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Summary
- Amigo Holdings PLC had reported a plunge of 36.9% in its revenue during 9M FY21 ended 31 December 2020.
- AMGO had demonstrated a 32.8% reduction in the number of customers during 9M FY21.
- The Company would expect court sanction for the scheme of arrangement by 10 May 2021.
- AMGO had a cash balance of £165.0 million as of 31 December 2020.
Amigo Holdings PLC (LON:AMGO) is the LSE listed financial services stock. AMGO’s shares have generated a return of approximately negative 77.96% in the last 12 months. It is listed on the FTSE All-Share Index. The Company was incorporated in 2016.
Business Model
Amigo Holdings Plc is the provider of guarantor loans based out in the UK.
(Source: Company presentation)
Recent News
On 25 January 2021, AMGO had incorporated a new subsidiary, ALL Scheme Ltd, to manage a redress scheme to tackle historic customer complaints. Moreover, it would manage claims regarding loans issued before 21 December 2020.
Q3 FY21 & 9M FY21 Financial and Operational Highlights (as on 25 February 2021)
(Source: Company result)
- The revenue of AMGO had slumped by 36.9% to £137.5 million during 9M FY21, adversely affected by the halt in lending activities and payment holidays given because of the Covid-19 pandemic.
- AMGO had managed to reduce impairment to revenue ratio to around 30.2% during 9M FY21, while it was 31.5% during 9M FY20, illustrating a decline in originations.
- Due to reduced lending activity, AMGO had demonstrated a 32.8% reduction in its number of customers and a significant decline of 42.9% in the net loan book during 9M FY21 as compared to an equivalent period of the prior year.
- The statutory loss after tax was negative £86.8 million during 9M FY21, while it had reported a profit of £45.9 million for the first nine months of FY20.
- Furthermore, the Company had seen a substantial complaint expense of £116.2 million during 9M FY21.
- The Company remained highly cash-generative, and the cash balance stood at £164.6 million as of 31 December 2020.
- Net borrowings of AMGO were £179.5 million during the period.
- The Company would expect court sanction for the scheme of arrangement by 10 May 2021. It would give benefits to customers having a fair complaint against AMGO.
- The payment holiday had been granted to 63,000 customers by the end of January 2021, with around 12,000 plans still active.
Share Price Performance Analysis of Amigo Holdings PLC
(Source: EODHD/Others, chart created by Kalkine group)
Shares of Amigo Holdings PLC were trading at GBX 11.14 and were down by close to 2.82% against the previous closing price as on 25 February 2021 (before the market close at 11:32 AM GMT). AMGO's 52-week Low and High were GBX 4.84 and GBX 54.70, respectively. Amigo Holdings PLC had a market capitalization of around £54.47 million.
Business Outlook
The Company had recovered significantly during the third quarter of FY21. However, AMGO agreed that it had been tough nine months in terms of business performance. Nevertheless, the Company had undergone a corporate restructuring process and developed a new management team to tackle existing business challenges. Moreover, AMGO had built a successful arrangement of the scheme to enable a sustainable financial solution for its customer base. AMGO would also incorporate necessary changes into the policies and procedures as suggested by FCA upon the review. The customer base had reduced by over 30% in the last 12 months.
The Board has not provided proper financial guidance amid an elevated level of Covid-19 uncertainty as the duration of Covid-19 pandemic cannot be determined. Furthermore, the Company believed that it has sufficient liquidity to fund its operations and support customers. AMGO had a cash balance of £165.0 million as of 24 February 2021. Overall, the management would maximize the efforts to enable financing for those who were not granted credit by leading financial institutions.
