(Alliance News) - Amigo Holdings PLC on Thursday reported a loss for the first half, as its loan book took a hit on a sharp drop in customers.
In the six months to September 30, the guarantor loans provider sunk to a pretax loss of GBP62.6 million compared to a GBP42.3 million profit the year before.
Revenue dropped 37% year on year to GBP92.3 million from GBP145.4 million.
Amigo's net loan book fell 34% to GBP485.2 million from GBP730.7 million at the same point the year before.
The firm upped its complaints provision to GBP159.1 million from GBP7.5 million the year before, which resulted in complaints costs rising to GBP93.7 million from GBP10.4 million the year before.
Amigo's customer numbers dropped 21% to 176.0 million from 222.8 million.
"It's undoubtedly been a difficult period for Amigo but as a team we have made significant progress towards quantifying and addressing the challenges we face. As a board we have a clear responsibility to all our stakeholders: from delivering the right outcomes for our customers as they manage the impact of Covid-19, to managing the wellbeing of our employees, and getting the business back on track for our shareholders," Chief Executive Gary Jennison said.
Amigo cut its interim dividend, compared to the 3.1p distribution the year before.
The lender considers that it has "adequate liquidity" to continue to fund operations and support its customers.
"There is, however, a material uncertainty surrounding going concern due to the potential economic impact of Covid-19, uncertainty over future complaint volumes and the possible outcome of the ongoing UK Financial Conduct Authority investigation," Amigo added.
As of October 30, Amigo reached a decision on all 25,571 complaints but is yet to issue final response to 2,517 customers of those complaints. It has previously said outstanding complaints refer to group of complaints where "significant guarantor payments on a loan have been a feature". "
Amigo noted the Complaints Voluntary agreement - or VReq - deadline has been reached.
Jennison added: "We are much better placed operationally to manage complaints and we now understand our position better. We have appointed professional advisors to help us look at all the available options; this work is at a very early stage. Where we've seen evidence of very poor behaviour by some claims management companies, we have reported them to their regulator, the FCA. Our focus is on ensuring that Amigo retains its position as a viable unsecured lending platform for the 10 million to 12 million adults who are excluded from mainstream bank lending. We want to meet the varied needs of these potential customers, be that through offering guarantor loans or other unsecured loan products."
Amigo said it is "confident" it is making progress in "quantifying and addressing" its legacy issues.
"We have a new board in place which is focused on taking the business through to the next stage of its development," Amigo added.
Looking ahead, Amigo is expected to return to lending, on a "prudent basis", as soon as possible in 2021.
Amigo continued: "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."
It did, however, note its cash position "remains strong" and collections remained at 83% of pre-Covid-19 levels.
Shares in Amigo were down 0.2% in London on Thursday morning at 9.17 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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