Half-year Report

RNS Number : 9163U

Amigo Holdings PLC

28 November 2019

Amigo Holdings PLC

Interim results for the six months ended 30 September 2019

Focused on delivery

Amigo Holdings PLC, (Amigo), the leading provider of guarantor loans in the UK, announces results for the six-month period ended 30 September 2019.

Figures in £m, unless otherwise stated		H1 FY20	H1 FY19	Change %
Number of customers¹	'000	222.8	188.9	17.9
Net loan book²		730.7	671.7	8.8
Revenue		145.4	130.1	11.8
Impairment:revenue ratio		31.1%	23.3%	33.5
Operating cost:income³		20.8%	17.8%	16.2
Profit after tax⁴		37.0	37.7	(1.9)
Adjusted profit after tax⁵		35.8	47.2	(24.2)
Basic EPS	Pence	7.8	8.6	(9.3)
EPS (Basic, adjusted)⁶	Pence	7.5	10.8	(30.6)
Net borrowings /adjusted tangible equity⁷		2.0x	2.3x	(13.0)
Interim dividend		3.1p	1.87p	65.8

Financial Highlights

▪ Net loan book of £730.7m, an 8.8% increase (H1 FY19: £671.7m) underpinned by strong customer growth of 17.9%

▪ Growth in revenue to £145.4m, an increase of 11.8% (H1 FY19: £130.1m)

▪ Cost of funds improved to 4.3% (H1 FY19: 5.2%) following increased securitisation and open market repurchases of senior secured notes

▪ Impairment:revenue ratio within guidance at 31.1% (H1 FY19: 23.3%)

▪ Cost:income ratio increased to 28.0% due to accelerated investment and a provision for complaints (H1 FY19: 17.9%). Excluding the provision for complaints, operating cost:income ratio of 20.8% was within guidance (H1 FY19: 17.8%)

▪ Reported profit after tax for the period of £37.0m, a decrease of 1.9%

▪ Adjusted profit after tax £35.8m (H1 FY19: £47.2m)

▪ Proposed interim dividend of 3.1p

▪ Full year guidance for key operating metrics remains unchanged

Operational highlights

▪ Strengthened credit policy resulted in lower relending

▪ Focus on new customers led to high levels of customer growth

▪ Received FCA feedback on Guarantor Lending

▪ Action plans initiated to address capacity constraints in Collections

▪ Outsource partnership extended to support Collections activity

▪ Strong growth in Irish business with net loan book of €4.8m

Commenting on the half year results, Hamish Paton, CEO of Amigo, said:

"The first half of the financial year has demonstrated continued demand for our guarantor loan product with solid growth in customer numbers. We are making encouraging progress as we roll out the operational and strategic initiatives outlined in August. While it will take some time to see the full benefits, we are pleased with the positive start we have made.

"Amigo holds a leading position in the guarantor loans market and our product makes a real difference to the lives of our borrowers, many of whom cannot access credit from mainstream providers. We are determined to use that position to be a role model in a growing sector, working alongside our regulators, to be at the forefront of best practice and achieve the best outcome for our customers."

Analyst, investor and bondholder conference call and webcast

Amigo will be hosting a live meeting and conference call today at 09:30 (GMT). The live webcast can be accessed via our website at: https://www.amigoplc.com/investors/results-centre. A conference call is also available (Dial in: +44 20 3936 2999; Access code: 733526). There will be a facility to ask questions via both the webcast and conference call. A replay will be available on Amigo's website after the event. The presentation pack for the webcast shows the reconciliation between the PLC results and Amigo Loans Group Limited (the 'Bond Group').

Notes to summary financial table:

¹Number of customers represents the number of accounts with a balance greater than zero, now exclusive of charged off accounts.

²Net loan book represents total outstanding loans less provision for impairment excluding deferred broker costs.

³The cost:income ratio is defined as operating expenses divided by revenue and is 28.0%. Adjusting this for the removal of the complaints provision produces an operating cost:income ratio of 20.8%

⁴ Profit after tax otherwise known as profit and total comprehensive income to equity shareholders of the Group as per the financial statements.

⁵Adjusted profit is a non IFRS measure. Adjusted profit after tax for H1 FY20 is profit after tax less impact on profit of the £85.9m senior secured note buyback in the period (£0.1m), plus impact on profit of writing off previously capitalised fees relating to our revolving credit facility prior to modification (£1.8m), less impact of releasing a tax provision relating to prior years in the period (£2.9m). Adjusted profit after tax for H1 FY19 is profit after tax plus shareholder loan note interest (£6.0m) and IPO costs and related financing (£3.9m) less incremental tax expense (£0.4m).

⁶This is a non-IFRS measure and the calculation is shown in note 7. Senior secured note buyback costs are excluded as they are not underlying in nature. By excluding this item from the adjusted profit and EPS metrics, the Directors are of the opinion that these measures give a better understanding of the underlying performance of the business. The weighted average number of shares has increased by 8.9% since 30 September 2018 due to timing of shareholder loan note conversion to equity following the IPO, hence diluting adjusted basic earnings per share figures.

⁷Net borrowings defined as borrowings, less cash at bank and in hand. Adjusted tangible equity is defined as shareholder equity less intangible assets.

Contacts:

Amigo investors@amigo.me

Nayan Kisnadwala, CFO

Kate Patrick, Head of Investor Relations

Hawthorn Advisors amigo@hawthornadvisors.com

Lorna Cobbett / Victoria Ainsworth Tel: 020 3745 4960

About Amigo Loans

Amigo is a leading provider of guarantor loans in the UK and offers access to mid-cost credit to those who are unable to borrow from traditional lenders due to their credit histories.

The guarantor loan concept introduces a second individual to the lending relationship, typically a family member or friend with a stronger credit profile than the borrower. This individual acts as guarantor, undertaking to make loan payments if the borrower does not.

Amigo was founded in 2005 and has grown to become the UK's largest provider of guarantor loans. In the process, Amigo's guarantor loan product has allowed borrowers to rebuild their credit scores and improve their ability to access credit from mainstream financial service providers in the future.

Amigo is a mid-cost provider with a simple and transparent product - a guarantor loan at a representative APR of 49.9%, with no fees, early redemption penalties or any other charges. Amigo Loans Ltd and Amigo Management Services Ltd are authorised and regulated in the UK by the Financial Conduct Authority (FCA).

CHIEF EXECUTIVE'S STATEMENT

Performance

The first half of the financial year has seen continued growth in customer numbers, loan book and revenue compared to the same period last year. An expected increase in impairment and investment, in line with guidance, and a provision for complaints, have resulted in a slight decrease in statutory profit for the six months to 30 September 2019 of 1.9% to £37.0m and a reduction on last year in adjusted profit after tax of 24.2% to £35.8m.

Lending to new customers is at record levels, up significantly both year-on-year and quarter-on-quarter, as our new advertising campaign and increased marketing efficiency accelerated lead generation. A renewed focus on new customers has resulted in an increase of 17.9% in our customer base from the same period last year, with over 12,500 net new borrowers added through the second quarter.

As pre-announced in August, we tightened our credit policy during the second quarter, only relending to customers who have demonstrated an extended period of on-time payments. As a result, we have seen a reduction in relending to existing customers from 38% to 22% of originations over the second quarter. We expect relending will remain at similar levels over the third quarter before increasing towards the end of the financial year, as more customers become eligible again under the stricter lending criteria. We will also continue to optimise our credit-worthiness assessments. While this will mean more in-depth checks for some of our borrowers, we strive to find the right balance between providing an easy, non-intrusive customer experience and minimising risk for our borrowers, guarantors and ourselves.

Impairment levels rose in line with expectations. While the wider environment remains challenging with ongoing economic and political uncertainty, we continue to focus on addressing collections capacity issues. We are investing in both people and technology that will increase agent effectiveness. We have also extended our outsource relationship to provide more support with outbound dialling and through the later stage of our arrears process. We are at the beginning of this journey; the full benefits will take time to come through, but I am encouraged by the early signs of progress. Getting new teams in place and trained to Amigo standards takes time; we expect these new colleagues to be fully productive towards the end of the current quarter. Since half year, we have signed the lease on a new property which will provide additional space for our new team members from the fourth quarter.

Regulatory Update

Amigo's UK business is authorised by the Financial Conduct Authority (FCA). We fully support the FCA's efforts to ensure that consumers are protected from undue harm, that there is effective competition and that the consumer finance market operates efficiently and inclusively. The FCA embarked on a review of the high cost credit markets in 2017, with a focus on affordability, complaints and repeat lending. More recently, the FCA has several sector related reviews ongoing including one on guarantor lending, the feedback on which we have now received. This focused on the role of the guarantor, and specifically the guarantor's understanding of their responsibilities at the time of payout, as well as when guarantors are asked to make a payment. At Amigo, it is still fewer than 10% of payments that are made by the guarantor and we believe this is evidence that the affordability assessment we carry out with the borrower before payout is effective.

We have tight procedures in place on affordability and a multi-stage system with ten steps in which the guarantor's understanding and acceptance of their role is confirmed. Our priority is the financial wellbeing of our customers and we go to significant lengths to obtain the informed consent of every borrower and guarantor.

Over the first half, the Financial Ombudsman Service (FOS) updated their approach to complaints assessment. They also highlighted to us a backlog of complaints that was awaiting their judgement and offered us the opportunity to review these again in-house. We have been working with FOS to clear through this backlog, which is now being unwound.

Although complaint levels have been low historically, we have recently seen an increase in volumes. We have reviewed our complaints process in detail and examined the root cause of complaints received. As a consequence, we have further tightened processes and are upskilling our Complaints team. With the FOS backlog unwinding, we expect to revert to more normalised, lower uphold rates and a reduced average redress.

We continue to work alongside our regulators and consider it our responsibility as sector leader to be at the forefront of best practice, to continue to make a positive difference to the lives of our customers.

Strategy

We are focused on growing a sustainable business providing responsible, life-improving finance to the under-served, building on our strong position in the guarantor sector. Central to our business is our responsibility to our borrowers and to our guarantors. Our product makes a real difference to the lives of our customers, many of whom cannot access credit from their bank or other lenders. It is essential that we put the financial health of our customers before anything else. As the leader in our part of the market, we aim to be a role model, offering affordable solutions that fairly balance high demand for loans from customers with challenging credit profiles, with the need to ensure that we continue to lend responsibly, consistent with the long term-interests of our borrower and guarantors.

Our immediate focus is on addressing operational priorities and driving sustainable growth within our core product offer. In addition to optimising our collections process, we are investing in our loan handling capacity, both in people and technology. We will continue to make ongoing improvements that support customers through their lending journey and are focused on improving pipeline flow-through and conversion rates. This will facilitate an increase in customer numbers without a corresponding rise in customer acquisition costs.

In line with Amigo's core values and heritage to constantly innovate and experiment, we are also reviewing our approach to pricing. Over the coming quarters we intend to test a more differentiated structure, offering lower rates to lower risk customers, potentially opening up our product to a broader customer base. In addition, we have looked in-depth at customer needs and are developing variants of the core proposition to make us more relevant for different loan purposes and improve penetration of different broker segments.

Beyond the immediate growth and recovery opportunities from the core, we intend to build on our leading position in the UK guarantor term loan sector and test our ability to expand into adjacent spaces. We have strong awareness and brand recognition in our core market to leverage as well as existing or historic relationships with a large number of customers. However, we need to do this in a way that does not detract from our efforts in the core, minimises risk and remains consistent with our responsibilities to our borrowers. Hence over the next year we will be developing and testing potential product extensions with broader market appeal.

Internationally, we continue to support our business in Ireland which is seeing robust demand for our guarantor product. Once we are comfortable that the UK business is operating to its potential, we will look again outside of our current footprint.

We remain committed to keeping Amigo special. Many of our people have been part of the Amigo family for a long time, and we are adding more great people to our already strong teams. We want to harness this positivity and take it forward.

Board

As announced on 22 November 2019, Richmond Group Ltd ("RGL") has notified us of its intention to propose the appointment of a non-executive director of the Company in accordance with the Relationship Agreement signed between the Company and RGL on 29 June 2018. The proposal process will be governed by the terms of the Relationship Agreement and be subject to the appropriate Board and regulatory approvals.

Dividend

The Board is proposing an interim dividend of 3.1p. The interim dividend will be paid on 29 January 2020 to ordinary shareholders on the register on 10 January 2020. The ex-dividend date will be 9 January 2020.

Summary and Outlook

Amigo is resolutely focused on achieving the best customer outcomes. Our half year results demonstrate continued demand for our guarantor loan product with solid growth in customer numbers. Over the second quarter we have worked hard to address capacity constraints within the business with action plans initiated to drive further improvements. It will take time to see the full benefits of our actions, but we have made a good start in the first half. Our robust business model generates good levels of cash and we have further reduced our cost of funding over the period. As a result, we have a strong and flexible balance sheet. Our guidance for the full year is unchanged for key operating metrics (net loan book growth, operating cost to income and impairments to revenue), dividend and gearing.

FINANCIAL REVIEW

Group Performance

During the period, the Group generated revenue of £145.4m (H1 FY19: £130.1m) driven by continued growth in the net loan book⁸, which increased to £730.7m (H1 FY19: £671.7m), an increase of 8.8% versus September 2018. Strong top line growth was offset by the combination of increasing impairment charges, provisions for customer complaints and investment in people and operations. This resulted in an adjusted profit after tax of £35.8m (H1 FY19: £47.2m) and statutory profit after tax of £37.0m (H1 FY19: £37.7m).

The impairment charge as a percentage of revenue for the first six months was 31.1% (H1 FY19: 23.3%) in line with recent guidance. As highlighted in the first quarter results, the rise in impairment over the first half of the year was principally driven by operational capacity constraints resulting in more customers falling into arrears. Investment in people and technology to address capacity constraints is underway with further progress expected in the remainder of the financial year. In the first quarter we updated our IFRS 9 model to reflect the increased probability of a no deal Brexit and the corresponding adverse effect this is expected to have on the economy and on consumer sentiment. We have continued to monitor this position throughout the second quarter and with the uncertainty surrounding the outcome of the imminent UK general election and subsequent Brexit resolution, we have maintained our view on the probability of a no deal Brexit. We will continue to review our position throughout the financial year.

The Group has recognised a complaints provision of £7.5m at the half year, bringing the year to date complaints costs recognised in the income statement to £10.4m. Further details are provided in note 12. The additional complaints provision increases the ratio of operating expenses as a percentage of revenue to 28.0% (H1 FY19: 17.9%). Excluding complaints costs the ratio of operating expense to revenue is 20.8% (H1 FY19: 17.8%). This represents an increase on the prior year as we continue to invest in our people and operations to ensure best in class customer experience and positive customer outcomes.

In the year to date, the Group has repurchased £85.9m of senior secured notes on the open market. In total the Group has now repurchased £165.9m of senior secured notes since December 2018. With funding from the low-cost securitisation facility replacing high yield senior secured notes with a coupon of 7.625%, the Group's cost of funds has continued to reduce and were 4.3% in the first half of the financial year (H1 FY19: 5.2%). The £85.9m of repurchases in the year to date embed further finance cost savings in the remainder of the financial year.

The effective tax rate of the business for the first six months is 12.5% (H1 FY19: 22.1%) lower than the prevailing UK corporation tax rate of 19%. This is due to the release of prior year tax provisions no longer considered necessary. The effective tax rate for the remainder of this year is expected to be close to the UK corporation tax rate of 19%.

Adjusted earnings per share was 7.5 pence (H1 FY19: 10.8 pence) and basic earnings per share was 7.8 pence (H1 FY19: 8.6 pence). This reflects a combination of reduced profit after tax and the increase in the weighted average number of shares post IPO. Adjusted EPS excludes the effect of open market senior secured note repurchases, RCF fees, the associated tax on both, and a release of a prior year tax provision no longer considered necessary. A reconciliation of the calculation is shown in note 7 of the accounts.

Balance sheet and funding

During the six month period, the net loan book increased from £707.6m to £730.7m supported by originations of £216.9m, an increase of 5.6% versus the second half of the prior year. The ageing of the loan book, shown in note 8 of the accounts, shows that 93.5% of balances are either fully up to date or less than 31 days past due (H1 FY19: 95.6%).

Cash collections in the period were £297.8m (H1 FY19: £260.7m) exceeding originations by £80.9m (37.3%). Consequently, the Group's preferred indicator of gearing, net borrowings/adjusted tangible equity has fallen from 2.3x (H1 FY19) to 2.0x. Net borrowings at 30 September 2019 were £496.3m (H1 FY19: £464.5m). Loan to value ('LTV') measured as net borrowings over gross loan book was 60.7% (H1 FY19: 62.5%).

The Group is financed from a combination of cash generated from operations, senior secured notes of £234.1m with a 7.625% coupon, a super senior revolving credit facility (RCF) of £109.5m and a securitisation facility of £300m. The interest rate for the securitisation facility is materially less than both the RCF and the senior secured notes and should over time allow a significant reduction in cost of funding.

The Group will continue to maintain a diverse source of funds with variable repayment dates and currently intends to keep some element of all its existing facilities. On 17 May 2019 the terms of the RCF were substantially modified. The capacity reduced from £159.5m to £109.5m and in doing so the number of banks in the syndicate was reduced from four to three. In addition, the term was extended by five years to May 2024 and the margin was reduced. On 6 June 2019, the securitisation facility was upsized from £200m to £300m, in a move to provide further balance sheet flexibility and reduce cost of funds. Amigo may from time to time continue to make opportunistic open market repurchases of its outstanding high yield senior secured notes.

Notes:

⁸ Net loan book represents total outstanding loans less provision for impairment excluding deferred broker costs

Principal risks and uncertainties

Amigo's financial performance is subject to a number of risks and uncertainties that could materially impact its financial performance over the remaining six months of the year. The principal risks and uncertainties are consistent with those set out in pages 31 to 35 of the annual report and accounts 2019, which is available on the company website, but our assessment of the level of risk has changed in three cases - credit risk, customer and conduct risk and regulatory and political risk.

All principal risks and uncertainties are summarized below.

Credit risk

The risk that a counterparty will not repay a debt in full and on time. This includes idiosyncratic lending risk, macroeconomic risk, and new lending pilot risk. Two factors have led to an increase in credit risk over the first half of the year. The first is the emergence of operational issues in our collections functions, which has led to an increase in arrears and impairment. The second is the elevated macroeconomic uncertainty surrounding Brexit and the increased possibility of a disruptive scenario. There has been no change in the assessment of the underlying quality of the back book, and tightened top-up criteria have marginally reduced credit risk in new lending, but the net impact of the two factors mentioned above has increased risk.

Customer and conduct risk

The risk that Amigo's actions have or will lead to poor outcomes for our customers. This includes affordability risk, the risk of customer misunderstanding, and the risk of persistent debt. Although the FCA has recently provided feedback from their Guarantor Understanding Multi Firm Work, the market for alternative consumer credit is subject to ongoing reviews by the FCA, which may significantly impact the Group`s business model and lending practices. Additionally, in response to an evolving interpretation from FOS on the Group's lending decisions, we have seen an increase in the number of customer complaints and the portion of those that are upheld. We have also adjusted our origination criteria away from those cases where suitability is difficult or costly to verify, mitigating this concern going forward. Our risk management continues to be informed by evolving regulation and industry best practice.

Regulatory and political risk

The risk that the regulatory or political environment will change in a way adverse to our business. This may be explicit changes in regulation or legislation or changes in interpretation. It includes regulation or legislation specific to our product, applying to financial services more generally, or not specific to our business at all. Regulatory and political risk has increased in the first half of the year with ongoing activities in our market by the FCA and the FOS applying its evolving interpretation on the appropriateness of the Group's lending decisions. This has led to an increase in the number of complaints received and the portion of those that are upheld. While Amigo is actively working with the FOS to respond to these developments, there is still considerable uncertainty around how this will develop. The FOS has considerable scope to interpret regulatory principles in favour of customers in any given case, and the FCA may also make more explicit changes, although we have recently received feedback from the FCA as noted earlier. Legislation on breathing space is expected, and the introduction of a duty of care for financial services firms has been considered both by Parliament and the FCA. Uncertainty around the impact of the Senior Managers and Certification Regime (SMCR) and the upcoming general election also contribute to highly elevated risk.

Reputation risk

The risk of negative stories impacting the way customers, employees, investors, media, politicians, regulators, or other stakeholders view Amigo and our brand and affecting their business relationship with us, whether linked to us specifically or not, and whether fair or unfair. This includes both stories that are driven by a specific event and those that are not. Guarantor loans remain a target of criticism from politicians and anti-debt campaigners, and Amigo continues to actively counter misperceptions about the product.

Operational risk

The risk of a loss or negative impact due to inadequate or failed internal policies, processes, or systems, or from external events. This includes data security and cyber risk, system availability, SMCR implementation, and legal risk. Amigo is changing rapidly, both adapting to the external environment and building for the future. While this inevitably introduces risk, the control environment is also improving to manage that risk.

People risk

The risk that Amigo will not have the number and quality of people necessary to deliver on its strategy. Amigo continues to build breadth and depth at senior levels while increasing recruiting and improving retention in operations and across the wider business.

Strategic and competitive risk

The risk that Amigo fails to achieve its objectives, either due to actively poor decisions or a passive failure to adapt to changes in the competitive environment. This includes the risk of new competitors and the risks in entering a new geography. Progress continues in the Ireland business, Amigo's first international venture, though there is still work to do to build out its full capability. Domestic competitors continue to grow but we have maintained our leading position in the guarantor loan product space.

Treasury risk

The risk arising from the core actions of the Treasury function. This is principally liquidity risk. This remains a low risk area.

Risk of Shareholders with significant influence

The Company has a majority shareholder which possesses sufficient voting power to have a significant influence over certain matters requiring shareholder approval, including the election of Directors, dividend policy, remuneration policy, and approval of significant corporate transactions. The position of the majority shareholder may not always be aligned with the opinion and interests of management, the Company, or the Company's minority shareholders. The addition of a representative on the Board from the majority shareholder may change the likelihood of this risk occurring.

Responsibility statement of the directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

· the interim management report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Nayan Kisnadwala

Director

27 November 2019

INDEPENDENT REVIEW REPORT TO AMIGO HOLDINGS PLC

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2019 which comprises Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity and Condensed Consolidated Cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2019 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

The impact of uncertainties related to the alternative consumer credit market and the UK exiting the European Union on our review

Uncertainties related to the alternative consumer credit market and Brexit are relevant to understanding our review of the condensed financial statements.

The business model for providing alternative consumer credit is subject to significant regulatory and consumer attention, including complaints, which may lead to adverse actions and effects on the business model and financial position. This is exacerbated by the potential for further pressure on the economic and political environment through Brexit, which is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes. The full range of possible effects is unknown.

An interim review cannot be expected to predict the unknowable factors or all possible future implications for a company in relation to Brexit, or where its only activity is alternative consumer credit.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the interim financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Jonathan Bingham

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London

E14 5GL

27 November 2019

Condensed Consolidated Statement of Comprehensive Income

			6 months ended	6 months ended	Year to
			30-Sep-19	30-Sep-18	31-Mar-19
			Unaudited	Unaudited	Audited
	Notes		£m	£m	£m
Revenue		3	145.4	130.1	270.7
Interest payable and funding facility fees			(17.2)	(18.2)	(38.2)
Shareholder loan note interest			-	(6.0)	(6.0)
Total interest payable		4	(17.2)	(24.2)	(44.2)
Impairment of amounts receivable from customers			(45.2)	(30.3)	(64.2)
Other operating expenses			(30.3)	(23.3)	(47.4)
Complaints provision			(10.4)	-	-
Total operating expenses			(40.7)	(23.3)	(47.4)
IPO and related financing costs		5	-	(3.9)	(3.9)
Profit before tax			42.3	48.4	111.0
Tax on profit		6	(5.3)	(10.7)	(22.4)
Profit and total comprehensive income to equity shareholders of the Group¹			37.0	37.7	88.6

The profit is derived from continuing activities.

		6 months ended	6 months ended	Year to
Earnings per share		30-Sep-19	30-Sep-18	31-Mar-19
Basic EPS (pence)	7	7.8	8.6	19.4
Diluted EPS (Pence)	7	7.7	8.6	19.4

Dividend per share (pence)²		10.55²	1.87	1.87

The accompanying notes form part of these financial statements.

¹ - There was no other comprehensive income during any period, and hence no consolidated statement of other comprehensive income is presented

² - Total cost of dividends paid in the period was £35.4m (H1 FY19: £nil). Dividends are recognised on the date of their payment. This payment relates to the final dividend for FY19 approved at the Annual General Meeting (AGM) on 12 July 2019. Dividend per share includes the prior year final dividend (7.45p), but also the current period interim dividend of 3.1p, approved by the Board on 27^th November 2019

Condensed Consolidated Statement of Financial Position as at 30 September 2019

		30-Sep-19	30-Sep-18	31-Mar-19
		Unaudited	Unaudited	Audited
	Notes	£m	£m	£m
Non-current assets
Customer loans and receivables	8	316.7	286.4	302.5
Property, plant and equipment		1.0	0.5	0.7
Right of use lease asset		0.4	-	-
Intangible assets		0.1	0.1	0.1
Deferred tax asset		6.3	7.7	6.8
		324.5	294.7	310.1
Current assets
Customer loans and receivables	8	436.5	404.4	426.0
Other receivables	10	3.5	1.9	1.2
Derivative asset		0.1	-	0.1
Cash at bank and in hand		27.9	19.5	15.2
		468.0	425.8	442.5

Total Assets		792.5	720.5	752.6

Current liabilities
Trade and other payables	11	(13.9)	(17.3)	(15.4)
Lease liability		(0.2)	-	-
Provisions	12	(6.3)	-	-
Current tax liabilities		(0.5)	(16.7)	(16.0)
		(20.9)	(34.0)	(31.4)
Non-current liabilities
Borrowings	13	(524.2)	(484.0)	(476.7)
Lease liability		(0.5)	-	-
Provisions	12	(1.2)	-	-
		(525.9)	(484.0)	(476.7)

Total liabilities		(546.8)	(518.0)	(508.1)

Net assets / (liabilities)		245.7	202.5	244.5

Equity
Share capital	14	1.2	1.2	1.2
Share premium		207.9	207.9	207.9
Merger reserve		(295.2)	(295.2)	(295.2)
Retained earnings		331.8	288.6	330.6
Shareholder equity		245.7	202.5	244.5

The accompanying notes form part of these financial statements.

This interim report of Amigo Holdings PLC was approved by the Board of Directors and authorised for issue.

Nayan Kisnadwala	Date:	27 November 2019
Director		27 November 2019
Company no. 10024479

Condensed Consolidated Statement of Changes in Equity


	Share	Share	Merger	Retained	Total
	capital	premium	Reserve¹	earnings	equity
	£m	£m	£m	£m	£m


At 31 March 2018 (Audited)	1.0	0.9	(295.2)	287.0	(6.3)
IFRS 9 opening balance sheet adjustment²	-	-	-	(37.5)	(37.5)

At 01 April 2018	1.0	0.9	(295.2)	249.5	(43.8)

Total comprehensive income	-	-	-	37.7	37.7
Share based payments	-	-	-	1.4	1.4
IPO³	0.2	207.0	-	-	207.2

At 30 September 2018 (Unaudited)	1.2	207.9	(295.2)	288.6	202.5

Total comprehensive income	-	-	-	50.9	50.9
Dividends paid	-	-	-	(8.9)	(8.9)

At 31 March 2019 (Audited)	1.2	207.9	(295.2)	330.6	244.5
Total comprehensive income	-	-	-	37.0	37.0
IFRS 16 adjustment⁴	-	-	-	(0.4)	(0.4)
Dividends paid	-	-	-	(35.4)	(35.4)

At 31 September 2019 (Unaudited)	1.2	207.9	(295.2)	331.8	245.7

The accompanying notes form part of these financial statements.

¹ - The merger reserve was created as a result of a Group reorganisation in 2017 to create an appropriate holding company structure. The restructure was within a wholly owned group, constituting a common control transaction.

² - IFRS 9 was adopted on 1 April 2018; comparatives have not been restated.

³ - On 4 July 2018 the shareholder loan notes were converted to equity upon the listing of the Group.

⁴ - On 1 April 2019, the Group adopted IFRS 16. A right of use asset of £0.4m and a lease liability of £0.8m were recognised as a result, with the balancing amount being posted to retained earnings.

Condensed Consolidated Statement of Cash flows

	6 months ended		6 months ended	Year to
	30-Sep-19		30-Sep-18	31-Mar-19
	Unaudited		Unaudited	Audited
	£m		£m	£m
Profit for the period		37.0	37.7	88.6
Adjustments for:
Impairment provision		45.2	30.3	64.2
Complaints provision		10.4	-	-
Income tax expense		5.3	10.7	22.4
Shareholder loan note interest accrued		-	6.0	6.0
Interest expense		17.2	18.2	38.2
Interest receivable		(154.7)	(143.2)	(286.3)
Share-based payment		0.1	-	1.3
(Profit)/loss on purchase of senior secured notes		0.8	-	-
Depreciation of property, plant and equipment		0.2	0.1	0.3
Operating cash flows before movements in working capital¹		(38.5)	(40.2)	(65.3)
Increase/(decrease) in receivables		(2.6)	3.0	(2.8)
Increase/(decrease) in payables		1.0	0.7	(0.4)
Complaints redress paid		(1.4)	-	-
Tax paid		(20.3)	(6.6)	(18.3)
Interest paid		(13.6)	(17.2)	(35.8)
Net proceeds from intercompany funding		0.2	(0.4)	(0.2)
Net cash used in operating activities before loans issued and collections on loans		(75.2)	(60.7)	(122.8)
Loans issued		(216.9)	(220.7)	(426.1)
Collections		297.8	260.7	543.5
Other loan book movements		0.5	-	-
Net cash used in operating activities		6.2	(20.7)	(5.4)
Investing activities
Purchases of property, plant, equipment		(0.4)	-	(0.4)
Net cash used in investing activities		(0.4)	-	(0.4)
Financing activities
Purchase of senior secured notes		(86.8)	-	(81.3)
Dividends paid		(35.4)	-	(8.9)
Proceeds from bank borrowings		168.6	40.0	266.5
Repayment of bank borrowings		(39.5)	(12.0)	(167.5)
Net cash from financing activities		6.9	28.0	8.8
Net increase / (decrease) in cash and cash equivalents		12.7	7.3	3.0
Cash and cash equivalents at beginning of period		15.2	12.2	12.2
Cash and cash equivalents at end of period		27.9	19.5	15.2

¹ The IPO is not included in financing activities (as no new capital was raised). IPO and related financing costs are included within operating cash flows; see note 5 for detail. On 4 July 2018 the Company's shares were admitted to trading on the London Stock Exchange. Immediately prior to admission the shareholder loan notes were converted to equity increasing the share capital of the business to 475 million ordinary shares and increasing net assets by £207.2m. No additional shares were issued subsequent to conversion of the shareholder loan notes. There were no cash transactions involved in this conversion - all related transaction costs are immaterial.

Notes to the financial statements

1. Accounting policies

1.1 Basis of preparation of financial statements

Amigo Holdings PLC is a public company limited by shares (following IPO on 4 July 2018), listed upon the London Stock Exchange (LSE: AMGO). The Company is incorporated and domiciled in the United Kingdom and its registered office is Nova Building, 118-128 Commercial Road, Bournemouth, United Kingdom BH2 5LT.

The principal activity of the Company is to act as a holding company for the Amigo Loans Group of companies. The 'principal' activity of the Amigo Loans Group is to provide individuals with guarantor loans of up to £10,000 over one to five years.

The consolidated financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs") and the Companies Act 2006, except for financial instruments measured at amortised cost or fair value.

The presentation currency of the Group is GBP, and these financial statements are presented in GBP. All values are stated in £ million (£m) except where otherwise stated.

The Group's principal accounting policies under EU-IFRS, which have been consistently applied to all years presented unless otherwise stated, are set out below.

These interim financial statements have been prepared fully in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of Amigo Holdings PLC (the 'Group') as at and for the year ended 31 March 2019.

The interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated annual report for the year ended 31 March 2019, other than that this is the first set of the Group's financial statements where IFRS 16 has been applied. Changes to significant accounting policies are described in note 1.2.

The consolidated financial statements of the Group as at and for the year ended 31 March 2019 are available through our website and upon request from the Company's registered office at Nova Building, 118-128 Commercial Road, Bournemouth, United Kingdom, BH2 5LT.

The comparative figures for the financial year ended 31 March 2019 are not the Company's statutory accounts for that financial year but, are an extract from those statutory accounts for interim reporting. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies.

Accounting Policies (continued)

The report of the auditor:

(i) was unqualified;

(ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and

(iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

These interim financial statements were approved by the board of directors on 27 November 2019.

Going concern

The Directors have made an assessment in preparing these financial statements as to whether the going concern basis is appropriate.

The Group meets its funding requirements through cash generated from operations, a revolving credit facility which expires in May 2024, senior secured notes which expire in January 2024 and a securitisation facility with a three year tenor to June 2022 and subsequent four year amortisation period to June 2026. The Group's forecasts and projections, which cover a period of more than twelve months from the date of approval of these financial statements, taking into account reasonably possible changes in trading performance, show that the Group should be able to operate within its currently available facilities. The Group has sufficient financial resources together with assets that are expected to generate cash flow in the normal course of business.

In making its assessment, the Group took account of macroeconomic risks, cyber threats, conduct risk relating to complaints and the availability of funding. The assessment is aligned to the Group's Forecast for the next eighteen months. The Forecast is built on a bottom-up, granular basis and makes specific assumptions in respect of future impairments and complaints, and the Group's funding structure. The Forecast was stress tested to consider the impact of the principal risks which were assessed as having the highest probability of occurrence or the severest impact, crystallising contemporaneously.

The assessment considers the impact of the following events individually and the impact on the sustainability of our business model in aggregate:

• a downturn in the UK economy as a result of Brexit, which results in an increased UK unemployment rate and thus increased credit losses and impairment. UK unemployment is identified as the key factor in the macroeconomic considerations of IFRS 9 and reflects a principal risk faced by the business;

• an increase in complaints on the affordability or appropriateness of past lending. Our lending practices have been subject to significant political, regulatory and customer attention, and combined with FOS's evolving interpretation of appropriate lending decisions during the period, has resulted in an increase in number of complaints received; and

• a cyber sensitivity, which considers the risk that a cyber event outside the control of management results in a temporary disruption to the Group's operations and potentially to its customers, including a potential fine.

The directors considered the impact of higher loan impairment, conduct and operational losses on the availability of finance to support the Group's operations. In particular, the Group stressed the impact of early amortisation of its securitisation facility. The Group's other debt facilities are committed for the duration of the period of assessment. These facilities are subject to various covenants requirements, which were also considered in the Group's stress testing.

The Group also considered the likely impact of the current and available mitigating actions, which include the ability to restrict originations, reduction in discretionary costs and restrict future dividend payments. In extremis, the Group has substantial mitigating actions at its disposal, in particular the ability to restrict loan originations and future dividend payments, either or both of which could be used to offset the crystallisation of the Group's principal risks.

The Group has concluded that there is a reasonable expectation that the Company and the Group have adequate resources and will continue to operate and meet their liabilities as they fall due over the period of their assessment. The Group therefore adopts the going concern basis in preparing these financial statements.

1.2 New and amended standards adopted by the group and company

Details of the accounting policies applied are those set out in Amigo Holdings PLC financial statements for the year ended 31 March 2019.

In applying the accounting policies, management has made judgements and estimates in numerous areas, and the actual outcome may differ from those calculated. Key judgements and estimates in the Group's accounting policies are displayed in note 2.

During the period IFRS 16 Leases became effective and was adopted by the Group. The change did not have a material impact on the Group's net cash flows, financial position, total comprehensive income or earnings per share.

1.3 IFRS 9

IFRS 9 Financial Instruments replaced IAS 39 Financial instruments: Recognition and Measurement and was adopted on 1 April 2018.

i) Classification

IFRS 9 requires a classification and measurement approach for financial assets which reflects how the assets are managed and their cash flow characteristics. IFRS 9 includes three classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit and loss (FVTPL). A financial asset is measured at amortised cost if it meets both of the following conditions (and is not designated as at FVTPL):

Accounting Policies (continued)

● it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

● its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

Loans to customers are measured at amortised cost under IFRS 9.

ii) Impairment

IFRS 9 includes a forward-looking "expected credit loss" (ECL) model in regards to impairment. IFRS 9 requires an impairment provision to be recognised on origination of a loan. Under IFRS 9, a provision will be made against all stage 1 (defined below) loans to reflect the probability that they will default within the next twelve months. The application of lifetime expected credit losses to assets which have experienced a significant increase in credit risk also results in an uplift in impairment.

iii) Measurement of ECLs

Under IFRS 9 financial assets fall into one of three categories:

Stage 1-Financial assets which have not experienced a "significant" increase in credit risk since initial recognition.

Stage 2-Financial assets that are considered to have experienced a "significant" increase in credit risk since initial recognition.

Stage 3-Financial assets which are in default or otherwise credit impaired.

Loss allowances for stage 1 financial assets are based on twelve-month ECLs; that is the portion of ECLs that result from default events that are estimated within twelve months of the reporting date and are recognised from the date of asset origination. Loss allowances for stage 2 and 3 financial assets are based on lifetime ECLs, which are the ECLs that result from all estimated default events over the expected life of a financial instrument.

In substance the Group treats the borrower and the guarantor as having equivalent responsibilities. Hence for each loan there are two obligors to which the entity has equal recourse. This dual borrower nature of the product is a key consideration in determining the staging and the recoverability of financial assets.

The Group performs separate credit and affordability assessments on both the borrower and guarantor. After having passed an initial credit assessment, most borrowers and all guarantors are contacted by phone and each is assessed for their creditworthiness and ability to afford the loan. In addition, the guarantor's roles and responsibilities are clearly explained and recorded. This is to ensure that while the borrower is primarily responsible for making the repayments, both the borrower and the guarantor are clear about their obligations and are also capable of repaying the loan.

When a borrower misses a payment, both parties are kept informed regarding the remediation of the arrears.

Accounting Policies (continued)

If a missed payment is not remediated within a certain timeframe, collection efforts are automatically switched to the guarantor and if arrears are cleared the loan is considered as performing.

iv) Assessment of significant change in risk

In determining whether the credit risk (i.e. risk of default) of a financial instrument has increased significantly since initial recognition, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort, including both quantitative and qualitative information and analysis. The qualitative customer data available both on an ongoing basis and without undue cost or effort is payment status flags, which occur in specific circumstances such as a short-term payment plan, bankruptcy, deceased or other indicators of a change in a customer's circumstances. See note 2.1.2 for details of how payment status flags are linked with customer arrears, and judgements on what signifies a significant change in risk.

v) Derecognition

The Group offers, to certain borrowers, the option to top-up existing loans subject to internal eligibility criteria. The Group pays out the difference between the customer's remaining outstanding balance and the new loan amount at the date of top-up. The Group considers a top-up to be a derecognition event for the purposes of IFRS 9 on the basis that a new contractual agreement is entered into by the customer replacing the legacy agreement. The borrower and guarantor are both fully underwritten at the point of top-up and the borrower may use a different guarantor from the original agreement when topping-up.

vi) Modification

Aside from top-ups, no formal modifications are offered to customers. In some instances, forbearance measures are offered to customers. These are not permanent measures, meaning there are no changes to the customers contract and so do not meet derecognition or modification requirements.

vii) Definition of default

The Group considers an account in default if it is more than three contractual payments past due, i.e. greater than 61 days, which is a more prudent approach than the rebuttable presumption of 90 days and has been adopted to align with internal operational procedures. The Group reassesses the status of loans at each month end on a collective basis.

When the arrears status of an asset improves so that it no longer meets the default criteria for that portfolio it is cured and transitions back from stage 3.

viii) Forbearance

Where the borrower indicates to the Group that they are unable to bring the account up to date, informal, temporary forbearance measures may be offered. There are no changes to the customers' contract at any stage. Hence, these changes are neither modification or derecognition events.

Accounting Policies (continued)

Depending on the forbearance measure offered, an operational flag will be added to the account, which may suggest a significant increase in credit risk and trigger movement of this balance from stage 1 to stage 2 in impairment calculations. See note 2.1.2 for further details.

1.4 Provisions

Provisions are recognised when the Group has legal or constructive obligations as a result of past events and it is probable that expenditure will be required to settle those obligations. They are measured at the Directors' best estimates of future cash flows, after taking into account information available and different possible outcomes.

1.5 Share-based payments

The fair value of the share plans is recognised as an expense over the expected vesting period with a corresponding entry to retained earnings, net of deferred tax. The fair value of the share plans is determined at the date of grant. Non-market based vesting conditions (i.e. earnings per share and absolute total shareholder return targets) are taken into account in estimating the number of awards likely to vest, which is reviewed at each accounting date up to the vesting date, at which point the estimate is adjusted to reflect the actual awards issued.

1.6 Securitisation

The Group securitises its own financial assets via the sale of these assets to a special purpose entity, which in turn issues securities to investors. All financial assets continue to be held on the Group's Consolidated Balance Sheet, together with debt securities in issue recognised for the funding. Securitised loans are not derecognised for the purposes of IFRS 9 on the basis that the Group retains substantially all the risks and rewards of ownership. The Group benefits to the extent that the surplus income generated by the transferred assets exceeds the administration costs of the special purpose vehicle (SPV), the cost of funding the assets and the cost of any losses associated with the assets and the administration costs of servicing the assets. Risks retained include credit risk, repayment risk and late payment risk.

2. Critical accounting assumptions and key sources of estimation uncertainty

Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made are:

Judgements

Management considers the following areas to be the judgements that have the most significant effect on the amounts recognised in the financial statements. They are explained in more detail in the following sections:

● IFRS 9 - Measurement of ECLs

o Assessing whether the credit risk of an instrument has increased significantly since initial recognition (note 2.1.2).

2. Critical accounting assumptions and key sources of estimation uncertainty (continued)

o Definition of default is considered by the Group to be when an account is three contractual payments past due (note 1.3.vii).

o Provisions (note 2.1.4) - Judgement is involved in determining whether a present obligation exists and in estimating the probability, timing and amount of any outflows

Estimates

Areas which include a degree of estimation uncertainty are:

● IFRS 9 - Measurement of ECLs

o Adopting a collective basis for measurement in calculation of ECLs in IFRS 9 calculations (note 2.1.1).

o Incorporation of forecast loss curves, prepared on a risk segment basis, in the calculation of ECLs (note 2.1.1).

o Forward-looking information incorporated into the measurement of ECLs (note 2.1.3).

o Incorporating a probability weighted estimate of external macroeconomic factors into the measurement of ECLs (note 2.1.3).

● IFRS 9 - Probability of default and loss given default

o Probability of default (PD) is an estimate of the likelihood of default over a given time horizon, the calculation of which includes internal historical data, assumptions and expectations of future conditions.

o Loss given default (LGD) is an estimate of the expected future losses due to borrowers defaulting on loans, depicted as a percentage of the total exposure at the time of default. The calculation of this includes internal historical data, assumptions and expectations of future conditions.

● Provisions (note 2.1.4)

o Calculation of our provisions involves managements' best estimate of expected future outflows, the calculation of which evaluates current and historical data, and assumptions and expectations of future outcomes.

2.1 Credit impairment

2.1.1 Measurement of ECLs

The Group has adopted a collective basis of measurement for calculating ECLs. The loan book is divided into portfolios of assets with shared risk characteristics and further divided by quarterly origination vintages. ECLs are calculated on a collective basis, and hence applied on a combined borrower/guarantor basis (see note 1.3.viii for further details over the borrower/guarantor relationship). The Group's ECL methodology considers the collective estimated cash shortfalls for each credit risk portfolio based on forecast loss curves.

2.1 Credit impairment (continued)

Forecast loss curves are prepared on a risk segment basis for annual vintages and combine the Group's historical trends, current credit loss behaviour and management judgements.

Internal Group trends are reviewed over 60 months for equivalent cohorts of assets, being the maximum contractual term for the product. No external information is used, aside from in consideration of economic adjustments (see 2.1.3). Loss curves are reviewed and approved by the Risk Committee and Audit Committee prior to use in IFRS 9 calculations.

2.1.2 Assessment of significant change in credit risk

To determine whether there has been a significant increase in credit risk the following two step approach has been taken:

1) The primary indicator of whether a significant increase in credit risk has occurred for an asset is determined by considering the performance of each payment status flag (see note 2.1.1). If the specific operational flag placed on an account is deemed a trigger indicating the remaining lifetime probability of default has increased significantly, the Group considers the credit risk of an asset to have increased significantly since initial recognition.

The Group reassesses the flag status of all loans at each month end and remeasures the proportion of the book which has demonstrated a significant increase in credit risk based on the latest payment flag data. An account transitions from stage 2 to stage 1 immediately when a payment flag is removed from the account. Each quarter a Flag Governance meeting is held, to review operational changes which may impact the use of operational flags in the assessment of significant increase in credit risk.

2) As a backstop, the Group considers that a significant increase in credit risk occurs no later than when an asset is two contractual payments past due (equivalent to 30 days), which is aligned to the rebuttable presumption of more than 30 days past due.

2.1.3 Forward-looking information

The Group assesses the impact of forward-looking information on its measurement of ECLs. The Group has analysed the effect of a range of economic factors and identified the most significant macroeconomic factor that is likely to impact credit losses as the rate of unemployment.

Forecast unemployment rates have been built into the credit loss forecasts utilising four scenarios based on an independent forecast of future economic conditions and applying a probability weighting to each scenario. Economic assumptions included in IFRS 9 calculations are approved by the Board.

These weighted scenarios include a base (40.0%), an upside (6.1%) and two downside scenarios (31.7% and 22.2%). The forward-looking scenarios have been reviewed regularly and updated where deemed necessary. The weightings as at 31 March 2019 year-end were a base (50.0%), an upside (5.1%) and two downside scenarios (26.4% and 18.5%). The political climate has resulted in a heightened risk of a no deal Brexit and the general sentiment is that this could have an adverse effect on the economy.

2.1.3 Forward-looking information (continued)

As a result, the Group assessed the sensitivity and increased the probability weighting of a stressed scenario during the first half of the year. The scenarios are weighted according to management judgement of each scenario's likelihood. The base case attracts 40.0% weighting and is driven by forecast unemployment changes, as estimated by the Office of Budget Responsibility.

The probability weighting applied to each remaining scenario is calculated based on the period of time that the unemployment rate has been above each threshold since 1971, as management's best estimate of future unemployment scenarios.

Since year end, the Group assessed the sensitivity and the base case has been lowered to 40.0% from 50.0% due to various political events and the increased information available around Brexit meaning managements view on the probability of a hard-Brexit has changed since year end, leading to a lowering of the base case. The Group will continue to monitor the potential impact over the coming months and expects any further impact to be recognised in the later part of this year.

As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different to those projected.

2.1.4 Provisions

Provisions included in the Statement of Financial Position refers to a provision recognised for customer complaints. The provision represents an accounting estimate of the expected future outflows arising from customer-initiated complaints, using information available as at the reporting date (see note 12 for further detail). Management evaluate on an ongoing basis whether provisions should be recognised, revising previous judgements and estimates as appropriate.

The key assumptions in these calculations which involve significant management judgement are:

- Complaint volumes - complaints received but not yet processed and estimates of future volumes

- Upheld rate, being the percentage of cases upheld in favour of the customer resulting in redress compensation

- Average redress - the estimated compensation, inclusive of balance adjustments and cash payments, for each upheld case which receives redress

These assumptions remain subjective due to uncertainty associated with future complaint volumes and the magnitude of redress which may be required. Complaint volumes may include complaints under review by the Financial Ombudsman Service, FCA feedback and cases reviewed internally.

Provisions are often sensitive to changes in key assumptions. Sensitivity analysis has therefore been performed on the complaints provision balance considering incremental changes in the key assumptions, should current estimates prove too high or too low.

2.1.4 Provisions (continued)

Assumption	30-Sep-19
Customer-initiated complaint volumes (500 complaints)	+/- 1.1m
Percentage point change in average upheld rate per complaint (5 p.p.)	+/- 3.4m
Average redress per valid complaint (£500)	+/- 0.7m

¹ Sensitivity analysis shows the impact of a 500 increase or decrease in the number of complaints would have on the provision level

² Average uphold rate per customer. Sensitivity analysis has been calculated to show the impact of a 5 percentage point change in the average uphold rate per complaint would have on the provision level

³Average redress per loan agreement initiated by complaints received by the Amigo Group. Sensitivity analysis shows the impact a £500 increase or decrease in the average redress per complaint would have on the provision level.

It is possible that the eventual outcome may differ materially from the current estimate (and the sensitivities provided above) and this could materially impact the financial statements as a whole, given the company's only activity is alternative consumer credit. This is due to the risks and inherent uncertainties surrounding the assumptions used in the provision calculation. In particular, there is significant uncertainty around impact of regulatory intervention, Financial Ombudsman actions and potential changes to remediation arising from continuous improvement of the Group's operational practices, which may have a material impact on the eventual volume and outcome of complaints.

3. Revenue

Revenue consists of interest revenue and is derived primarily from a single segment in the UK, with an immaterial amount from Amigo Loans Ireland Ltd. This is consistent with the reporting to the chief operating decision maker, which the Group considers is the Board. No segmental analysis is therefore provided based on the immaterial quantum of Irelands revenue.

4. Interest payable and funding facility

	6 months ended	6 months ended	Year to
	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m

Bank interest payable	3.7	1.7	3.8
Senior secured notes interest payable	9.7	14.9	29.1
Funding facility fees	0.6	1.6	3.5
Securitisation interest payable	3.2	-	1.8

	17.2	18.2	38.2
Shareholder loan note interest	-	6.0	6.0

Total interest payable	17.2	24.2	44.2

4. Interest payable and funding facility (continued)

Funding facility fees include non-utilisation fees associated with the undrawn portion of the Group's revolving credit facility and securitisation facility, and amortisation of the initial costs of the Group's revolving credit facility, senior secured notes and securitisation facility.

Interest payable represents the total amount of interest expense calculated using the effective interest method for financial liabilities that are not treated as fair value through the profit or loss. Non-utilisation fees within this figure are immaterial. No interest was capitalised by the Group during the period.

Included within bank interest payable for the period is £2.2m of written off fees. These were previously capitalised and were being spread over the expected life of the Group's prior revolving credit facility. Following substantial modification of the facility, these have been written off in full. Fees worth £700k have been capitalised in relation to the modified facility and will be spread over the expected life of the modified agreement.

5. IPO and related financing costs

IPO and related financing costs are disclosed separately in the financial statements because the Directors consider it necessary to do so to provide further understanding of the financial performance of the Group. They are material items of expense that have been shown separately due to the significance of their nature and amount.

	6 months ended 30-Sep-19	6 months ended 30-Sep-18	Year to 31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m

IPO and related financing costs	-	3.9	3.9

IPO and related financing costs relate to advisor, legal fees and financing fees in respect of the listing of the Group in July 2018. Included within these costs in the prior year was a £1.4m share-based payment expense.

6. Taxation

The applicable corporation tax rate for the period to 30 September 2019 was 19% and the effective tax rate is 12.5%. The difference is due to the release of tax provisions relating to prior years in the period. The Group's effective tax rate for the period to 30 September 2018 was 22.1%. The current period effective tax rate is reflective of the applicable corporate tax rate for the year and reconciling items.

7. Earnings per share

	6 months ended	6 months ended	Year to
	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	Pence	Pence	Pence

Basic EPS	7.8	8.6	19.4
Diluted EPS	7.7	8.6	19.4
Adjusted Basic EPS*	7.5	10.8	22.0

The Directors are of the opinion that the publication of the adjusted earnings per share is useful as it gives a better indication of ongoing business performance.

Reconciliations of the earnings and share data used in the calculations are set out below. Note figures are presented net of tax:

	6 months ended	6 months ended	Year to
	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m
Earnings for basic EPS	37.0	37.7	88.6
Shareholder loan note interest	-	5.6	5.6
IPO and related financing costs	-	3.9	3.9
Senior secured note buyback	(0.1)	-	2.0
RCF fees	1.8	-	-
Tax provision release	(2.9)	-	-
Earnings for adjusted basic EPS¹	35.8	47.2	100.1

Basic weighted average number of shares (m)	475.3	436.6	455.9
Dilutive potential ordinary shares	4.3	-	-
Diluted weighted average number of shares (m)	479.6	436.6	455.9

¹Adjusted basic EPS and earnings for adjusted basic EPS are non-GAAP measures.

There were 1,000,000 ordinary shares in issue at 31 March 2018. As a result of the IPO, on 28 June 2018 the 1,000,000 ordinary shares in issue were sub-divided, with each existing ordinary share split into 400 ordinary shares. The weighted average number of shares has been retrospectively adjusted for 30 September 2018 as a result of the change in the number of shares without a corresponding change in resources.

8. Customer loans and receivables

	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m
Stage 1	704.5	633.3	683.4
Stage 2	75.5	87.0	70.0
Stage 3	37.3	22.8	29.6
Gross Loan Book	817.3	743.1	783.0
Deferred broker costs¹- Stage 1	19.4	16.3	18.2
Deferred broker costs¹- Stage 2	2.1	2.2	1.9
Deferred broker costs¹- Stage 3	1.0	0.6	0.8
Loan book inclusive of deferred broker costs	839.8	762.2	803.9
Provision	(86.6)	(71.4)	(75.4)
Customer loans and receivables	753.2	690.8	728.5

1 Deferred broker costs are recognised within customer loans and receivables and are amortised over the expected life of those assets using the effective interest rate (EIR) method.

The following table further explains changes in the gross carrying amount of loans receivable from customers to explain their significance to the changes in the loss allowance for the same portfolios.

	Stage 1	Stage 2	Stage 3	Total
	£m	£m	£m	£m
Gross carrying amount as at 31 March 2019	683.4	70.0	29.6	783.0
Deferred broker fees	18.2	1.9	0.8	20.9
Loan book inclusive of deferred broker costs	701.6	71.9	30.4	803.9
Changes in gross carrying amount attributable to:
Transfer to stage 1	13.8	(13.6)	(0.2)	-
Transfer to stage 2	(38.8)	39.1	(0.3)	-
Transfer to stage 3	(20.0)	(10.3)	30.3	-
Passage of time	(55.0)	(5.2)	1.9	(58.3)
Customer settlements	(50.5)	(4.6)	(0.6)	(55.7)
Loans charged off	(5.9)	(13.0)	(26.4)	(45.3)
Net new receivables originated	177.5	13.1	3.0	193.6
Net movement in deferred broker fees	1.2	0.2	0.2	1.6
Loan book inclusive of deferred broker costs as at 30 September 2019	723.9	77.6	38.3	839.8

8. Customer loans and receivables (continued)

The following tables explain the changes in the loan loss provision between the beginning and the end of the period:

	Stage 1	Stage 2	Stage 3	Total
	£m	£m	£m	£m
Loan loss provision as at 31 March 2019	29.3	17.4	28.7	75.4
Changes in loan loss provision attributable to:
Transfer to stage 1	0.6	(3.4)	(0.2)	(3.0)
Transfer to stage 2	(1.6)	9.7	(0.3)	7.8
Transfer to stage 3	(0.8)	(2.5)	29.5	26.2
Passage of time	(2.4)	(1.3)	1.8	(1.9)
Customer settlements	(2.1)	(1.1)	(0.6)	(3.8)
Loans charged off	(0.4)	(3.2)	(25.6)	(29.2)
Net new receivables originated	7.3	3.5	2.9	13.7
Remeasurement of ECLs	0.3	1.5	(0.4)	1.4
Loan loss provision as at 30 September 2019	30.2	20.6	35.8	86.6

The following table splits the gross loan book by arrears status, and then by stage respectively.

	Stage 1	Stage 2	Stage 3	Total
	£m	£m	£m	£m
Up to date	671.2	28.7	-	699.9
1-30 days	33.3	30.6	-	63.9
31-60 days	-	16.2	-	16.2
60 days +	-	-	37.3	37.3
	704.5	75.5	37.3	817.3

As at 30 September 2019, £371.5m of the loans to customers had their beneficial interest assigned to the Group's special purpose vehicle (SPV) entity, namely AMGO Funding (No. 1) Limited, as collateral for securitisation transactions (2018: £nil).

Ageing of gross loan book by days overdue

	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m
Up to date	699.9	658.0	680.7
1 - 30 days	63.9	52.1	59.8
31 to 60 days	16.2	10.2	12.7
>61 days	37.3	22.8	29.8
Gross Loan Book	817.3	743.1	783.0

8. Customer loans and receivables (continued)

	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
Customer loans and receivables	£m	£m	£m
Due within one year	426.6	387.9	412.9
Due in more than one year	304.1	283.8	294.7

Net Loan book	730.7	671.7	707.6
Deferred broker costs¹
Due within one year	9.9	16.5	13.1
Due in more than one year	12.6	2.6	7.8
Customer loans and receivables	753.2	690.8	728.5

¹ Deferred broker costs are recognised within customer loans and receivables and are amortised over the expected life of those assets using the effective interest rate ("EIR") method.

9. Financial instruments

The below tables show the carrying amounts and fair values of financial assets and financial liabilities, including the levels in the fair value hierarchy. All financial assets fall within the IFRS 9 category of amortised cost. The tables analyses financial instruments into a fair value hierarchy based on the valuation technique used to determine fair value:

a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

c) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

		30-Sep-19		30-Sep-18		31-Mar-19
	Fair value	Carrying amount	Fair value	Carrying amount	Fair value	Carrying amount	Fair value
	hierarchy	£m	£m	£m	£m	£m	£m
Financial assets not measured at fair value1
Amounts receivable from customers2	Level 3	753.2	762.0	690.8	749.0	728.5	758.2
Other receivables	Level 3	3.4	3.4	1.7	1.7	1.2	1.2
Amounts owed by Group entities	Level 3	0.1	0.1	-	-	-	-
Cash and cash equivalents	Level 1	27.9	27.9	19.5	19.5	15.2	15.2
		784.6	793.4	712.0	770.2	744.9	774.6
Financial assets measured at fair value
Derivative asset	Level 2	0.1	0.1	-	-	0.1	0.1
		0.1	0.1	-	-	0.1	0.1
Financial liabilities not measured at fair value1
Amounts owed to Group entities	Level 3	-	-	-	-	-	-
Other liabilities	Level 3	(13.9)	(13.9)	(17.3)	(17.3)	(15.2)	(15.2)
Senior secured notes	Level 1	(231.0)	(228.7)	(393.5)	(398.7)	(315.3)	(316.8)
Securitisation facility	Level 2	(293.9)	(297.9)	-	-	(158.6)	(160.5)
Bank loans	Level 2	0.7	0.7	(90.5)	(90.5)	(2.8)	(2.8)
		(538.1)	(539.8)	(501.3)	(506.5)	(492.1)	(495.5)

1 The Group has disclosed the fair values of financial instruments such as short-term trade receivables and payables at their carrying value because they consider this a reasonable approximation of fair value.

2 The unobservable inputs in the fair value calculation of amounts receivable from customers are expected credit losses, forecast cash flows and discount rates.

Derivative asset valuation is obtained directly from the issuer of the instrument.

Financial instruments not measured at fair value

The fair value of amounts receivable from customers has been estimated using a net present value calculation using discount rates derived from contractual interest rates less acquisition and financing costs. As these loans are not traded on an active market and the fair value is therefore determined through future cash flows, they are classed as Level 3 under IFRS 13 Fair Value Measurement. The fair value of senior secured notes has been taken at the Bloomberg Valuation Service (BVAL) market price.

9. Financial instruments (continued)

All financial instruments are held at amortised cost, with the exception of the derivative asset which is held at FVTPL.

The fair value of the securitisation facility is estimated using a net present value calculation using discount rates derived from contractual interest rates, with cash flows assuming no principal repayments until maturity date.

		30-Sep-19	30-Sep-18	31-Mar-18
		£m	£m	£m
Maturity analysis of financial liabilities
Analysed as:
- due within one year
Amounts owed to Group entities	-		-	(0.2)
Other liabilities	(13.9)		(17.3)	(15.2)
- due in three to four years
Securitisation facility	(293.9)		-	(158.6)
Bank loans	0.7		(90.5)	(2.8)
Senior secured note liability	(231.0)		(393.5)	(315.3)
	(538.1)		(501.3)	(492.1)

10. Other receivables

	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m
Current
Other receivables	2.0	-	-
Prepayments and accrued income	1.4	1.9	1.2
Amounts owed by Group undertakings	0.1	-	-
	3.5	1.9	1.2

11. Trade and other payables

	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m
Current
Accrued senior secured note interest	3.7	6.3	5.0
Trade payables	0.8	0.5	1.2
Amounts owed to Group undertakings	-	-	0.2
Taxation and social security	0.7	0.7	0.6
Accruals and deferred income	8.7	9.8	8.4
	13.9	17.3	15.4

12. Provisions

Our lending practices have been subject to significant political, regulatory and customer attention and, combined with FOS' evolving interpretation of appropriate lending decisions during the period, has resulted in an increase in number of complaints received.

	30-Sep-19
	Unaudited
	£m
Balance as at 31-Mar-19	-
Provisions made during the period	10.4
Utilised during the period	(2.9)
Balance at 30-Sep-19	7.5

2019
Non-current	1.2
Current	6.3
	7.5

Customer complaints redress

As at 30 September 2019, the Group has recognised cumulative provisions totalling £10.4m, of which £8.4m was recognised in Q2 2020 against customer complaints redress and associated costs. Utilisation to date is £2.9m, leaving a residual provision of £7.5m. The charge in Q2 related to several factors including higher expected complaint volumes, an increase in average redress per complaint and the complaints management strategy.

The current provision reflects the Group's best estimate of expected cost of redress relating to customer-initiated complaints, based on information available at the period end. The provision has two components, being a provision for complaints received but not yet processed, and a provision being an estimate of expected valid future complaints relating to existing loans, based on our revised risk appetite. It is possible that the eventual outcome may differ materially from the current estimates and this could materially impact the financial statements as a whole, given the company's only activity is alternative consumer credit. This is due to the risks and inherent uncertainties surrounding the assumptions used in the provision calculation. In particular, there is significant uncertainty around impact of regulatory intervention, Financial Ombudsman actions and potential changes to remediation arising from continuous improvement of the Group's operational practices, which may have a material impact on the eventual volume and outcome of complaints. The Group continues to monitor its policies and processes to ensure that it responds appropriately to customer complaints. The Group will continue to assess both the underlying assumptions in the calculation and the adequacy of this provision periodically using actual experience and other relevant evidence to adjust the provisions where appropriate.

See note 2.1.4 for detail of the key assumptions that involve significant management judgement and estimation in the provision calculation.

13. Bank and other borrowings

	30-Sep-19	30-Sep-18	31-Mar-19
	Unaudited	Unaudited	Audited
	£m	£m	£m
Non-current liabilities
Amounts falling due 3-4 years
Securitisation facility	293.9	-	158.6
Bank loan	(0.7)	90.5	2.8
Amounts falling due > 5 years
Senior secured notes	231.0	393.5	315.3
	524.2	484.0	476.7

The bank facility and the senior secured notes are secured by a charge over the Group's assets and a cross guarantee given by other subsidiaries. The securitisation on 13 November 2018 for a £150m facility was increased as at 17 December 2018 to £200m. The securitisation facility increased to £300m in June 2019, of which, £293.9m was drawn (net of unamortised fees) at 30 September 2019.

14. Share capital

On 4 July 2018 the Company's shares were admitted to trading on the London Stock Exchange. Immediately prior to admission the shareholder loan notes were converted to equity, increasing the share capital of the business to 475 million ordinary shares and increasing net assets by £207.2m. No additional shares were issued subsequent to conversion of the shareholder loan notes.

Allotted and called up shares at par value

	30-Sep-19	30-Sep-19	30-Sep-19
	£'000	£'000	£'000
	Paid	Unpaid	Total
41,000 deferred ordinary shares of £0.24 each	10	-	10
475,333,760 ordinary shares of 0.25p each	1,188	-	1,188
	1,198	-	1,198

	31-Mar-19	31-Mar-19	31-Mar-19
	£'000	£'000	£'000
	Paid	Unpaid	Total
41,000 deferred ordinary shares of £0.24 each	10	-	10
475,333,760 ordinary shares of 0.25p each	1,188	-	1,188
	1,198	-	1,198

14. Share capital (continued)

	Ordinary	Total
	Number	Number
At 30 September 2018	475,333,760	475,333,760
At 31 March 2019	475,333,760	475,333,760
At 30 September 2019	475,333,760	475,333,760

Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. Each ordinary share in the capital of the Company ranks equally in all respects and no shareholder holds shares carrying special rights relating to the control of the Company. The nominal value of shares in issue is shown in share capital, with any additional consideration for those shares shown in share premium.

Deferred shares

At the time of the IPO and subdivision the 41,000 ordinary B shares were split into 16,400,000 ordinary shares of £0.25 and 41,000 deferred shares of £0.24.

The deferred shares do not carry any rights to receive any profits of the Company or any rights to vote at a general meeting. Prior to the subdivision the ordinary B shares had 1.24 votes per share; all other shares had one vote per share.

Dividends

Dividends are recognised through equity on the date of their payment.

	30-Sep-19		30-Sep-18
	£m		£m
Interim dividend for twelve months 31 March 2020 of £3.10p per share		3.10	-
Final dividend for twelve months 31 March 2019 of £7.45p per share		7.45	-
Interim dividend for twelve months 31 March 2019 of £1.87p per share		-	1.87
Dividends per share		10.55	1.87

15. Immediate and ultimate parent undertaking

The immediate and ultimate parent undertaking and controlling party is Richmond Group Limited, a Company incorporated in the UK.

The Company and Group are included in the consolidated financial statements of Richmond Group Limited. The consolidated financial statements of Richmond Group Limited are available to the public and may be obtained from the registered office: Walton House, 56-58 Richmond Hill, Bournemouth, BH2 6EX.

16. Share based payments

The Company has three share-based payment schemes in operation:

· Long term incentive plan (LTIP)

· Share incentive plan scheme (SIP)

· Save As You Earn Option plan (SAYE)

A summary of the awards under each scheme is set out below:

Equity Settled	Method of settlement accounting	Number of instruments	Vesting period	Contractual life of options	Exercise price
2019 - LTIP	Equity	3,217,761	3 years	July - August 2022	£-
2019 - SIP	Equity	-	3 years rolling	October 2022	£-
2019 - SAYE	Equity	1,049,353	3 years	September 2022	£0.6368

Long term incentive plan (LTIP)

The long term incentive plans (LTIP) were established on 26 July 2019 and 11 September 2019. The LTIP awards were granted to eligible employees in the form of nil cost share options and are subject to performance conditions and continuity of employment. The 2019 LTIP Criteria is set out below.

16. Share based payments (continued)

Relative TSR growth compared to the comparator group

Proportion of awards subject to TSR condition that vest

Below median

Median

Upper Quartile

25%

100%

Absolute TSR growth

Proportion of awards subject to Absolute TSR condition that vest

Below 6% p.a.

6% p.a.

12% p.a.

25%

100%

EPS growth

Proportion of awards subject to EPS condition that vest

Below 8% p.a.

8% p.a.

16% p.a.

25%

100%

Share incentive plan scheme (SIP)

The first payroll deductions to acquire shares under the SIP were made in September 2019, however the shares were not purchased until October 2019.

The Company gives the participating employees one matching share for each partnership share acquired on behalf of the employee using the participating employees' gross salaries. The shares vest at the end of three years on a rolling basis as they are purchased, with employees required to stay in employment for the vesting period to receive the shares.

Save As You Earn Option Plan (SAYE)

The initial options were granted under the SAYE plan on 23 September 2019.

The Company offers a savings contract that gives participating employees an opportunity to save a set amount using the participating employees net salaries. The shares vest at the end of three years where the employee has the opportunity to purchase the shares at the fixed option price, take the funds saved or buy a portion of shares and take the remaining funds, with the employees required to stay in employment for the vesting period to receive the shares; however, the funds can be withdrawn at any point.

The SAYE awards vest after broadly three years; the participants will have a window of six months in which to exercise their options. Due to the short nature of the exercise window it is reasonable to assume the participants will exercise, on average, at the mid-point of the exercise window. The SAYE awards are not subject to the achievement of any performance conditions.

16. Share based payments (continued)

Information for the period

The fair value of the equity settled share-based payments has been estimated as at the date of grant using both the Black-Scholes and Monte Carlo models. The inputs to the models used to determine the valuations fell within the following ranges:

	LTIP	LTIP	SAYE
Grant date	26 July 2019	11 September 2019	23 September 2019
Expected life of options (Years)	3	3	3.3
Share prices at date of grant	£1.606	£0.732	£0.691
Expected share price volatility (%)	50.0%	50.0%	50.0%
Risk free interest rate (%)	0.47%	0.47%	0.42%
The total expenses recognised for the period arising from the above share-based payments are as follows:			30 September 2019
			£m
Total equity settled share-based payment expense recognised in the settlement of comprehensive income			0.1

17. Amigo Loans Group Limited ('ALGL')

Amigo Loans Group Limited (ALGL) is a wholly owned subsidiary of the Company and a reconciliation to its consolidated results is included in the presentation pack on the Company's website as part of ALGL's senior secured note reporting requirements.

The following are subsidiary undertakings of the Company at 30 September 2019 and includes undertakings registered or incorporated up to the date of the Directors' Report as indicated. Unless otherwise indicated all Group owned shares are ordinary. All entities are subsidiaries on the basis of 100% ownership and shareholding, aside from AMGO Funding (No. 1) Limited which is an orphaned structured entity.

17. Amigo Loans Group Limited ('ALGL') (continued)

Name	Country of incorporation	Class of shares held	Ownership 2020	Ownership 2019	Principal activity
Direct holding
Amigo Loans Group Limited1	United Kingdom	Ordinary	100%	100%	Trading company
Amigo Loans Holdings Limited1	United Kingdom	Ordinary	100%	100%	Holding company
Indirect holdings
Amigo Loans Limited1	United Kingdom	Ordinary	100%	100%	Trading company
Amigo Management Services Limited1	United Kingdom	Ordinary	100%	100%	Trading company
Amigo Canteen Limited1*	United Kingdom	Ordinary	100%	100%	Trading company
Amigo Luxembourg SA2	Luxembourg	Ordinary	100%	100%	Financing company
AMGO Funding (No.1) Limited4**	United Kingdom	N/A	SE	SE	Securitisation vehicle
Amigo Car Loans Limited1	United Kingdom	Ordinary	100%	100%	Dormant company
Amigo Motor Finance Limited1	United Kingdom	Ordinary	100%	100%	Dormant company
Amigo Car Finance Limited1	United Kingdom	Ordinary	100%	100%	Dormant company
Amigo Store Limited1	United Kingdom	Ordinary	100%	100%	Dormant company
Amigo Group Limited1	United Kingdom	Ordinary	100%	100%	Dormant company
Amigo Finance Limited1	United Kingdom	Ordinary	100%	100%	Dormant company
Amigo Loans International Limited3	Ireland	Ordinary	100%	100%	Holding company
Amigo Loans Ireland Limited3	Ireland	Ordinary	100%	100%	Trading company

1 Registered at 118-128 Nova Building, Commercial Road, Bournemouth BH2 5LT.

2 Registered at 19, Rue de Bitbourg, L-1273 Luxembourg.

3 Registered at Suite 3, One Earlsfort Centre, Lower Hatch Street, Dublin 2.

4 Registered at Level 37, 25 Canada Square, London E14 5LQ.

* Previously RG Catering Services Limited.

** Incorporated on 4 October 2018.

18. Related Party Transaction

The Group had no related party transactions during the six month period to 30 September 2019 that would materially affect the performance of the Group. Details of the transactions for the year ended 31 March 2019 can be found in note 24 of the Amigo Holdings Limited 2019 financial statements.

This financial report provides alternative performance measures ("APMs") which are not defined or specified under the requirements of International Financial Reporting Standards. We believe these APMs provide readers with important additional information on our business. To support this we have included a reconciliation of the APMs we use, how they are calculated and why we use them.

Key Performance Indicators

Other financial data	6 months ended	6 months ended	Year to
Figures in £m, unless otherwise stated	30-Sep- 2019	30-Sep- 2018	31-Mar-2019
Net Loan Book	730.7	671.7	707.6
Net Borrowings	496.3	464.5	461.5
Net borrowings/gross loan book	60.7%	62.5%	58.9%
Borrowings/loan book	64.1%	65.1%	60.9%
Net borrowings/adjusted tangible equity	2.0	2.3	1.9
Risk adjusted revenue	100.2	99.8	206.5
Risk adjusted margin	25.0%	28.3%	28.5%
Average gross loan book	800.2	705.6	725.5
Net interest margin	31.2%	31.0%	31.5%
Cost:income ratio	28.0%	17.9%	17.5%
Operating cost:income ratio (ex. complaints)	20.8%	17.8%	17.5%
Impairment:revenue ratio	31.1%	23.3%	23.7%
Impairment charge as a percentage of loan book	11.1%	8.1%	8.2%
Cost of funds percentage	4.3%	5.2%	5.3%
Adjusted return on average adjusted tangible equity	29.2%	47.6%	45.6%
Adjusted free cash flow excluding loan originations	267.4	248.6	515.7
Adjusted profit after tax	35.8	47.2	100.1
Adjusted return on average assets	9.4%	13.6%	14.0%
Other financial data continued	6 months ended	6 months ended	Year to
Figures in £m, unless otherwise stated	30-Sep- 2019	30-Sep- 2018	31-Mar- 2019
Revenue yield	36.3%	36.9%	37.3%
Gross loan book	817.3	743.1	783.0
Originations	216.9	220.7	426.1
Adjusted tangible equity	245.6	202.2	244.4
Adjusted tangible equity/total assets	0.31x	0.29x	0.33x
Percentage of book <31 days past due	93.5%	95.6%	94.6%

1. "Net loan book" is a subset of customer loans and receivables and represents true loan book when the IFRS 9 impairment provision is accounted for, comprised of:

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Gross loan book^(a)	817.3	743.1	783.0
Provision^(b)	(86.6)	(71.4)	(75.4)
Net loan book^(c)	730.7	671.7	707.6

(a) Gross loan book represents total outstanding loans and excludes deferred broker costs.

(b) Provision for impairment represents the Group's estimate of the portion of loan accounts that are not in arrears or are up to five payments in arrears for which the Group will not ultimately be able to collect payment. Provision for impairment excludes loans that are six or more payments in arrears, which are charged off from the Statement of Financial Position and are therefore no longer included in the loan book.

2. "Net borrowings" is comprised of:

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Borrowings	(524.2)	(484.0)	(476.7)
Cash at bank and in hand	27.9	19.5	15.2
Net borrowings	(496.3)	(464.5)	(461.5)
This is deemed useful to show total borrowings if cash available at year end was used to repay borrowing liabilities.

3. The Group defines loan to value (LTV) as net borrowings divided by gross loan book. This measure shows if borrowings year on year movement is in line with loan book growth.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Net borrowings (£m)	(496.3)	(464.5)	(461.5)
Gross loan book (£m)	817.3	743.1	783.0
Net borrowings/gross loan book	60.7%	62.5%	58.9%

The Group defines "borrowings/loan book" as borrowings (excluding cash) divided by gross loan book.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Borrowings (£m)	(524.2)	(484.0)	(476.7)
Gross loan book (£m)	817.3	743.1	783.0
Borrowings/gross loan book	64.1%	65.1%	60.9%

This is shown as a statutory alternative to net borrowings/gross loan book above.

4. The Group defines "adjusted tangible equity" as shareholder equity less intangible assets plus shareholder loan notes. The following table sets forth a reconciliation of adjusted tangible equity to shareholder equity at 30 September 2019, 2018 and 31 March 2019.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Shareholder equity	245.7	202.3	244.5
Intangible assets	(0.1)	(0.1)	(0.1)
Shareholder loan notes	-	-	-
Adjusted tangible equity	245.6	202.2	244.4
Net borrowings/adjusted tangible equity	2.0	2.3	1.9

Adjusted tangible equity is not a measurement of performance under IFRS, and you should not consider adjusted tangible equity as an alternative to shareholder equity as a measure of the Group's equity or any other measures of performance under IFRS.

5. The Group defines "risk adjusted revenue" as revenue less impairment charge. The following table sets forth a reconciliation of risk adjusted revenue to revenue for 6 months to 30 September 2019, 2018 and year to 31 March 2019.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Revenue	145.4	130.1	270.7
Impairment charge	(45.2)	(30.3)	(64.2)
Risk adjusted revenue	100.2	99.8	206.5

Risk adjusted revenue is not a measurement of performance under IFRS, and you should not consider risk adjusted revenue as an alternative to profit before tax as a measure of the Group's operating performance, as a measure of the Group's ability to meet its cash needs or any other measures of performance under IFRS.

6. The Group defines "risk adjusted margin" as risk adjusted revenue divided by the average of gross loan book.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Risk adjusted revenue	100.2	99.8	206.5
Average gross loan book	800.2	705.6	725.5
Risk adjusted margin (annualised)	25.0%	28.3%	28.5%

Average gross loan book
Opening gross loan book	783.0	668.1	668.1
Closing gross loan book	817.3	743.1	783.0
Average gross loan book	800.2	705.6	725.5

This measure is used internally to review an adjusted return on the Group's primary key assets.

7. The Group defines "net interest margin" as net interest income divided by average interest-bearing assets (being both gross loan book and cash) at the beginning of the period and end of the period.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Revenue	145.4	130.1	270.7
Interest payable and funding facility fees	(17.2)	(18.2)	(38.2)
Net interest income	128.2	111.9	232.5

Net interest margin (annualised)	31.2%	31.0%	31.5%
IFRS 9 stage 3 revenue adjustment	11.5	4.8	12.7
Adjusted net interest margin (annualised)	34.0%	32.4%	33.2%

8. The Group defines "cost:income ratio" as operating expenses excluding IPO costs, including the complaints provision and related financing divided by revenue.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Revenue	145.4	130.1	270.7
Operating expenses	40.7	23.3	47.4
Cost:income ratio	28.0%	17.9%	17.5%

This measure allows review of cost management.

Operating cost:income ratio, defined as the cost:income ratio excluding the complaints provision is:

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Revenue	145.4	130.1	270.7
Operating expenses	30.3	23.2	47.4
Cost:income ratio	20.8%	17.8%	17.5%

9. Impairment charge as a percentage of revenue (impairment:revenue ratio) represents the Group's impairment charge for the period divided by revenue for the period.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Revenue	145.4	130.1	270.7
Impairment of amounts receivable from customers	45.2	30.3	64.2
Impairment charge as a percentage of revenue	31.1%	23.3%	23.7%

A key measure for the Group in monitoring risk within the business.

10. Impairment charge as a percentage of loan book represents the Group's annualised impairment charge for the period divided by closing gross loan book.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Impairment charge	45.2	30.3	64.2
Closing gross loan book	817.3	743.1	783.0
Impairment charge as a percentage of loan book (annualised)	11.1%	8.1%	8.2%

Allows review of impairment level movements year on year.

11. The Group defines "Cost of funds" as interest payable (less shareholder loan note interest) divided by the average of gross loan book.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Interest payable	17.2	24.2	44.2
Less shareholder loan note interest	-	(6.0)	(6.0)
Cost of funds	17.2	18.2	38.2
Average book	800.2	705.6	725.5
Cost of funds percentage (annualised)	4.3%	5.2%	5.3%

This measure is used by the Group to monitor cost of funds and impact of diversification of funding.

12. "Adjusted return on equity" is calculated as annualised adjusted profit after tax divided by the average of adjusted tangible equity at the beginning of the period and the end of the period.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Adjusted profit after tax	35.8	47.2	100.1
Adjusted tangible equity	245.6	202.2	244.4
Average adjusted tangible equity	245.0	198.5	219.6
Adjusted return on average adjusted tangible equity (annualised)	29.2%	47.6%	45.6%

Deemed to give a useful representation of underlying return on equity by using average tangible equity.

13. The Group defines "free cash flow" as cash collections less non-direct costs (expenses excluding advertising, credit score costs and complaints). The following table sets forth the calculation of adjusted free cash flow excluding loan originations for 6 months to 30 September 2019, 2018 and year to 31 March 2019.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Collections	297.3	260.7	543.5
Non-direct costs	(29.9)	(12.1)	(27.8)
Adjusted free cash flow excluding loan originations	267.4	248.6	515.7

This is used internally to review cash generation.

14. The following table sets forth a reconciliation of "adjusted profit after tax" to profit after tax for 6 months to 30 September 2019, 2018 and year to 31 March 2019.

	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Reported profit after tax	37.0	37.7	88.6
Senior secured note buyback	(0.1)	-	2.0
RCF Fees	1.8	-	-
Shareholder loan note interest	-	5.6	5.6
IPO and related financing costs	-	3.9	3.9
Tax provision release	(2.9)	-	-
Adjusted profit after tax	35.8	47.2	100.1

The above items were all excluded due to them being non business-as-usual transactions. IPO and related financing costs are one off and related to the Group becoming a public listed company. Shareholder loan note interest will not continue in future years as this has all been converted to equity. Senior secured note buybacks are not underlying business-as-usual transactions. RCF fees relate to written off fees following modification and extension of our revolving credit facility. The tax provision release refers to the release of a tax provision no longer required. Neither are business-as-usual transactions. Hence, removing these items is deemed to give a fairer representation of underlying profit within the financial year.

15. The Group defines "revenue yield" as annualised revenue over the average of the opening and closing gross loan book for the period.

Revenue yield	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Revenue	145.4	130.1	270.7
Opening Loan Book	783.0	668.1	668.1
Closing Loan Book	817.3	743.1	783.0
Average Loan Book	800.2	705.6	725.5
Revenue yield (annualised)	36.3%	36.9%	37.3%
IFRS 9 stage 3 revenue adjustment	11.5	4.8	12.7
Adjusted revenue yield	39.2%	38.2%	39.1%

This is deemed useful in assessing the gross return on the Group's loan book.

16. The percentage of balances fully up to date or within 31 days overdue is presented as this is useful in reviewing the quality of the loan book.

Ageing of gross loan book by days overdue:	30-Sep-19	30-Sep-18	31-Mar-19
	£m	£m	£m
Current	699.9	658.0	680.7
1-30 days	63.9	52.1	59.8
31 - 60 days	16.2	10.2	12.7
> 61 days	37.3	22.8	29.8
Gross loan book	817.3	743.1	783.0

Percentage of book <31 days past due	93.5%	95.6%	94.6%

17. Adjusted return on assets (ROA) refers to annualised adjusted profit over tax as a percentage of average assets.

Adjusted return on assets	30-Sep-19	30-Sep-18	31-Mar-19
Adjusted profit after tax	35.8	47.2	100.1
Net loan book	730.7	671.7	707.5
Other receivables	24.5	19.1	22.7
Cash	27.9	19.5	15.2
Total Assets	783.1	710.3	745.4
Average Assets	764.3	695.6	713.1
Adjusted return on assets	9.4%	13.6%	14.0%

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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