1. Accounting policies

1.1 Basis of preparation of financial statements

General information

Amigo Holdings PLC is a public company limited by shares (following IPO on 4 July 2018), listed on the London Stock Exchange

(LSE: AMGO). The Company is incorporated and domiciled in England and Wales. With effect from 15 June 2023 the Company's registered office is Unit 11a, The Avenue Centre, Bournemouth, Dorset, United Kingdom BH2 5RP.

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 loans to individuals. Previously, its principal activity was to provide individuals with guarantor loans from £2,000 to £10,000 over one to five years. No new advances on the legacy guarantor loans have been made since November 2020. Following FCA approval to return to lending, in October 2022, Amigo launched, on a pilot basis, a new guarantor loan as well as an unsecured loan product under the RewardRate brand. With the Fallback Solution being implemented, leading to a cessation of trade and implementation of a wind down plan in March 2023, there has been no new lending in the six months to 30 September 2023.

The condensed interim financial statements do not constitute the statutory financial statements of the Group within the meaning of section 434 of the Companies Act 2006. The statutory financial statements for the year ended 31 March 2023 were approved by the board of directors on 27 July 2023 and have been delivered to the Registrar of Companies. The consolidated financial statements of the Group as at and for the year ended 31 March 2023 are available upon request from the Company's registered office at Unit 11a, The Avenue Centre, Bournemouth, Dorset, United Kingdom BH2 5RP. Those accounts have been reported on by the Company's auditor, MHA. The report of the auditor:

i)      Drew attention to the fact that the Directors had taken the decision to wind down the operations and subsequently liquidate the Group and Parent Company and therefore do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements. Accordingly, the financial statements were prepared on a basis other than going concern.

The condensed interim financial statements for the six months ended 30 September 2023 have not been audited or reviewed by auditors and were approved by the board of directors on 18 December 2023.

Accounting policies

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 2023. There are certain items of expenditure which cannot be provided for under accounting standards but will be used up in the orderly wind down of the Group. Once this expenditure is incurred, the Group will no longer report a positive shareholder equity position. The cost reduction exercise undertaken by Amigo aims to minimise this expenditure in order to maximise returns to Scheme creditors.

Basis of preparation

The condensed interim financial statements for the six months ended 30 September 2023 have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted for use in the United Kingdom (UK). The condensed interim financial statements should be read in conjunction with the statutory financial statements for the year ended 31 March 2023. The figures for the financial year ended 31 March 2023 are not the Group's statutory accounts for that financial year but are an extract from those statutory accounts for interim reporting.

These interim financial statements have been prepared on a basis other than going concern under the historical cost convention, except for financial instruments measured at amortised cost or fair value. The presentational currency of the Group is GBP, the functional currency of the Company is GBP and these financial statements are presented in GBP. All values are stated in £ million (£m) except where otherwise stated.

Going concern

In determining the appropriate basis of preparation for these financial statements, the Board has undertaken an assessment of the Group and Company's ability to continue as a going concern for a period of at least twelve months from the date of approval of the financial statements.

In undertaking a Going Concern review, the Directors considered the Group's decision to switch the Scheme from the Preferred to the Fallback Solution, announced on 23 March 2023.

The Directors believe there is no general dispensation from the measurement, recognition and disclosure requirements of IFRS despite the Group not continuing as a going concern. Therefore, IFRS is applied accordingly throughout the financial statements. The relevant accounting standards for each part of the Financial Statements have been applied on the conditions that existed and decisions that had been taken by the Board as at or prior to 30 September 2023.

The switch to the Fallback Solution required that the trading subsidiary, Amigo Loans Ltd ("ALL"), stopped lending with immediate effect and be placed into an orderly wind down, with the result that all surplus assets after the wind down will be transferred to the Scheme creditors. A further requirement of the Fallback Solution is that ALL be placed into liquidation within two months of payment of the final Scheme dividend.  No value will be attributed to the ordinary shares of the Company in this scenario.

Given the cessation of trading on 23 March 2023, alongside no apparent realistic strategic capital raise or viable alternative solutions, and the requirement dictated by the Scheme to ultimately liquidate Amigo Loans Ltd (the Group's sole cash-generating unit), the Board has determined that the Financial Statements for the six months to 30 September 2023 will be prepared on a basis other than Going Concern.

The Board has prepared a set of financial projections for the solvent wind down following the cessation of new lending in March. Alongside a base scenario which indicates ample liquidity available through the course of wind down, a downside scenario has been collated that stresses the primary cash flow risks to the Group that are considered severe but plausible. Stresses have been applied to:

•     Removal of any prospective debt sales

•     Increased Scheme liabilities 

•     Increased overhead spend

Despite the stresses applied, the Group maintains sufficient liquidity in the period. It is therefore considered only a marginal risk that the Group is unable to remain solvent during the orderly wind down. The key risks that would prevent this from being achieved can be considered the risks applied in the downside scenario alongside potential regulatory action or intervention.

1.2 Amounts receivable from customers

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"). Note, the Group does not hold any financial assets that are equity investments; hence the below considerations of classification and measurement only apply to financial assets that are debt instruments. A financial asset is measured at amortised cost if it meets both of the following conditions (and is not designated as 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.

Business model assessment

In the assessment of the objective of a business model, the information considered includes:

·      the stated policies and objectives for the loan book and the operation of those policies in practice, in particular whether management's strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets;

·      how the performance of the loan book is evaluated and reported to the Group's management;

·      the risks that affect the performance of the business model (and the financial assets held within that business model) and its strategy for how those risks are managed;

·      how managers of the business are compensated (e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected); and

·      the frequency, volume and timing of debt sales in prior periods, the reasons for such sales and the Group's expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group's stated objective for managing the financial assets is achieved and how cash flows are realised.

The Group's business comprises primarily loans to customers that are held for collecting contractual cash flows. Debt sales of charged off assets are not indicative of the overall business model of the Group. The business model's main objective is to hold assets to collect contractual cash flows.

In light of the decision to enter into the Fallback Solution and the trigger for an orderly wind down of the business the Board re-evaluated this business model assessment, noting also that any reclassification of financial assets identified as requiring reclassification is the first day of the next accounting period.  The assessment was no longer considered appropriate for the RewardRate portfolio for which a decision has been made to sell as a result of the wind down strategy and has been classified as Held for Sale at 30 September 2023 (see note 9). The RewardRate portfolio has been reclassified under fair value through other comprehensive income with effect from 1 April 2023.

Assessment of whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, "principal" is defined as the fair value of the financial asset on initial recognition. "Interest" is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time, as well as profit margin.

In assessing whether the contractual cash flows are SPPI, the Group considers the contractual terms of the instrument.

This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. The Group has deemed that the contractual cash flows are SPPI and hence, loans to customers are measured at amortised cost under IFRS 9.

ii) Impairment

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

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; and

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 default events over the expected life of a financial instrument.

At the reporting date, the Group held both guarantor and personal loans on balance sheet. In relation to the guarantor loans, in substance the borrower and the guarantor of each financial asset have 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 an asset. The new guarantor and unsecured loan products under the RewardRate brand have been disclosed as held for sale assets as at 30 September 2023 and therefore does not attract ECL impairments.

The Group has assessed that ECLs on customer loans and receivables is a key sensitivity, refer to note 2.1.1 for further detail of the judgements and estimates used in the measurement of ECLs and note 2.1.3 for detail on impact of forward-looking information on the measurement of ECLs.

iv) Assessment of significant increase in credit risk (SICR)

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 used in this assessment is payment status flags, which occur in specific circumstances such as a short-term payment plans, breathing space 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 to staging, and judgements on what signifies a significant increase in credit risk.

v) Derecognition

Receivable from customers are derecognised when the entity's contractual rights to the financial asset's cash flows have expired.

vi) Definition of default

The Group considers an account to be 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 in IFRS 9 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 immediately cured and transitions back from stage 3 within the Group's impairment model.

vii) 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 customer's contract at any stage. Depending on the forbearance measure offered, an operational flag will be added to the customer's account, which may indicate significant increase in credit risk and trigger movement of this balance from stage 1 to stage 2 in impairment calculation. See note 2.1.2 for further details.

2. Critical accounting assumptions and key sources of estimation uncertainty

Preparation of the financial statements requires management to make significant judgements and estimates.

Judgements

The preparation of the condensed consolidated Group financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the consolidated statement of financial position date and the reported amounts of income and expenses during the reporting period. The most significant uses of judgements and estimates are explained in more detail in the following sections:

·      IFRS 9 - measurement of ECLs:

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

·      Definition of default is considered by the Group to be when an account is three contractual payments past due (note 1.2.vi).

·      Multiple economic scenarios - the probability weighting of base, downside and severe downside scenarios to the ECL calculation (note 2.1.3).

·      Complaints provisions:

·      Estimating the probability, timing and amount of any outflows (note 2.2.1).

·      Restructuring provision:

·      Required resource plan and subsequent timing of staff exits

·      Assessing supplier requirements and recognition of onerous contracts

·      Accounts receivable from customers:

·      Judgement is applied in assessing whether the contractual cash flows are "SPPI", the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition

·      Held for sale assets:

·      Assessing probability and timing of an asset's prospective sale (note 9)

Estimates

Areas which include a degree of estimation uncertainty are:

·      IFRS 9 - measurement of ECLs:

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

·      Probability of default ("PD"), exposure at default ("EAD") and loss given default ("LGD") (note 2.1.1).

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

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

·      Complaints provision:

·      Upheld Scheme claimants that have made payments post the Scheme Effective Date which will be due a refund in full. This estimate evaluates historical data and applies future assumptions for the timing of refunds (note 2.2.1).

·      Estimation of the cash liability is based on assumptions around net future collections which uses assumptions around credit losses, valuation of impaired debt and future operating expenses.

·      Restructuring provision:

·      Severance costs of staff exits which are contingent on the timing of exit and therefore contingent on future resource required.

·      Held for sale asset:

·      Estimate of expected fair value less costs to sell, valued via a market approach (note 9).

2.1 Credit impairment

2.1.1 Measurement of ECLs

The Group has adopted a collective basis of measurement for calculating ECLs. In the current year the loan book is bifurcated into those customers who have had a Covid-19 forbearance plan and those who have not.

The allowance for ECLs is calculated using three components: PD, LGD and EAD. The ECL is calculated by multiplying the PD (twelve month or lifetime depending on the staging of the loan), LGD and EAD and the result is discounted to the reporting date at the original EIR.

The twelve month and lifetime PDs represent the probability of a default occurring over the next twelve months or the lifetime of the financial instruments, respectively, based on historical data and assumptions and expectations of future economic conditions.

EAD represents the expected balance at default, considering the repayment of principal and interest from the balance sheet date to the default date. LGD is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that the Group expects to receive.

2.1.2 Assessment of significant increase in credit risk (SICR)

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 presence of certain payment status flags on a customer's account. This is the Group's primary qualitative criteria considered in the assessment of whether there has been a significant increase in credit risk. If a relevant operational flag 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. Examples of this include operational flags for specific circumstances such as short-term payment plans and breathing space granted to customers.

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 (one payment past due is equivalent to 30 days past due), which is aligned to the IFRS 9 rebuttable presumption of more than 30 days past due. This is the primary quantitative information considered by the Group in significant increase in credit risk assessments.

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.

2.1.3 Forward-looking information

The Group assesses the impact of forward-looking information on its measurement of ECLs. While the Group has historically analysed effects of a range of macro-economic variables it believes the most significant factors likely to impact future credit losses will be unemployment and inflation. These factors are considered on a qualitative basis in estimating PDs and weighting scenarios and ultimately reflect The Group's expectations of future credit losses. 

The Group has modelled and weighted three different macroeconomic scenarios - a base, a downside and a severe downside scenario.

·      The base scenario broadly represents probability of defaults whereby historic performance is extrapolated with an expectation for future deterioration applied on a judgemental qualitative basis relating to expectations on the aforementioned macroeconomic factors. A weighting of 25% has been applied to reflect the Group's assumption that whilst the current macroeconomic environment has the potential to improve based on Office for Budgetary Reporting ("OBR") forecasts, the rate of inflation is likely to remain higher than recent historical levels throughout the remaining life of the loan book and therefore likely to impact customers in an adverse manner. Further consideration has been given to the rise in interest rates, which are expected to remain materially above recent prior year averages.

·        The downside scenario uplifts the base scenario probability of default by an average of 17%. Incremental to the base scenario assumptions, further consideration has been given to the uncertainty surrounding macroeconomic forecasts and the potential for a range of outcomes. In the downside scenario, the uplift to PDs is modelled based on a further potential deterioration in the economy and the macroeconomic factors that may impact the Group's customer base, for example inflation and unemployment spike, which would result in an income shock and rise in defaults.  A weighting of 50% has been applied to this scenario to reflect a prudent judgement on future credit losses given the high level of uncertainty in economic forecasts.

·      The severe downside applies a further uplift of 25% to the probability of default in the downside scenario, weighted at 25%. This scenario captures the income shock outlined in the downside scenario along with incremental credit losses the Group may reasonably expect to experience in the managed wind down of the business. 

The following table details the absolute impact on the current ECL provision of £9.3m if each of the three scenarios are given a probability weighting of 100%.

The scenarios above demonstrate a range of ECL provisions from £9.0m to £9.5m.

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.

2.2 Complaints provisions

2.2.1 Complaints provision - estimation uncertainty

Complaints provision included in the statement of financial position refers to a provision recognised for liabilities arising from the Scheme. The provision represents an accounting estimate of the expected future outflows arising from the Scheme, using information available as at the date of signing these financial statements.

Management evaluates on an ongoing basis whether the Scheme provision should be recognised, revising previous judgements and estimates as appropriate; however, there is a wide range of possible outcomes.

Calculating the total liability associated with the Scheme involves significant, complex management judgements and estimations. While the population of Scheme claimants that have an upheld claim is materially known, there is significant judgement and estimation required in evaluating the range of possible outcomes of potential Scheme cash redress available for those claimants as the business winds down. Estimating the future cash redress and recognising a provision for its value requires applying judgement on both future cash inflows arising from loan book collections and debt sales alongside expected future operating expenses. Therefore, inherently any such future projections involve a high level of uncertainty. The Scheme cash redress component of the overall Scheme provision is estimated to be £106.1m, which as per the Scheme, assumes all assets of the business are committed to upheld Scheme claimants. The calculation of the Scheme provision in total as at 30 September 2023 is based on Amigo's best estimate of the future total obligation, which totals £208.0m.

The total Scheme liability has increased by £16.6m compared to the prior year. The increase in provision is primarily due to an increase in the estimation of the previously outlined cash redress, which based on the latest expectations and judgements applied has increased approximately £9m to £106.1m, alongside an increase in observed uphold rates resulting in higher balance adjustments and customer cash refunds, partly offset by utilisation of outsourced Scheme handling costs.

Alongside the cash redress component, the Scheme provision is also comprised of balance adjustments which have decreased with the passage of time due to the collection of customer balances, and an estimate of refunds to upheld Scheme claimants for collections made since Scheme effective date, which will be redressed in full and attract compensatory interest.

While uncertainty and judgement exist across the components that comprise the overall Scheme provision, they ultimately are included in the calculation of total available Scheme cash redress, itself a component part of the provision. Therefore, applying sensitivity analysis to the overall cash redress captures a number of possible scenarios within the component parts. 

The following table details the effect on the complaints provision considering incremental changes on the key cash redress assumption, should current estimates and estimates that are used to derive its value prove too high or too low.

1.     Cash redress. Sensitivity analysis shows the impact of a 10-percentage point change in the amount of the cash redress provision.

The Board considers that this sensitivity analysis covers the full range of likely outcomes based on the fact that a significant portion of claims has been decisioned already.

It is possible that the eventual outcome may differ materially from the current estimate and could materially impact the financial statements as a whole. This is due to the risks and inherent uncertainties surrounding the assumptions used in the provision calculation.

3. Revenue and segment reporting

Revenue comprises interest income on amounts receivable from customers. Loans are initially measured at fair value (which is equal to cost at inception) plus directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest rate method. Revenue is presented net of amortised broker fees, which are spread over the expected behavioural lifetime of the loan as part of the effective interest rate method.

The effective interest rate ("EIR") is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument (or a shorter period where appropriate) to the net carrying value of the financial asset or financial liability. The calculation takes into account all contractual terms of the financial instrument and includes any incremental costs that are directly attributable to the instrument, but not future credit losses.

The Group has one operating segment based on the geographical location of its operations, being the UK. IFRS 8 requires segment reporting to be based on the internal financial information reported to the chief operating decision maker. The Group's chief operating decision maker is deemed to be the Group's Executive Committee ("ExCo") whose primary responsibility is to support the Chief Executive Officer ("CEO") in managing the Group's day-to-day operations and analyse trading performance.

Amigo Loans Ireland Limited, registered in Ireland, was sold by the Group to the CEO of the business in a management buy-out on 28 February 2023. Amigo Loans Ireland Limited was not a reportable operating segment, as it was not separately included in the reports provided to the strategic steering committee. In the prior period the results of these operations were included in the "other segments" column.

For the six months to 30 September 2023 all the Group's performance related to the UK operating segment, and therefore segment information is not presented. The table below presents the Group's performance on a segmental basis for the six months to 30 September 2022 in line with reporting to the chief operating decision maker:

1.        Gross loan book represents total outstanding loans and excludes deferred broker costs.

2.        Net loan book represents gross loan book less provision for impairment.

The carrying value of property, plant and equipment and intangible assets included in the consolidated interim statement of financial position materially all relates to the UK in the period to 30 September 2022; hence the split between UK and Ireland has not been presented. The results of each segment have been prepared using accounting policies consistent with those of the Group as a whole.

4. Interest payable and funding facility fees

No interest was capitalised by the Group during the period. Funding facility fees include non-utilisation fees and amortisation of initial costs of the Group's senior secured notes.

5. Modification of financial assets

Covid-19 payment holidays and any subsequent extensions were assessed as non-substantial financial asset modifications under IFRS 9.

The carrying value of historical modification losses at the period end was £nil (H1 2023: £1.7m).

6. Taxation

The applicable corporation tax rate for the period to 30 September 2023 was 25.0% (H1 2023: 19.0%) and the effective tax rate is negative 1.5% (H1 2023: 0.0%).

The Finance Act 2021 increased the UK corporation tax rate from 19% to 25% with effect from 1 April 2023.

7. Profit/(loss) per share

Basic profit/(loss) per share is calculated by dividing the profit/(loss) for the period attributable to equity shareholders by the

weighted average number of ordinary shares outstanding during the period.

Diluted profit/(loss) per share calculates the effect on profit/(loss) per share assuming conversion of all dilutive potential

ordinary shares. In the current period, following the closure of the performance-related share incentive plans and non-performance-related schemes, there were no dilutive potential ordinary shares. Dilutive potential ordinary shares in the prior year were calculated as follows: 

i)      For share awards outstanding under performance-related share incentive plans such as the Share Incentive Plan ("SIP") and the Long-Term Incentive Plans ("LTIPs"), the number of dilutive potential ordinary shares is calculated based on the number of shares which would be issuable if the end of the reporting period is assumed to be the end of the scheme's performance period. An assessment over financial and non-financial performance targets as at the end of the reporting period has therefore been performed to aid calculation of the number of dilutive potential ordinary shares.

ii)     For share options outstanding under non-performance-related schemes such as the two Save As You Earn schemes ("SAYE"), a calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated is compared with the number of share options outstanding, with the difference being the dilutive potential ordinary shares.

Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase earnings per share.

1.       Adjusted basic profit/(loss) per share and earnings for adjusted basic (loss)/earnings per share are non-GAAP measures.

The Directors are of the opinion that the publication of the adjusted profit/(loss) per share is useful as it gives a better indication of ongoing business performance. There are no profits attributable to shareholders as net assets, after the cost of collecting the loan book, are committed to Scheme creditors. Reconciliations of the earnings used in the calculations are set out below.

1.       Adjusted basic (loss)/earnings per share and earnings for adjusted basic (loss)/earnings per share are non-GAAP measures.

8. Customer loans and receivables

The table shows the gross loan book and deferred broker costs by stage, within the scope of the IFRS 9 ECL framework.

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.

Ageing of gross loan book (excluding deferred brokers' fees and provision) by days overdue:

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.

1         Passage of time relates to amortisation of loan balances over the course of the financial year, due to cash payments partially offset by interest accruals.

As shown in the table above, the loan book inclusive of deferred broker cost decreased from £111.6m to £33.8m at 30 September 2023. This was primarily driven by the effect of passage of time (loan balances amortising throughout the period), customer settlements and no originations on these loans in the year. The originations in the year to 31 March 2023 related to the RewardRate brand. These are shown as held for sale assets (note 9).

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

1         Passage of time relates to amortisation of loan balances over the course of the financial year, due to cash payments partially offset by interest accruals.

As shown in the above tables, the allowance for ECL decreased from £30.1m at 30 September 2022 to £9.3m at 30 September 2023. The overall provision has reduced as the book amortises and ages in the absence of new originations on these loans.

The following table splits the gross loan book by arrears status, and then by stage respectively for the period ended 30 September 2023.

The following table splits the gross loan book by arrears status, and then by stage respectively for the period ended 30 September 2022.

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

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. Held for sale assets

Following FCA approval to return to lending, in October 2022, Amigo launched, on a pilot basis, a new guarantor loan as well as an unsecured loan product which feature dynamic pricing to reward on-time payment with reducing interest rates and penalty-free annual payment holidays. The new products were released under the RewardRate brand. Following the implementation of the wind down plan on 23 March 2023, new lending immediately ceased. It is considered that, under IFRS 5, the RewardRate loan book meets the criteria as a held for sale asset. This conclusion has been reached in the assessment of the following criteria outlined in IFRS 5:

•     Carrying amount to be recovered principally through the sale - given the loan book will run for approximately five years based on loan term, this far exceeds the current wind down plan timeline and any period that would be economical to collect. The only reasonable solution to maximise creditor returns is to sell the RewardRate loan book rather than collect it to term. 

•     Asset is available for immediate sale - The loan book is considered to be available for sale reasonably imminently.

•     Sale is highly probable - It is considered given the nascency of the book and the robustness of creditworthiness, alongside firm indications of interest, a sale is highly probable.

Given the Group expects to sell the RewardRate loan book at a discount (i.e. below carrying value) it will be measured at the fair value less costs to sell.

It is not expected to incur costs to sell the asset and therefore can recognise the asset at fair value - i.e. the price it expects to receive from a third party purchasing the asset.

10. 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. The tables analyse 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).

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

2.       The unobservable inputs in the fair value calculation of amounts receivable from customers are balance adjustments arising from upheld Scheme claims, expected credit losses, forecast cash flows and discount rate. As both balance adjustments and lifetime expected credit losses are embedded in the calculation, this results in a fair value lower than the carrying amount.

3.       Senior secured notes are presented in the financial statements net of unamortised fees. As at 30 September 2023, the gross principal amount outstanding was £0m (H1 2022: £50.0m). The fair value reflects the market price of the notes at the end of the period.

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 the blended effective interest rate of the instruments. 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 as at 30 September 2022 has been taken at the Bloomberg Valuation Service ("BVAL") market price.

All financial instruments are held at amortised cost. There are no derivative assets in the current or prior period.

The Group's activities expose it to a variety of financial risks, which can be categorised under credit risk and treasury risk. The objective of the Group's risk management framework is to identify and assess the risks facing the Group and to minimise the potential adverse effects of these risks on the Group's performance. Financial risk management is overseen by the Group Risk Committee alongside other principal risks: operational, regulatory, strategic and conduct risks.

11. Other receivables

12. Trade and other payables

¹ Other creditors include an onerous contract provision of £1.1m in relation to the RewardRate (RR) product. The product has a number of associated supplier contracts that cannot either be terminated, or a termination fee has been negotiated to end the contract early. These unavoidable costs are expected to be greater than the economic benefits of collecting or selling the RR loan book.

13. Bank and other borrowings

The Group's Senior secured notes in the form of £49.7m high yield bonds with a coupon rate of 7.625% which were due to expire in January 2024, were redeemed early in March 2023.

14. Provisions

Provisions are recognised for present obligations arising as the consequence of past events where it is more likely than not that

a transfer of economic benefit will be necessary to settle the obligation, which can be reliably estimated.

Customer complaints redress

The total Scheme liability has increased by £16.6m compared to the prior year. The increase in provision is primarily due to an increase in the estimation of the previously outlined cash redress, which based on the latest expectations and judgements applied has increased approximately £9m to £106.1m, alongside an increase in observed uphold rates resulting in higher balance adjustments and customer cash refunds, partly offset by utilisation of outsourced Scheme handling costs. Utilisation in the period totalled £4.7m, primarily relating to the cost incurred in processing decisioning of Scheme claims.

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.

The Group anticipates the redress programme will be complete, or substantially complete, within nine months of the period end. Uncertainties exist around the timing of completion of the redress programme due to operational complexity and the potential for customer appeals.

Restructuring provision

As at 30 September 2023, the Group recognised a restructuring provision totalling £4.6m in respect of the expected cost of staff redundancies and liquidator costs due to wind down of the business.

15. 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.

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 0.25p 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. The Group plans to cancel these deferred shares in due course.

Dividends

Dividends are recognised through equity, on the earlier of their approval by the Company's shareholders or their payment.

The Board decided that it would not propose a final dividend payment for the year to 31 March 2023 or an interim dividend for the period to 30 September 2023. Total cost of dividends paid in the period is £nil (2022: £nil).

16. Immediate and ultimate parent undertaking

The immediate and ultimate parent undertaking is Amigo Holdings PLC, a company incorporated in England and Wales. The consolidated financial statements of the Group as at and for the year ended 31 March 2023 are available upon request from the Company's registered office at Unit 11a, The Avenue Centre, Bournemouth, Dorset, United Kingdom BH2 5RP.

17. Share-based payments

The Group issued share options and awards to employees as part of its employee remuneration packages. The Group operated three types of equity settled share scheme: Long Term Incentive Plan ("LTIP"), employee's savings-related share option schemes referred to as Save As You Earn ("SAYE") and the Share Incentive Plan ("SIP").

Share-based payment transactions in which the Group receives goods or services as consideration for its own equity instruments are accounted for as equity settled share-based payments. At the grant date, the fair value of the share-based payment is recognised by the Group as an expense, with a corresponding entry in equity, over the period in which the employee becomes unconditionally entitled to the awards. The fair value of the awards granted is measured based on Company specific observable market data, considering the terms and conditions upon which the awards were granted. Following the implementation of the wind down plan in March 2023, the fair value of all share-based payments was £nil. The charge to the consolidated statement of comprehensive income was £0m in the six months to 30 September 2023 (H1 2023: charge of £0.1m).

18. Investment in subsidiaries and structured entities

The following are subsidiary undertakings of the Company at 30 September 2023 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.

The Irish entity, Amigo Loans International Limited, together with its subsidiary, Amigo Loans Ireland Limited, was sold by the Group to the CEO of the business in a management buy-out on 28 February 2023. Following write off of the intercompany balances there were net liabilities in the Irish entities of less than £0.1m. Consideration for the disposal was £1.

As part of the ongoing orderly wind down of activities the Group commenced proceedings to dissolve dormant companies in the structure.  The formal dissolution of six previously dormant entities was confirmed on 30 October 2023. Amigo Loans Luxembourg S.A. was also dissolved on 1 December 2023.

1       Registered at Unit 11a, The Avenue Centre, Bournemouth, Dorset BH2 5RP, England.

2       Registered at 9, Rue de Bitbourg, L-1273 Luxembourg.

3     Registered at 40a Station Road, Upminster, Essex, RM14 2TR, England.

4     The Irish entity, Amigo Loans International Limited, together with its subsidiary, Amigo Loans Ireland Limited, was sold by the Group to the CEO of the business in a management buy-out on 28 February 2023.

·     Under liquidation

19. Related party transactions

The Group had no related party transactions during the six-month period to 30 September 2023 that would materially affect the performance of the Group. Details of the transactions for the year ended 31 March 2023 can be found in note 24 of the Amigo Holdings PLC financial statements.

20. Post Balance Sheet events

Dissolution of entities - As part of the ongoing orderly wind down of activities the Group commenced proceedings to dissolve dormant companies in the structure.  The formal dissolution of six entities identified as dormant in note 18 was confirmed on 30 October 2023. Amigo Loans Luxembourg S.A. was also dissolved on 1 December 2023.

Proposed transaction and suspension of listing - On 17 October 2023 Amigo announced that it has entered into an exclusivity agreement with Craven House Capital plc and others, to enable them and the Company to further explore a potential transaction. On 16 November 2023 the Company announced that the exclusivity arrangement has been terminated with immediate effect, and that all work on the proposed transaction had ceased.  During the period 17 October - 17 November

the FCA had suspended the Company's listing on the Premium segment of the Official List and trading on the Main Market of the London Stock Exchange because of the lack of information about the assets in relation to the proposed transaction, which could prevent the smooth operation of the market in the shares of the Company.

Appendix: alternative performance measures

Given the implementation of the Fallback Scheme and the winding down of the Group's business, the Board believes that disclosure of alternative performance measures ("APMs") is no longer relevant, and therefore they are no longer disclosed.