Lender Amigo hails surging revenue but profits count the cost of IPO
Amigo witnessed a 50 per cent leap in sales across the first quarter of its new financial year, but its share price remained flat as the costs of its recent stock market float impacted profits.
The figures
The lender reached £62.9m revenue for the three months to the end of June, a whopping 47 per cent rise year on year, while adjusted profit after tax stoof at £21.4m, a 31 per cent jump on the same period of 2017.
However, the £4m financing costs of its July IPO and £6m related to interest on shareholders’ loan notes meant profit after tax only grew four per cent to £12.3m. Impairments also rose to 25 per cent, up from 14 per cent the year before.
But the guarantor loans business continued to grow its net loan book 37 per cent to £638m, and also counted a customer base of 194,000, up 40 per cent as its CEO hailed “significant growth potential” in the UK.
Why it’s important
Amigo credited its mid-market 49.9 per cent APR loan offering for its rapid customer growth in its latest quarter, where borrowers without strong credit histories nominate a friend or family member who can wipe out the debt in case they default.
However, it has faced accusations that it allowed customers to manipulate affordability checks, with a Times investigation knocking £140m off its share price in the middle of July.
The company’s July IPO should help it reach more customers, it claimed, while the float gave it a healthy cash flow of £207m.
What the chief executive 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,” chief executive Glen Crawford said.
“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.”
What shares did
Shares recovered quickly from an initial drop from £2.80 to £2.72 as the market opened this morning to remain flat.