Q1 2019 Financial Results

RNS Number : 1846Z

Amigo Holdings PLC

30 August 2018

 

30 August 2018

Q1 2019 Financial Results
A Strong Start to the Financial Year

Amigo Holdings PLC (LSE: AMGO) ("Amigo" or the "Company") announces unaudited quarterly results for the period ending 30 June 2018.

Figures in £ million, unless otherwise stated		Quarter ending 30 June 2018	Quarter ending 30 June 2017	Change %
Revenue		62.9	42.9	47%
Impairment / revenue	%	25%	14%	79%
Adjusted profit after tax1		21.8	16.6	31%
Profit after tax		12.3	11.8	4%
EPS (Basic, adjusted)2	pence	5.5	4.2	31%
Basic EPS	pence	3.1	2.9	7%
Net loan book3		638.2	466.9	37%
Net borrowings4 / gross loan book5	%	63%	67%	(6)%
Net borrowings / adjusted tangible equity6		2.5	2.3	9%
Number of customers	'000s	194	140	39%

Notes:

¹ Adjusted profit is a non IFRS measure. Adjusted profit after tax 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) as shown in note 6.

² This is a non-IFRS measure and the calculation is shown in note 6. Shareholder loan note interest is excluded as the loan notes were converted to equity immediately before admission while IPO costs are also non-recurring in nature. By excluding these items 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.

³ Net loan book represents total outstanding loans less provision for impairment excluding deferred broker costs

⁴ Net borrowings is defined as borrowings, excluding shareholder loan notes, less cash at bank and in hand

⁵ Gross loan book represents total outstanding loans excluding deferred broker costs

⁶ Adjusted Tangible Equity is defined as shareholder equity less intangible assets plus shareholder loan notes

Financial highlights

§ Significant growth in revenue to £62.9 million, an increase of 47% compared to the previous year (Q1 2017: £42.9 million)

§ Net Loan Book of £638.2 million, up 37% year on year

§ The impairment charge for the quarter is slightly better than guidance as a percentage of revenue post implementation of IFRS 9 on 1 April 2018

§ Adjusted profit after tax of £21.8 million; an increase of 31% compared to the previous year

§ Profit after tax of £12.3 million increase of 4% compared to the previous year

§ Customer base of 194,000 (Q1 2017: 140,000), an increase of 39% year on year

Company highlights

§ Amigo offers a single guarantor loan product to customers who cannot (due to a variety of circumstances) access traditional finance

§ Amigo's guarantor loans offer a fixed 49.9% APR with no extra fees, late payment charges or early redemption penalties; this places the product at the lower cost end of the mid-cost credit segment⁷

§ Amigo completed its initial public offering ("IPO") on the London Stock Exchange on 4 July 2018

§ Increased customer interaction through the Amigo app, which enhances our ability to offer customers easy access to manage their finances

§ 'Treating Customers Fairly Champion' at the Consumer Credit Awards in July 2018

⁷ See infographic on amigoplc.com/investors for mid cost credit market

Commenting on the Q1 results, Glen Crawford, CEO of Amigo, said:

We are delighted to deliver our first set of results as a listed company. The continuing strong growth in our customer numbers, loan book and revenues reflect the increasing market penetration of our product and positions Amigo well for the future.

Our successful IPO was a key milestone for Amigo and its employees, allowing us to bring our product to a wider customer base. We offer a single product - a guarantor loan at a fixed APR of 49.9% to those who are unable to access traditional sources of finance due to their credit history.

There is significant growth potential for Amigo in the UK and we already occupy an unrivalled first mover position as a guarantor lender in the UK mid cost credit space. We expect further strong growth in the demand for mid cost credit products which we are well positioned to meet"

Analyst, investor and bondholder conference call

There will be a webcast at 09:30 (BST) on 30 August 2018 for analysts, investors and bondholders. This will be hosted by Amigo's CEO, CFO and Head of Legal.

Please register for the webcast via:

https://www.investis-live.com/amigo/5b8539115bdb551000290105/olds 

And to participate in questions please contact either:

a)    [e-mail];

b)    [e-mail];

c)    Or call 020 3745 4960

The presentation pack for the webcast shows the reconciliation between the PLC results and Amigo Loans Group Limited (the 'Bond Group') and is available on amigoplc.com/investors.

Contacts:

Hawthorn Advisors                                                                         [e-mail]

Lorna Cobbett                                                                                   Tel: [phone]

Victoria Ainsworth 

J.P. Morgan Cazenove (Joint Corporate Broker)                        Tel: [phone]

Ina De

Kamalini Hull

RBC Capital Markets (Joint Corporate Broker)                           Tel: [phone]

Oliver Hearsey

Marcus Jackson

Notes to Editors:

About Amigo Loans

Amigo is the leading company in the UK guarantor loans market and offers access to 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, with approximately 88% UK product share as of 31 March 2018. 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 operates within the mid cost credit market providing a simple and transparent product - a guarantor loan at an APR of 49.9%, with no fees, early redemption penalties or any other charges.

Amigo Loans Ltd is authorised and regulated in the UK by the Financial Conduct Authority (FCA).

Business review

Amigo has a simple business model, offering a single transparent product - a guarantor backed loan at 49.9% APR with no additional charges, fees, front loading of interest or prepayment penalties. The product sits firmly in the mid cost credit space a long way from high cost credit which starts at 100% per annum and much nearer to prime rates which the company estimates at up to 35% APR. The simplicity of the product and the ability for a customer to repay at any time without financial penalty has the advantage of also allowing customers the opportunity to improve their credit history.

Loans are offered between 1-5 years of between £500 to £10,000. At the end of June we had approximately 200,000 customers with an average outstanding balance of £4,000 and term outstanding of around 38 months.

In the first quarter of the financial year the business continued to grow its gross loan book with a focus on its core lending. This approach has enabled increased customer numbers, and at the same time managed impairment levels.  The cost/income ratio of the business continues to fall and for the first quarter of 2018 was 17.5% (2017, Q1: 24.5%) which combined with the above has resulted in an expected growth in profitability.

Financial review

Adjusted profit after tax has increased by 31% to £21.8million for the quarter on the back of an increasing loan book and profit after tax increased 4% to £12.3million. The net loan book at 30 June 2018 reflects the transition to IFRS 9 which increased the loss allowance by £44.2million. After booking this additional provision the net loan book has increased by £171.3million compared to 30 June 2017.

On 4^th July 2018 the shareholder loan notes were capitalised immediately prior to listing, resulting in an increase in tangible equity of £207.2million. The strong cash flows of the business mean that Amigo naturally delevers with a net borrowings / gross loan book ratio of 63% compared to 67% at 30 June 2017. Net borrowings / adjusted tangible equity reflects the additional provision and stands at 2.5x, reduced from 2.8x at 31 March 2018 when calculated on a like for like basis (i.e. including the additional IFRS 9 provision and assuming conversion of the shareholder loan notes into equity).

Adjusted basic earnings per share of 5.5p for the quarter show an increase of 31% over the prior year and basic earnings per share increased 7% to 3.1p.

Product awards

Amigo's simple product with no additional fees (even when a customer is in arrears or settles early), no front loading of interest and a cap on the total amount a customer will pay, helps ensure that all customers (both borrowers and guarantors) are treated fairly. For the last five years Amigo has won the Moneynet.co.uk Best Credit Builder product award and recently won the Consumer Credit Awards Treating Customers Fairly Champion. 

Condensed Consolidated Statement of Comprehensive Income

							3 months  ended	3 months  ended	Year  to
							30-Jun-18	30-Jun-17	31-Mar-18
						Notes	£m	£m	£m
Revenue						2	62.9	42.9	210.8
Interest payable and funding facility fees							(9.0)	(6.4)	(30.4)
Shareholder loan note interest							(6.0)	(5.1)	(21.2)
Total interest payable						3	(15.0)	(11.5)	(51.6)
Impairment of amounts receivable from customers1							(16.0)	(6.1)	(44.8)
Operating expenses							(11.0)	(10.5)	(46.2)
IPO costs and related financing						4	(3.9)	-	(2.1)
Profit before tax							17.0	14.8	66.1
Tax on profit						5	(4.7)	(3.0)	(15.5)
Profit attributable to equity shareholders of the Company							12.3	11.8	50.6

				3 months  ended	3 months  ended	Year  to
				30-Jun-18	30-Jun-17	31-Mar-18
Basic and Diluted EPS (pence)			6	3.1	2.9	12.7

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

Consolidated balance sheet (as at 30 June)

				30-Jun-18	30-Jun-17	31-Mar-18
			Notes	£m	£m	£m
Non-current assets
Property, plant and equipment				0.5	0.7	0.6
Intangible assets				0.1	0.1	0.1
Deferred tax asset				7.7	0.2	-
				8.3	1.0	0.7
Current assets
Amounts receivable from customers1			7	656.7	481.6	666.3
Other receivables			8	2.4	2.1	2.3
Cash at bank and in hand				11.9	8.8	12.2
				671.0	492.5	680.8
Total Assets				679.3	493.5	681.5
Current liabilities
Trade and other payables			9	(27.4)	(18.4)	(18.8)
Current tax liabilities				(14.5)	(7.2)	(12.7)
				(41.9)	(25.6)	(31.5)
Non-current liabilities
Borrowings			10	(460.5)	(328.0)	(455.0)
Shareholder loan notes			11	(207.2)	(185.0)	(201.1)
Deferred tax liability				-	-	(0.2)
				(667.7)	(513.0)	(656.3)
Total liabilities				(709.6)	(538.6)	(687.8)
Net assets / (liabilities)				(30.3)	(45.1)	(6.3)
Equity
Share capital				1.0	1.0	1.0
Share premium				0.9	0.9	0.9
Merger reserve				(295.2)	(295.2)	(295.2)
Retained earnings				263.0	248.2	287.0
Shareholder equity				(30.3)	(45.1)	(6.3)

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

Consolidated Statement of Changes in Equity

		Share	Share	Merger	Retained	Total
		capital	premium	Reserve1	earnings	equity
		£m	£m	£m	£m	£m
At 31 March 2017		1.0	0.9	(295.2)	236.4	(56.9)
Total comprehensive income		-	-	-	11.8	11.8
At 30 June 2017		1.0	0.9	(295.2)	248.2	(45.1)
Total comprehensive income		-	-	-	38.8	38.8
At 31 March 2018		1.0	0.9	(295.2)	287.0	(6.3)
					-
IFRS 9 opening balance sheet adjustment2		-	-	-	(37.7)	(37.7)
At 01 April 2018		1.0	0.9	(295.2)	249.3	(44.0)
Total comprehensive income		-	-	-	12.3	12.3
Share based payments		-	-	-	1.4	1.4
At 30 June 2018		1.0	0.9	(295.2)	263.0	(30.3)

¹ - The merger reserve was created as a result of an inter and intra-group reorganisation to create an appropriate holding company structure.

² - Refer to IFRS 9 note 1.2 - IFRS 9 was adopted on 1 April 2018, comparatives have not been restated.

Consolidated Cashflow statement

	3 months  ended	3 months  ended	Year to
	30-Jun-18	30-Jun-17	31-Mar-18
	£m	£m	£m
Profit for the period	12.3	11.8	50.6
Adjustments for:
Impairment provision	16.0	6.1	44.8
Income tax expense	4.7	3.0	15.5
Shareholder loan note interest accrued	6.0	5.1	21.2
Interest expense	9.0	6.4	30.4
Interest charged on loan book	(69.2)	(44.2)	(222.1)
Depreciation of property, plant and equipment	0.1	0.1	0.2
Operating cash flows before movements in working capital	(21.1)	(11.7)	(59.4)
Net movement in working capital	3.3	(1.5)	(1.3)
Tax paid	(2.9)	(3.0)	(7.2)
Interest paid	(0.8)	(0.6)	(28.2)
Proceeds from intercompany funding	0.1	2.4	3.1
Repayment of intercompany funding	(0.5)	-	(5.0)
Proceeds from external funding	17.0	45.0	276.6
Repayment of external funding	(12.0)	-	(105.0)
Net cash used in operating activities before loans issued and collections on loans	(16.9)	30.6	73.6
Loans issued	(109.8)	(109.8)	(470.1)
Collections	126.4	83.6	404.4
Net cash used in operating activities	(0.3)	4.4	7.9
Investing activities
Purchases of property, plant, equipment	-	-	(0.1)
Net cash used in investing activities	-	-	(0.1)
Financing activities
Proceeds from issue of share capital	-	-	-
Net cash from financing activities	-		-
Net increase / (decrease) in cash and cash equivalents	(0.3)	4.4	7.8
Cash and cash equivalents at beginning of period	12.2	4.4	4.4
Cash and cash equivalents at end of period	11.9	8.8	12.2

Notes to the condensed financial statements

1.      Accounting policies

1.1.     Basis of preparation of financial statements

Amigo Holdings PLC is a public company listed upon the London Stock Exchange  (LSE: AMGO).

These consolidated financial statements have been prepared on the going concern basis under the historical cost convention and in accordance with the recognition and measurement requirements of the International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). These interim financial statements have not 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 2018.

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 2018, other than that this is the first set of the Group's financial statements where IFRS 9 and IFRS 15 have 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 2018 are available upon request from the Company's registered office at Nova, 118-128 Commercial Street, Bournemouth, United Kingdom, BH2 5LT.

The comparative figures for the financial year ended 31 March 2018 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. 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 30 August 2018.

1.2.     Significant accounting policies

Details of the accounting policies applied are those set out in Amigo Loans Holdings Group Limited's Financial Statements 2018.

In applying the accounting policies, management has made appropriate estimates in many areas, and the actual outcome may differ from those calculated. The key sources of estimation uncertainty at the balance sheet date were the same as those that applied to the consolidated financial statements of the Group for the period ended 30 June 2017.

During the period a number of new standards and amendments to IFRS became effective and were adopted by the Group. The impact of IFRS 9 is described below, otherwise none of the other changes had a material impact on the Group's net cash flows, financial position, total comprehensive income or earnings per share.

	31-Mar-18	01-Apr-18	01-Apr-18
	Closing	IFRS 9 Impact	Opening
	£m	£m	£m
Non-current assets
Property, plant and equipment	0.6	-	0.6
Intangibles	0.1	-	0.1
Deferred tax	-	7.9	7.9
	0.7	7.9	8.6
Current assets
Gross loan book	668.1	-	668.1
Loss allowance	(21.2)	(44.2)	(65.4)
Loan book	646.9	(44.2)	602.7
Deferred broker fees	19.4	(1.4)	18.0
Amounts receivable from customers	666.3	(45.6)	620.7
Other receivables	2.3	-	2.3
Cash at bank and in hand	12.2	-	12.2
	680.8	(45.6)	635.2
Total assets	681.5	(37.7)	643.8
Total liabilities	(687.8)	-	(687.8)
Net assets / (liabilities)	(6.3)	(37.7)	(44.0)
Capital and reserves
Called up share capital	1.0	-	1.0
Share premium	0.9	-	0.9
Merger reserve	(295.2)	-	(295.2)
Retained earnings	287.0	(37.7)	249.3
Shareholder equity	(6.3)	(37.7)	(44.0)

There have been no changes to the classification of financial assets and liabilities upon adoption of IFRS 9.

1.2.3. IFRS 9

IFRS 9 'Financial Instruments' is the replacement of IAS 39 'Financial instruments, recognition and measurement' and will be applied for the first time in the Group's financial statements for the year ended 31 March 2019. The key changes to the Group's accounting policies resulting from its adoption of IFRS 9 are summarised below.

The assessment below is dependent on management's judgements and estimates particularly with regard to forward looking assumptions. The full impact of adopting IFRS 9 on the consolidated Financial Statements will depend on the financial instruments that the Group holds during the current financial year, the macroeconomic environment and judgements made during the year.

1.2.3.1. Classification

IFRS 9 adopts a classification and measurement approach for financial assets which reflect 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 Though 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):

• 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.

The Group does not believe that the new classification requirements will have a significant impact upon the measurement bases for its financial assets. Loans to customers that are classified as loans and receivables and measured at amortised cost under IAS 39 will also be measured at amortised cost under IFRS 9.

1.2.3.2. Impairment

IFRS 9 replaces the 'incurred loss' model in IAS 39 with a forward-looking 'expected credit loss' (ECL) model. IFRS 9 requires an impairment provision to be recognised on origination of loan, based on its anticipated credit loss. Under IAS39, a provision is made where there has been objective evidence of impairment, such as a borrower falling into arrears. Additionally, the IAS39 methodology included a provision against up to date loans for losses where the loss has been incurred but not yet reported and is likely to be reported during a short emergence period. Under IFRS9, a provision will be made against all up to date loans to reflect the probability that they will default within the next 12 months, which is longer than the emergence period used under IAS39, thus accelerating the recognition of impairment charges. The application of expected lifetime credit losses to assets which have experienced a significant increase in credit risk also results in an uplift in impairment versus IAS39. IFRS 9 only changes the timing of impairment losses with earlier recognition of impairment provisions on a growing loan book; the Group's cash flows are unaffected by the change in accounting standard and the lifetime losses are the same under both IAS 39 and IFRS 9.

1.2.3.2.1. 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 12-month ECLs, that is the portion of ECLs that result from default events that are estimated within 12 months after the reporting date and are recognised from the date of initial recognition. 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. 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. The Group's ECL methodology considers the collective estimated cash shortfalls for each credit risk portfolio based on forecast loss curves. Forecast loss curves are prepared on a risk segment basis for annual vintages and combine long term historical trends, current credit loss behaviour and management judgements. The impairment requirements of IFRS 9 are complex and require management judgements, estimates and assumptions, particularly in the following areas, which are discussed in detail below:

• assessing whether the credit risk of an instrument has increased significantly since initial recognition; and

• incorporating forward-looking information into the measurement of ECLs. The Group performs separate credit and affordability assessments on both the borrower and guarantor. When a borrower misses a payment, both parties are kept informed regarding the remediation of the arrears. 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. In substance the Group treats the borrower and the guarantor as having equivalent contractual responsibilities.

1.2.3.2.2. Assessment of significant change in credit risk

In determining whether the credit risk (i.e. risk of default) on 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 on an ongoing basis and available 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 significant change. To determine whether there has been a significant increase in credit risk the following 2 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 on a collective basis (see note 1.2.3.2.1.). The Group considers the credit risk of an asset to have increased significantly since initial recognition if, based on the Group's analysis, the remaining lifetime probability of default is determined to have increased significantly since initial recognition for assets with a payment flag.

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. The Group reassesses the flag status of all loans at each month end on a collective basis and remeasures the proportion of the book which has demonstrated a significant increase in credit risk based on the latest payment flag data.

1.2.3.2.3. Definition of default

The Group considers an account in default if it is more than three contractual payments past due. 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.

1.2.3.2.4. Forward looking information

The Group incorporates forward-looking information into 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 factored into the credit loss models utilising four scenarios based on independent forecasts of future economic conditions and applying a probability-weighted approach. These scenarios include a base, an upside and two downside scenarios.

1.2.3.3. Transition

The Group has taken advantage of the exemption and not restated comparative information for periods up to 31 March 2018. Differences in the carrying amounts of financial assets resulting from the adoption of IFRS 9 are recognised in retained earnings and reserves as at 1 April 2018. The estimated adjustment (net of tax) of the adoption of IFRS 9 on the opening balance of the Group's equity at 1 April 2018 is approximately £38m. This represents:

 • £nil related to the classification requirements;

 • An expected reduction of approximately 7% of the carrying value of the loan book related to increased IFRS 9 impairment charge;

 • An increase of approximately 17% of the additional IFRS 9 impairment provision in the carrying value of the deferred tax asset; and

• An expected reduction of approximately £38m of net assets related to increased IFRS 9 impairment charge. The above are estimates and will not be finalised until all transition work has been completed. The impact is the Group's best estimate pending finalisation of the transition work. The Group continues to refine, monitor and validate certain elements of the impairment models and related controls ahead of full reporting of IFRS 9 impacts later in the financial year.

1.2.3.4. Disclosure

IFRS 9 requires additional disclosures, in particular with regards to credit risk and ECLs. The Group's implementation project included assessing the disclosure requirements, identifying data gaps and implementing the necessary system and controls changes to enable the required disclosure.

2.      Revenue

Revenue consists of interest revenue and is derived from a single segment in the UK. 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.

3.    Interest payable and funding facility

		Period to	Period to	Year to
		30-Jun-18	30-Jun-17	31-Mar-18
		£m	£m	£m
Bank interest payable		0.5	0.1	2.9
Senior secured notes interest payable		7.7	5.8	25.0
Funding facility fees		0.8	0.5	2.5
		9.0	6.4	30.4
Shareholder loan note interest		6.0	5.1	21.2
Total interest payable		15.0	11.5	51.6

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

4.    IPO costs and related financing

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.

					Period to 30-Jun-18	Period to 30-Jun-17	Year to 31-Mar-18
					£m	£m	£m
IPO costs and related financing					3.9	-	2.1

IPO costs

IPO costs relate to advisor, legal fees, and financing fees in respect of the listing of the Group in July 2018.

5.    Taxation

The applicable corporation tax rate for the period to 30 June 2018 was 19% and the effective tax rate is 27.6%. The Group's effective tax rate for the period to 30 June 2017 was 20.3%. The current period effective tax rate is reflective of the applicable corporate tax rate for the year and reconciling items.

6.      Earnings per share

				30-Jun-18	30-Jun-17	31-Mar-18
				Pence	Pence	Pence
Basic and Diluted EPS				3.1	2.9	12.7
Adjusted Basic EPS				5.5	4.2	18.1

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

Reconciliations of the earnings used in the calculations are set out below:

				30-Jun-18	30-Jun-17	31-Mar-18
				£m	£m	£m
Earnings for basic EPS				12.3	11.8	50.6
Shareholder loan note interest				6.0	5.1	21.2
IPO and related financing costs				3.9	-	2.1
Less: tax on Shareholder loan note interest and IPO costs				(0.4)	(0.3)	(1.5)
Earnings for adjusted basic EPS				21.8	16.6	72.4
Weighted average number of shares (m)				400.0	400.0	400.0

There were 1,000,000 ordinary shares in issue at 31 March 2018 and 30 June 2017. 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 31 March 2018 and 30 June 2017 as a result in the change in the number of shares without a corresponding change in resources.

7.      Amounts receivable from customers

			30-Jun-18	30-Jun-17	31-Mar-18
Amounts receivable from customers			£m	£m	£m
Due within one year			368.6	275.0	373.6
Due in more than one year			269.6	191.9	273.3
Net Loan book			638.2	466.9	646.9
Deferred broker costs
Due within one year			13.2	9.3	12.7
Due in more than one year			5.3	5.4	6.7
			656.7	481.6	666.3

				30-Jun-18	30-Jun-17	31-Mar-18
				£m	£m	£m
Neither past due nor impaired
Up-to-date				628.9	443.2	605.6
In arrears but not impaired
1 payment in arrears				50.7	23.6	40.3
2 payments in arrears				9.2	3.6	7.7
In arrears and impaired
3-5 payments in arrears				21.4	6.0	14.5
				710.2	476.4	668.1
Impairment provision on amounts receivable from customers				(72.0)	(9.5)	(21.2)
				638.2	466.9	646.9
Deferred broker costs				18.5	14.7	19.4
				656.7	481.6	666.3

8.      Other receivables

				30-Jun-18	30-Jun-17	31-Mar-18
				£m	£m	£m
Current
Other receivables				0.9	0.9	0.9
Prepayments and accrued income				1.5	1.2	1.4
				2.4	2.1	2.3

9.      Trade and other payables

				30-Jun-18	30-Jun-17	31-Mar-18
				£m	£m	£m
Current
Accrued senior secured note interest				14.0	11.0	6.3
Trade payables				0.8	1.2	0.8
Amounts owed to group undertakings				-	-	0.4
Taxation and social security				0.8	1.1	0.2
Accruals and deferred income				11.8	5.1	11.1
				27.4	18.4	18.8

10.   Bank and other borrowings

				30-Jun-18	30-Jun-17	31-Mar-18
				£m	£m	£m
Non-current liabilities
Amounts falling due 3-4 years
Bank loan				67.2	-	62.2
Amounts falling due 4-5 years
Bank loan				-	9.5	-
Amounts falling due > 5 years
Senior secured notes				393.3	318.5	392.8
				460.5	328.0	455.0

The bank facility, and the senior secured notes are secured by a charge over the ALGL Group's assets and a cross guarantee given by other ALGL group companies.           

11.   Shareholder loan notes

		30-Jun-18	30-Jun-17	31-Mar-18
		£m	£m	£m
Amounts falling due > 5 years
Shareholder loan notes		207.2	185.0	201.1

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

12.   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 Group structure and related parties have not changed since 31 March 2018.

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.

13.   Amigo Loans Group Limited ('ALGL')

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 bond reporting requirements.

14.   Post Balance Sheet Events

On the 4 July the company floated 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.

 

END

 

 

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