CEO speaks of ‘extremely challenging situation facing Amigo’
Amigo Holdings confirmed on Friday that its Q1 pre-tax profits rose as a break in lending allowed the firm to be cash generative.
The loans provider in the UK recorded a pre-tax profit of £15m for the quarter ending in June, well up from the £1.4m figure from a year prior.
However, the firm taking a break in lending resulted in a 41% fall in customer levels, in addition to a near 50% drop in the net loan book. This caused overall revenue to fall by 33% to £32.5m from £48.8m in the corresponding quarter of 2020.
“Within this context, the performance of the business in the first quarter has been better than anticipated. As Amigo is not currently lending, the business is cash generative and our cost-reduction program has been effective,” Chief Financial Officer Mike Corcoran said.
However, the CFO questioned the ability of his company to keep on operating.
Net liabilities as of the final day in June were £105.2m compared with net assets of £170.5m a year prior.
“The extremely challenging situation facing Amigo, resulting from the significant liability for compensation payments for historical lending, provides the context for our first quarter results,” said Corcoran.
“Within this context, the performance of the business in the first quarter has been better than anticipated. As Amigo is not currently lending, the business is cash generative and our cost reduction programme has been effective. The level of collections remains robust with the impact of Covid-19 less than originally projected,” he added.
Amigo Holdings share price is up by 4.43% during the morning session on Friday.