Guarantor loans company Amigo (AMGO) has warned that its very survival is under threat as it reported a massive plunge into the red last year, sending the share price crashing 23% lower to 7.42p. That values the lender at just £35 million.
The company said that a Financial Conduct Authority investigation into customer credit worthiness checks could have a number of potential outcomes, including a significant fine and the requirement to perform a back-book remediation exercise.
Amigo admitted that this ‘material uncertainty’ calls into questions its ability to continue as a going concern. A potential sustained high level of customer complaints redress, or a negative outcome of the FCA investigation, could put the company out of business when added to Covid-19 issues.
MASSIVE LOSSES
For the year ended 31 March 2020, Amigo reported a pre-tax loss of £37.9 million, compared with a profit of £111 million in the previous 12 months, despite posting revenues up 8.7% to £294.2 million.
The impairment over revenue ratio rose to 38.5% from 23.7%.
Amigo said complaints cost of £126.8 million and complaints provision of £117.5 million as at 31 March 2020 was driven by an increase in complaints volumes.
Unsurprisingly, Amigo did not declare a final dividend for the year, making the first half 3.1p per share dividend the sole payout.
Amigo also appointed Jonathan Roe as chairman designate.
