Amigo Holdings PLC
Annual report and accounts 2023
Amigo Holdings PLC Annual report and accounts 2023
The current Board came into Amigo because we believe passionately
that there is a need in the market for a regulated mid-cost lender that
meets the demand of financially excluded people who deserve access
to regulated credit. We have fought hard as we sought to deliver the
best outcome for creditors, colleagues and shareholders.
It is with great sadness that the Board took the decision in March 2023
to commence the solvent wind down of the business. This will regrettably
result in no value for our shareholders. The Board is deeply sorry for
this outcome.
The economic and market environment moved against us considerably
after May 2022 when our Scheme of Arrangement, formulated between
late 2021 and early 2022, was sanctioned. This severely impacted our
ability to raise capital.
Our priority now is to undertake an orderly wind down of both the
Amigo Loans Ltd business and the wider Group, in which we maximise
returns for Scheme creditors and look after our people as we move
through the process. I would like to thank my colleagues for the
considerable commitment they have shown over a long and dicult
period and all our shareholders and wider stakeholders who have
supported us.
Danny Malone
Chief Executive Officer
Amigo Holdings PLC
Annual report and accounts 2023
Strategic report
Strategic report
1 About Amigo
2 Headlines
3 Business model
4 Chair’s statement
6 Chief Executive Ocer’s review
9 Strategy
10 Stakeholder engagement and section 172
16 Sustainability
24 Financial review
26 KPIs
28 Risk management
29 Our risks
32 Emerging risks
34 Going concern and viability statement
Corporate governance
35 Chair’s introduction
36 Board of Directors and Company Secretary
38 Executive Committee (“ExCo”) members
39 Corporate governance statement
40 Governance report
46 Audit Committee report
50 Nomination Committee report
52 Risk Committee report
54 Directors’ remuneration report
73 Directors’ report
79 Directors’ responsibilities statement
Financial statements
81 Independent auditor’s report to the
members of Amigo Holdings PLC
88 Consolidated statement of
89 Consolidated statement of financial position
90 Consolidated statement of changes in equity
91 Consolidated statement of cash flows
92 Notes to the consolidated financial statements
118 Company statement of financial position
119 Company statement of changes in equity
120 Company statement of cash flows
121 Notes to the financial statements – Company
123 Appendix: alternative performance
measures (unaudited)
123 Glossary
126 Information for shareholders
About Amigo
Amigo provided mid-cost credit in the
UKto those who would otherwise find
itdicult to access financial services.
On23 March 2023 Amigo stopped
oering new loans and started an orderly
solvent wind down of the business. Amigo
provided guarantor loans in the UK from
2005 to 2020 and unsecured loans
under the RewardRate brand from
October 2022 to March 2023, oering
access to mid-cost credit to those who
are unable to borrow from traditional
lenders due to their credit histories.
Amigos back book of loans is in the
process of being run o or sold with all
net proceeds due to creditors under a
Courtapproved Scheme of Arrangement.
Amigo Loans Ltd and Amigo Management
Services Ltd are authorised and regulated
in the UK by the Financial Conduct Authority.
Operational headlines
On 23 March 2023 Amigo’s Scheme of Arrangement
(“Scheme”), sanctioned by the High Court in May 2022,
switched to the Fallback Solution, which is an orderly
wind down of the Amigo Loans Ltd business. All new
lending ceased with immediate effect. As a result, the
Board has determined that the financial statements will
no longer be prepared on a going concern basis (see
note 1 of the financial statements).
This followed the Board concluding that it would not be
able to raise sufficient commitments for funds to meet
both the Scheme requirement of an additional £15m
redress payment and to provide working capital to
enable the business to continue as agoing concern
by26 May 2023.
The existing loan books, including both the legacy loans
and new RewardRate loans, will continue to be collected
or will be sold. This is expected to be substantively
completed by early 2024.
The FCA Enforcement action concluded on 14 February 2023
with a fine of £72.9m reduced to £nil by the FCA in order
to not threaten Amigo’s ability to meet its commitments
to redress creditors identified under the Scheme.
The priorities now are to ensure the orderly wind down
of the business as outlined under the Fallback Solution,
and the realisation of assets to maximise return for
scheme creditors, whilst looking after the wellbeing
of our employees. A number of roles will be required
as wecontinue to service our existing customers and
manage the wind down. Consultation for the redundancy
of all roles is ongoing.
The wind down will leave no value for shareholders.
While we have continued to engage with potential
providers of finance to allow the business to restart,
theBoard considers the likelihood of success tobe low.
Post period end, in line with the wind down strategy,
Chief Executive (“CEO”) Danny Malone resigned from
hisrole as CEO and Director, subject to a six month
notice period, ending 15 November 2023.
Financial headlines
Net loan book reduction of 67.1% to £45.4m
(FY22:£138.0m) and revenue reduction of 78.4%
to£19.3m (FY22: £89.5m), due to the ongoing
run-off of the legacy loan book and very limited new
lending during the period. All new lending has now
stopped in line with the wind down strategy and
FallbackScheme requirements.
Complaints provision year-on-year increase of 8.9% to
£195.9m at 31 March 2023 (FY22: £179.8m). Thisreflects
the higher final number of claims received and higher
expected uphold rate which has been revised in line with
observed third-party decisioning. Theincrease in the
provision substantially accounts for the income statement
charge of £19.1m.
Year-on-year costs increase of £11.6m owing primarily
toRewardRate development and restructuring costs.
The reduction in revenue as the book runs off, alongside
the increase in complaints provision, led to a reported
lossbefore tax of £34.7m, (FY22: profit of £167.9m).
Loss after tax was £34.8m (FY22: profit of £169.6m).
Thesignificant profit in the prior year related to the
release of a substantial proportion of the complaints
provision, following the sanctioning of the Scheme.
Overall, collections have remained robust despite the
increased cost of living and the continued, but expected,
rise in delinquency as the book runs-off. This has been
driven by continued strong post-charge-off recoveries.
The remaining £50m of senior secured notes was repaid
in full, at par, in March 2023.
Net unrestricted cash of £62.4m at 31 March 2023
(FY22:net unrestricted cash of £83.9m) driven by the
continued collection of the back book and limited
originations in theperiod. The reduction from the
prior year reflects the payment of the £97m Scheme
contribution, £51m of which has been repaid to Amigo
post year-end as part of the Fallback Solution. Allnet
cash is committed to the Scheme, othercreditors
and expenses, with no residual value attributable
Strategic report
Amigo Holdings PLC
Annual report and accounts 2023
Strategic report
Business model
Amigo’s business model, driven by our purpose of
providing those with few options to borrow the opportunity to
achieve financial mobility, offered accessible and affordable
loans to customers who have limited access to mainstream
finance. Through our customer-first approach, digital platform
and online or telephone customer journey, and in the context
of a robust conduct and risk framework, we sought to create
value for our stakeholders with strong cash generation and
efficient operations. We also aimed to support our customers
in improving their financial mobility through products that
rewarded regular, on-time payments, designed in collaboration
with a respected debt charity and with the FCA’s
Consumer Duty regulation in mind.
In October 2022, Amigo returned to lending with a new
brand and innovative lending proposition, significantly
improved processes, and a culture of responsible operation
todrive positive outcomes for all stakeholders. Unfortunately,
due to the inability to raise sufficient funds to meet the
conditions of Amigo’s Scheme of Arrangement, the Company
was placed into an orderly wind down on 23March 2023,
and new lending was stopped. The orderly wind down is
expected to be substantively complete within approximately
twelve months from its initiation. During this time, Amigo
will remain guided by its values and committed to strong
governance and regulatory compliance. We continue to
focus on delivering the best outcomes possible for our
customers, supporting our people and managing costs
tomaximise redress for our Scheme creditors.
Amigo Holdings PLC
Annual report and accounts 2023
Strategic report
Our values
1 3
We put customers first
We are passionate about delivering
positive outcomesthatmeet our
customers’ needs.
We act with integrity
We are open and honest.
We aim to do what is right
andfair. Always.
We own the outcome
We find solutions and
We question and challenge
thestatus quo.
We are human
We are welcoming and
We respect and listen
toeach other.
Amigo Holdings PLC
Annual report and accounts 2023
Chair’s statement
Strategic report
It is with great sadness that I introduce
this year’s annual financial results
for the year ended 31 March 2023.
Thepast twelve months have
beenan extraordinarily challenging
Wemade significant progress
the first nine months, firstly
achieving sanction for our Scheme
of Arrangement (“Scheme”) and
then securing permission from our
regulator, the Financial Conduct
Authority (“FCA”), to return to lending
the pilot launch of our new RewardRate
products. Unfortunately, market
conditions moved against us and,
despite securing offers for the required
debt funding, we were unable to raise
sufficient interest to underwrite the
required equity funding to pay a
further £15m contribution to Scheme
creditors and continue as a going
concern. As a result, on 23March
2023, the Board announced that it had
taken the difficult decision to switch the
Scheme from its Preferred Solution to
the Fallback Solution, which requires
Amigo to wind down itsAmigo Loans
Ltd business. As this is the only
revenue-generating business within
the Group, it is envisaged that the
whole Group will be liquidated. The
Board is deeply sorry for the impact
this will have on Scheme creditors
(who will receive less compensation),
our shareholders and employees.
While an agreement has been signed
with a shareholder who approached
management regarding seeking
investment in the Company or its
subsidiaries, the Board considers
that establishing a new business
and potentially creating value for
shareholders in the longer term
has significant execution risks and
would require regulatory approval.
We are pursuing all avenues in line
with our Directors’ duties, under
the Companies Act, to consider the
interests of all stakeholders, including
creditors, shareholders and employees.
However, as a result of Amigo’s Scheme
of Arrangement switch to the Fallback
Solution (the orderly wind down of the
Amigo Loans Ltd business), the Board
has determined that the financial
statements will no longer be prepared
on a going concern basis (note 1 of
the financial statements). Under the
Fallback Solution there is no expected
residual value for shareholders.
The Board currently intends to ask
shareholders to vote at the AGM in
September on proposals to delist the
PLC shares unless discussions with
potential investors progress towards
asuccessful conclusion.
Culture and conduct
In February, the FCA Enforcement
proceedings into the Group’s historic
lending practices and complaints
handling were concluded. Although
Amigo was not required to pay a
financial penalty, were it not for Amigo’s
financial position, we would have
been subject to a penalty of £72.9m.
In reaching agreement on the level of
the final penalty, the FCA recognised
that any penalty would cause Amigo
serious financial hardship and would
threaten the Company’s ability to meet
commitments to its Scheme creditors.
We are cognisant of the time afforded
to Amigo by the FCA throughout
the Scheme process and grateful
for its recognition of the significant
programme of change Amigo has
undertaken to deliver improvements
to the way in which our business
operates, including providing fair
outcomes to customers. Amigo has
made great strides in setting a culture
where the needs of our customers
are paramount, where we operate
inan open and constructive manner,
and monitor and measure conduct
and outcomes. As we move through
the wind down process, we remain
committed to delivering the highest
standards of corporate oversight with
diligence and integrity.
Jonathan Roe
Strategic report
Amigo Holdings PLC
Annual report and accounts 2023
Our people
Our people are our greatest asset and
the resilience and adaptability they
have shown has been remarkable. On
behalf of the Board, I would like to thank
all our teams, both current and those
that have left the business already, for
their unerring commitment and energy
over an immensely difficult period.
Akey priority for us is the wellbeing of
our teams. We are committed to looking
after those that remain with us as we
progress through the wind down and
complete the Scheme, and to preparing
our colleagues for their onward journey
as they leave the business.
On 23 September 2022, Gary Jennison
stepped down from his role as Chief
Executive Officer (“CEO”) and as
aDirector of the Board. In order to
provide an appropriate transition,
Garyremained employed by Amigo
until 31 December 2022. Gary was
replaced as CEO by Danny Malone,
then Chief Financial Officer (“CFO”), who
in turn was replaced by Kerry Penfold
as CFO. Kerry moved from the internal
position of Head of Finance and has
previously held senior positions at
other financial institutions.
On 27 March 2023, Senior Independent
Director, MariaDarby-Walker and
Non-Executive Director Jerry Loy,
both resigned from the Board with
immediate effect, following the wind
down announcement. In line withthe
wind down strategy, on 15May 2023
Danny Malone resigned from his role as
CEO and Director, subject to serving out
his six month notice period to support
the orderly wind down of the business.
I would like to thank each for their
considerable contributions, support,
insight and counsel.
Looking ahead
The orderly wind down of the
Amigo business is expected to be
substantively completed by the end
of the coming financial year. During
the wind down process, we will
remain guided by our values with
a strong focus on governance and
oversight as we seek to support all
our stakeholders through the process.
It is with deep regret that there will
be no residual value from the wind
down for our shareholders. We will
seek to maximise returns for Scheme
creditors, support our customers for
the remainder of their relationship
withus and safeguard the wellbeing
ofour employees.
The economic environment
andresultant tightening of credit
availability, coupled with the ongoing
cost-of-living crisis, means there is
an increasing need for companies
like Amigo to provide mid-cost
financial products to the financially
underserved. With more and more
companies in the sector failing, action
needs to be taken to fill this gap and
provide the opportunity of financial
mobility to all.
Jonathan Roe
27 July 2023