme or government bailouts (Which to my knowledge does not include Amigo and testament to their solvency), it appears that this agreement was made voluntarily by Amigo Holdings.
Which does pose the question:
If 50% to 75% of these claims budgeted for in the annual report were not genuine, was the voluntary agreement (Vreq) an insurance policy to assure the FOC that once lending resumes, that if funds allocated in the 2020 annual report (£126.8 Million) would not be prematurely used for the introduction of dividends and bonuses?
A 50% reduction in genuine claims would result in a further 63.4 Million available for re lending
Whereas a 75 % reduction in "Genuine Claims" would result in a further 95.1 Million in unrestricted cash.
In addition to the existing estimate of 145 Million in unrestricted Cash, this scenario would facilitate Amigo holdings with an unrestricted cash flow of aproximately 240 Million.
Any thoughts on how this scenario would affect the book value, SP & Market CAP?
FrankyS1971
Morning Sir, you are bang on!
That was the report I based by previous statements on Amigo Shifting from "Unstable" to "Stable":
The Moody report stated back in August:
FACTORS THAT COULD LEAD TO AN UPGRADE :
The outlook could be turned to stable
i) if volume of complaints declines significantly and FCA discussions conclude without adversely impacting the franchise positioning and cash reserves;
ii) Moody's views that the company will be able to gradually successfully resume new credit lending and improve its profitability to a more sustainable level, as well as
iii) if Amigo achieves a more diversified funding profile.
So far since the report:
1. The FOS themselves are placing claims on hold :
“The particular intricacies of this product area have needed to be reviewed in a lot of detail, for us to be confident that the decisions our ombudsmen reach are correct, fair and reasonable to both our consumers and businesses. This in turn has meant our ombudsman aren’t able to issue decisions on cases such as yours until these considerations are fully looked into and resolved. These are currently under review at a higher level and as soon as these things are sorted the ombudsman will be able to start issuing their decisions.”
(Could be a 25% to 50% reduction in provisions made in the annual report)
In addition to Garys statement in his recent interview that "A lot Of these claims are not genuine claims".
2. Resumption of lending within the next few weeks, already addressed by CEO Gary Jennison in his recent Interview:
https://www.amigoplc.com/investors
(Awaiting RNS imminently)
3. We have yet to see if Gary & the Amigo team will produce a more diversified funding profile however I suspect we will not find out about this until Lending resumes & the official RNS for Lending.
All in all we could be witnessing the transition of Amigo Holdings from "Unstable To "STABLE".
A Stable rating with Gary Jennison's expertise in turnarounds, would surely have a major impact on the Institutional Investors interest as well as Retail.
It is interesting that Gary's mantra in the video is:
"Fix the complaints"
"Fix the relationship with the regulator"
"Get the business lending again"
Exactly in line with Moody's analysis on the Factors that will lead to an upgrade.
The lending RNS if understood by the markets and its impact on Amigo's ratings should without doubt have a substantial effect on the SP and Market Cap.
xel123:
Nice find
Also Just found an interesting response from the FOS on "debtcamel" (October 23, 2020 at 6:23 pm) where the FOS themselves have put claims on hold.
The FOS stated:
“The particular intricacies of this product area have needed to be reviewed in a lot of detail, for us to be confident that the decisions our ombudsmen reach are correct, fair and reasonable to both our consumers and businesses. This in turn has meant our ombudsman aren’t able to issue decisions on cases such as yours until these considerations are fully looked into and resolved. These are currently under review at a higher level and as soon as these things are sorted the ombudsman will be able to start issuing their decisions.”
The FOS appear to have taken the position that top up loans IF genuine are upheld But the previous loan isn’t, in order to be fair to "Consumers AND Businesses". Two types of cases are on hold by the FOS, those where a guarantor has made some payments and the ones involving a deduction for unpaid interest.
This in addition to Gary's statement in his recent interview that "A lot Of these claims are not genuine claims" could yet prove that the actual genuine claims are only 25% to 50% of the original provisions.
The ramifications could be game changing and it is great to hear that the FOS are taking the stance of being fair to Businesses as well as Consumers!
Clintek
So between you me & Hereshopin, Franky & NS20 we must be approaching 2 % of Amigo Amigo Holdings.
1 more percent and combined we would have to submit an RNS!
Maybe even a seat on the board? lol
hunniford
If your going to email Gary, can you ask him, for the love of god, to keep the RNS simple.
Something along the lines of:
"Amigo is set to commence mainstream lending in ..... days"
Full Stop!
Sometimes less is more!
The last RNS which I took as really positive, was way too confusing for the markets and taken as a negative!
I wonder if the Amigo Team & the new CEO Gary will be delivering us a happy Christmas advert soon?
https://www.youtube.com/watch?v=Ojk9lbjDmPY
FrankyS1971
Talking about strengthening the board:
The addition of Maria (voted one of Cranfield University's '100 Women to Watch) on the 12th of October was just one of many definite strategic moves to fortify this board.
An expert in Strategy, corporate reputation to create their narrative and proactively engage with Institutional Investors and Retail.
With the II's being instrumental in the turnaround Strategy.
"Maria has over 30 years of experience advising the Boards of leading brands on marketing, brand, and corporate reputation, including within the financial services sector. Experienced at developing strategy, managing risk and organisational change, she helps businesses to create their narrative and proactively engage with their stakeholders; she has a strong focus on driving good culture, leadership and purposeful behaviour. Her client list has included:
The Financial Conduct Authority
Unum
Iglo/Birds Eye
Cadbury
and Rio Tinto amongst other leading brands.
Enough said?
FrankyS1971
Absolutely Agree.
With the right person at the helm this has every chance of success.
When investing in any company it is always prudent to check out the CEO and management team.
https://www.amigoplc.com/investors/messages-from-our-ceo
At the end of the day we are investing in people, not companies.
Personally I think the CEO has an amazing CV & turnaround record.
In all honesty, how many companies like Amigo are there that on the FTSE are not restricted from operating like CINE & Restaurant Group?
FrankyS1971
I could not agree more.
Especially with the senior secured notes not due to the "Banks"until 2024.
That ought to be sufficient time for the turnaround objective laid down by the CEO, to be executed.
Also, it has crossed my mind about the recent RNS (19th October) with a voluntary mandate from Amigo to not pay dividends etc, that this is exactly in line with Rishi Sunak statement that "Britain's biggest firms have been told they cannot pay dividends, dish out bonuses or sack staff" on the 24th September.
Although this was aimed at companies that claim the furlough scheme or government bailouts (Which to my knowledge does not include Amigo and testament to their solvency), it appears that this agreement was made voluntarily by Amigo Holdings.
Which does pose the question, what did the FCA & or government agree to with Amigo if they are not in receipt of bailouts?
Are the government actively involved in ensuring Amigo's turnaround is successful to ensure that this vital public service and line of credit continues to be made available to those members of the public who can pass the affordability checks?
Are the government liable for enforcing payment holidays etc on PLC's?
It would appear that there must be some agreement in place to protect these companies in situations where the government asks the private sector to provide financial aid?
Not that this has appeared to have affected Amigos unrestricted cash balance so far!
Itisagame
Hi
That is a frightening thought!
Whilst this may affect the existing loan book which has had no issues with payment holidays.
Moving forward.
Somehow I can not see the demographic that Amigo will be lending to will be affected by this.
If the new customers can pass affordability checks after the Initial National lockdown, and are still unaffected with the ongoing situation, it is unlikely their situation will change or will fall into the category of " facing payment difficulty, or are newly in difficulty."
By definition surely they would not pass the affordability checks if this applied:
The FCA interim chief executive Christopher Woolard said: "for those who are still facing payment difficulty, or are newly in difficulty, as a result of coronavirus, we expect firms to offer a tailored package of support taking into account the ongoing situation and local or national responses to the crisis."
So surely, by default, this will not apply to Amigo...
Paulanthony
Hi Paul, any reasons why you think the RNS will be tomorrow?
I think someone else mentioned Friday previously.
I hope they keep it really simple though.
Something along the lines of "Amigo is set to commence mainstream lending in 7 days" Full Stop!
The last RNS which I took as really positive, was way too confusing for the markets and taken as a negative!
TwistyMinkle
MriGoat
Sentiment & Fear with no News!
I could not agree more that the market as a whole is panicking today.
A buyers paradise!
Though It really does feel like the MM's are making the most of this with a massive "Tree Shake" at the moment, whilst potentially on the cusp of some news that will fundamentally change everything.
Not to mention the debt rating upgrade this would bring.
Surely the CEO's turnaround strategy with Advertising, Lending and a debt upgrade will have a profound impact on the business.
This Strategy has the potential to transform the company from the current "Unstable" rating to "STABLE".
With a stable rating in itself bringing many Institutional Investors.
Having read the "open letter to Shareholders from the CEO" and the recent interview, It would appear that the objective here is to create a snowball effect to full recovery.
Particularly for those with higher entry points from 200p to 250p who he addressed directly...
https://amigoloans.cdn.prismic.io/amigoloans/eb23bea2-8470-4b23-9be8-434145e12ac4_201012_RNS+Reach_Open+letter+to+shareholders_FINAL.pdf
TwistyMinkle
MriGoat
Sentiment & Fear with no News!
I could not agree more that the market as a whole is panicking today.
A buyers paradise!
Though It really does feel like the MM's are making the most of this with a massive "Tree Shake" at the moment, whilst potentially on the cusp of some news that will fundamentally change everything.
Not to mention the debt rating upgrade this will bring.
Surely the CEO's turnaround strategy with Advertising, Lending and a debt upgrade will have a profound impact on the business.
Perfectly timed for the current events?
Am I the only one that thinks this will potentially transform the company from the current "Unstable" rating to "STABLE"