Shares in troubled guarantor lender Amigo (AMGO) soared 13% to 13.5p after it scraped a profit in the first quarter and said it would resume lending on ‘a prudent basis’.
The update comes less than a month after shares crashed to 7.4p on news that a probe by the Financial Conduct Authority (FCA) into customer credit checks could see the firm hit with a significant fine and damages claims.
SLIM PICKINGS
After reporting pre-tax losses of £37.8 million in the year to 31 March, the company posted a meagre pre-tax profit of £1.4 million in the three months to June against £22.6 million a year earlier as revenues fell from £71.5 million to £48.8 million.
The impairment ratio remained steady at around 38% of revenues, while the net loan book shrank 24.1% to £553.1 million. Provisions for rectification of customer complaints were £116.4 million, similar to the amount put aside three months ago in its full year results.
The lender said it had reached an agreement with the FCA to resolve its complaints backlog by the end of October while the regulator begins its assessment of the firm’s creditworthiness.
With £145.2 million of cash as of the end of June, the firm insisted it had ‘adequate liquidity and funding to support our ongoing business activity’ and it was ‘updating our lending processes and policies to allow Amigo to restart lending in a prudent manner by the end of 2020’.
MORE CHALLENGES
As well as having to deal with a Covid-induced contraction in its business, an FCA probe into its liquidity and a mountain of complaints, Amigo has been embroiled in a public feud for the last year with major shareholder, founder and former chief executive James Benamor.
In a tweet late on Thursday, Mr Benamor stepped up his campaign to be reinstated as chief executive saying he would make an irrevocable bid for 29% of the company at 20p per share.
Earlier this month Amigo said that current chief executive Glen Crawford was ‘not prepared to work with Amigo in any circumstances where Mr Benamor returns to Amigo's governance structure in a position of influence, and that Mr Crawford's decision to return as CEO was predicated on the clear statement from Mr Benamor that he was selling down Richmond Group Limited's controlling shareholding in Amigo to a position of zero’.
The latest filing shows Richmond Group still owned a 10.66% stake in Amigo as of 26 August.
