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Edited Transcript of AMGO.L earnings conference call or presentation 28-Nov-19 9:30am GMT

Half Year 2020 Amigo Holdings PLC Earnings Call

Dec 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Amigo Holdings PLC earnings conference call or presentation Thursday, November 28, 2019 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Hamish S. Paton

Amigo Holdings PLC - CEO & Executive Director

* Nayan Vithaldas Kisnadwala

Amigo Holdings PLC - CFO & Executive Director

* Nicholas Beal

Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer

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Conference Call Participants

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* Alexander B. Wright

Apollo Global Management, Inc. - MD of Credit

* Anand Dhananjay Date

HSBC, Research Division - UK MidCap Equity Analyst

* Benjamin Edward Bathurst

RBC Capital Markets, Research Division - Research Analyst

* Colin Jackson

Goodbody Stockbrokers, Research Division - Research Analyst

* Gurjit Singh Kambo

JP Morgan Chase & Co, Research Division - Head of Diversified Financials Research

* John Cronin

Goodbody Stockbrokers, Research Division - Financial Analyst

* Mark Thomas

Hardman & Co. - Analyst

* Mark Watts;Banca IMI

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Presentation

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [1]

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Good morning, everyone. We can start. Yes. Brilliant. Good morning. Welcome to Amigo's half year results for the 6 months ended 30th September 2019. Thank you for joining us here today at the London Stock Exchange and also to those dialing in. I'm Hamish Paton, Chief Executive. And with me today are our CFO, Nayan Kisnadwala; and our Chief Regulatory and Public Affairs Officer, Nick Beal.

I'll first take you through some of the highlights of the half year before handing you over to Nayan to go into the numbers in more detail. Nick will then run through where we are with regulation before handing back to me to give an update on what we're doing operationally. I will then finish with a summary and outlook.

Let's first look at the highlights on Slide 5. Over the first half, we've seen solid customer growth and revenue growth with strong levels of lending to new customers, demonstrating continued demand for our guarantor loan product. We've also made a positive start in addressing the issues highlighted in our first quarter results presentation. Clear plans are in place to drive the required improvements in our operations, and our impairment levels are in line with guidance given at the first quarter update.

We've also increased our provision for complaints. We believe this is a prudent approach, and Nayan will go into more detail on this in a few moments. Our business continues to generate significant levels of cash. And over the period, we've achieved further reductions in our cost of funding. As a result, we have a strong and flexible balance sheet. We're, therefore, proposing to pay an interim dividend of 3.1p, which represents 1/3 of the fiscal dividend 2019. Full year guidance for our key operating metrics remain unchanged.

Moving to Slide 6. I'll just pick out a couple of financial highlights as Nayan will cover each in more detail. Firstly, customer numbers are up just under 18% year-on-year. A strong marketing campaign focused on the relationship between borrowers and guarantors helped drive leads, and a solid performance from our (inaudible) team contributed to this encouraging result. Over 12,000 net new customers were added in Q2 alone.

The impairment ratio is in line with the renewed guidance we gave at Q1, so are our operating costs, which do reflect some of the investments we started to make. We've also wanted to be clear about the level of complaints provision, splitting out this element from operating costs. Later on, I'll talk about some of the actions we're taking to improve our operational performance. As a result, we've reported a slight reduction in statutory profit of 1.9% and a 24.2% reduction in adjusted profit after tax. Adjusted profit after tax takes into account senior secured note repurchases, RCF fees and the release of a prior year tax provision.

With that, I will hand over to Nayan, who will take you through the numbers.

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [2]

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Thanks, Hamish. We continue to see strong demand for our product with growth in customer numbers and net loan book of 17.9% and 8.8%, respectively, versus the first half of the prior financial year which, with Amigo's consistent revenue yield, supported double-digit revenue growth. Initiatives to optimize the group's capital structure, including the open market repurchase of high-yield senior secured notes, have allowed us to reduce underlying finance costs once nonrecurring senior secured note buyback and RCF fees are excluded.

As expected, the H1 impairment charges increased in line with guidance given at our Q1 results. This is primarily as a result of the operational capacity constraints within the collections function, where we had not grown our teams in line the significant increase in customer numbers as well as a requirement to spend more time with each of our customers. Operating expenses are up versus the prior year, reflecting continued investments in strengthening our operations. Our customers' complaints expense of GBP 10.4 million relating to the customer redress settled in the period and estimated future costs arising from known cases as well as future customer complaints. I will talk more of this in a moment.

A GBP 2.9 million tax provision has been released in the period, reducing the P&L tax charge. This is partially offset by the GBP 2.2 million of previously capitalized fees relating to the RCF written off in Q1. Both elements have been excluded from the adjusted profit after tax calculation.

Basic earnings per share decreased by 9.3% to 7.8p. Adjusted basic earnings per share decreased by 30.6% to 7.5p. This reflects both the lower profit numbers as well as the increase in average number of shares post IPO. Net borrowings to adjusted tangible equity has improved to 2x.

On the next slide, we have shown a consistent increase in number of customers. We ended the period with nearly 223,000 borrowers, each with a unique guarantor. That's 17.9% up from the same period last year. In August, we talked about a renewed focus on growing new customer numbers, and it's encouraging to see the strong growth in new leads being generated. Our track record and continued demand for the guarantor product gives us confidence in our ability to continue to grow customer numbers.

On Slide 10, we focus on our loan originations. On the left-hand side, we have the origination split between new business and repeat lending; and on the right-hand side, we have the acquisitions channel mix. We originated GBP 213 million of new loans in the U.K. for half 1, a decrease of GBP 7.7 million compared to the prior year. New business is up significantly, both year-on-year and quarter-on-quarter, and constitutes 69% of total originations in half 1. As expected, as we tighten a little bit the criteria over the second quarter, we have seen a step down in repeat lending. We expect to see similar levels of relending over the current quarter with a pickup towards the end of the fiscal year.

On Slide 11, we focus on our revenue and margins. We delivered revenue of GBP 145.4 million in the half year, which is 11.8% above the first half of the previous year. The growth has been driven by the increase in number of customers we serve and the corresponding growth in the loan book. We have a simple business model with a representative APR of 49.9% and no other fees. This translates into a gross interest margin of 41.2%, which remains unchanged from the prior year.

Our cost of funds improved in the fiscal year, and actions we have taken will have a full year positive impact. Our stable gross margin and improving cost of funds gives us a net interest margin of 31.2%, a slight improvement for the first half of the prior year, which was 31%. The improvement in NIM is dampened by the GBP 2.2 million of capitalized RCF fees written off in the period.

Moving to the next slide. The chart on this page shows impairment as a percentage of income. The impairment ratio of 31.1% for the first half is in line with the guidance given at our Q1 results. Impairments stabilized in the second quarter in line with expectations, improving from 33.3% of revenue, ex debt sale in Q1, to 31.6% in Q2. The expected increase over the half year was primarily as a result of the operational capacity constraints within collections, which we highlighted in our first quarter results. We're investing in our teams to address this with recruitment accelerated over the second quarter. We are also investing in technology and are leveraging both resource and technology from third parties.

On the left-hand side of Slide 13, we have the impairment provision with the staging components; and on the right-hand side, with the loan book aging buckets. We have an impairment provision balance of GBP 86.6 million at the half year, which is GBP 15.2 million higher than the end of the previous half year. Provision coverage has increased from 9.6% to 10.6%. From a staging perspective, you will note that the provision related to stage 3 assets has grown to GBP 35.8 million, and that will get to stage 2 assets have grown marginally to GBP 20.6 million. Stage 1 decreased slightly year-on-year. The key driver for these changes is the increase in customers falling to arrears, particularly impacting stage 3, as a result of the issues we discussed in collections. The loan aging reflects the same trend. Our proportion of receivables which are current or less than 31 days past due declined to 93.5% compared to 95.7% last year.

Slide 14 shows that we continue to deliver strong operating leverage. Overall, our simple business model, online customer journey and bespoke technology allow us to have a very low cost-to-income ratio, giving significant operating leverage to scale up. Our overall costs at GBP 40.7 million for the half year, having this from prior years -- prior periods due to the accelerated investment in our people and processes as well as a provision we have recognized for customer complaints.

Over the first half, the Financial Ombudsman Service highlighted to us a backlog of complaints that was awaiting their judgment and offered us the opportunity to review this again in-house. We took the decision to work with the FOS and to tactically increase our uphold rate in order to clear the backlog. This is now unwinding.

Historically, we've had very low level of complaints. However, following some increase in the number of complaints we have received in-house, we have reviewed our complaints process in detail and the root cause of complaints received. We are listening hard to what the customer -- our regulators are saying. We have further tightened processes in upskilling our complaints team. With the FOS backlog unwinding, we expect to revert to more normalized, lower uphold rates and reduced average redress.

Excluding the provision for complaints, the ratio of operating expense to revenue was 20.8%. This is in line with the guidance we gave at Q1 and what we see as a continued appropriate level as we continue to invest in our operations to improve customer experience and operational resilience. It is worth noting that all investments will, over time, have a direct positive impact on our collections, impairments and complaints. Our intention for guidance, of course, is to have insight into how we expect to manage the operational efficiency of our business. Whilst dealing with complaints should not be treated as an exceptional and we do not do so, we believe stripping it out of our guidance gives a better idea of our underlying operating expense and operating leverage. Our cost-to-income ratio will continue to be best-in-class and remains a key competitive advantage.

The next slide shows the complaints provision on the balance sheet in more detail. As you can see, that's increased over the period, GBP 7.5 million. 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 2 components: one, being a provision for complaints received but not processed; and secondly, an allowance of expected valid future complaints related to certain existing loans based on our risk appetite. We continue to monitor our policies and processes to ensure that we respond appropriately to customer complaints.

Slide 16 shows the continued strong cash generation of our business. Our high cash flows reduce gearing despite strong growth in the loan book. The decrease in the adjustment made for tax reflects an additional 2 payments made in fiscal year '20 to a change in corporation tax payment dates and the release of a GBP 2.9 million tax pay -- tax provision. On the left-hand side, you'll note that net inflows from investing and financing activities were GBP 6.5 million and as the surplus of collections or originations was sufficient to fund operating activities, tax payments and financing costs. Gearing, defined here as net borrowings to adjusted tangible equity, continues to improve as all our outlays are predominantly covered by internally generated cash.

Slide 17 shows the funding structure as of September 19 and June 19. We continue to optimize our funding and have further improved our cost of funds from 5.2% at the end of last financial year to 4.3%. The senior secured notes become callable in January 2020 at a call premium of 3.8%. With the senior secured notes coupon at around 500 basis points higher than the interest cost of the securitization facility, we had it opportunistic in buying back approximately GBP 85.9 million of the senior secured notes.

There are several benefits to the securitization: it provides additional funding capacity; a diversified funding source; and over time, a cheaper cost of capital. Over the first half, we increased this facility to GBP 300 million. We also extended the term of the RCF, improved the margin and reduced its size to GBP 109.5 million. We had GBP 116 million undrawn funding facility at 30th September 2019, which, combined with the strong cash flows, covers over 12 months of growth capacity. A summary of the current gearing and covenant position is shown in the appendix, with all benchmarks and covenants comfortably met. The business has continued to improve its gearing level, which reflects the strength of our cash flow.

I'd like to end by giving a quick update on our operation in Ireland. Demand has been encouraging. And as at the end of September, we had over 1,800 customers. That's a great start from just February this year. The loan book as at the end of September was EUR 4.8 million, more than doubling from Q1. On the back of this initial success, we're investing in more capacity to meet the impressive growth in customer numbers, with particular focus on compliance as we develop the business. It's a positive start and gives us confidence in our ability to roll out a much-needed product into new markets.

With that, I'd like to hand over to Nick, who will give us an update on rate developments.

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Nicholas Beal, Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer [3]

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Thanks, Nayan. Turning to Slide 20. We've received an update from the FCA's Guarantor Understanding Multi Firm Work, which was first announced in July 2018 and highlighted the FCA's -- highlighted in the FCA's portfolio strategy letter from earlier this year, which I've mentioned in several of my recent updates. As you will recall, the aim of the review was for the FCA to better understand the role of guarantors, both at the point of payout of the loan but also when called upon to make a payment. The review focused on the information made available to potential guarantors and whether this is sufficient to ensure they reach an informed decision. We have 10 touch points with the guarantor before paying out to emphasize their responsibilities. As expected, the review identified points where our customer journey could be enhanced, including increasing the verbal explanation of key information to potential guarantors and increasing disclosure of the likelihood that a guarantor could be called upon to make payments.

Amigo has always sought to stay ahead of regulation and is reassured that we're already implementing changes that aligned to the actions the FCA raised. We will prioritize efforts to adopt remaining changes as soon as reasonably possible. Amigo believes that implementing these enhancements will not fundamentally alter the attractiveness of the guarantor loan product relative to the other higher-cost alternatives for our borrowers, nor will it deter willing guarantors from supporting deserving friends and family to allow them to be financially included.

The FCA supervision team are also carrying out other reviews, and we have a positive engagement with them. These are: first, the FCA supervision team are carrying out a review into guarantor assessments. We've not been specifically involved in this work, but are listening to the discussion. Although our customers had problems in their past, it's vitally important they can afford to repay us in the future. We continue to evolve our own affordability assessments for both borrowers and guarantors. In particular, we continue to consider how open banking solutions can be deployed in some parts of that assessment. However, the fact that less than 10% of payments come from a guarantor is evidence that our affordability assessments are working and provide good outcomes for guarantor -- for our customers.

Second, the review into repeat lending. Our business model does not rely on repeat lending, but we're happy to grant additional credit to our best customers. The FCA have carried out a detailed research across a wide variety of high- and mid-cost credit lenders. As you will be aware, we announced some significant changes to our recent lending scorecards last quarter to stay ahead of where we thought regulation may go. As Nayan has highlighted, this has impacted our lending figures this quarter, but it's the right action for all of our stakeholders. And we're beginning to see top-ups come back, but not to the level we'd previously been.

The FCA are continuing to highlight with regulators of other sectors the needs of vulnerable customers. The FCA published draft guidance earlier this year, and we're one of the firms that has helped them to carry out the required cost/benefit analysis for their proposed changes. We expect these to be published in the spring of next year.

In conclusion, we continue to improve our business to ensure it remains compliant and sustainable, meeting future regulatory expectations. We're continuing to listen to and engage with the FCA. We both remain committed to ensuring that customers receive good products with good outcomes.

I will now hand you back to Hamish.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [4]

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Thanks, Nick. I'd like to spend a few minutes on our overall strategic plan and then drill down into what we're doing operationally and particularly to address some of the issues we spoke about in August. Our core strategy is to grow a sustainable business providing responsible life-improving finance to the underserved. Most importantly, we put the financial well-being of our customers before all else. We have achieved a market-leading position, and with that comes responsibility. We aim to be a role model, to work with the regulator to ensure we need -- we lend in the long-term interest of both the borrower and the guarantor. I'm pleased that we've now received some feedback from the FCA after their review into guarantor lending. This provides greater clarity as to what we need to do moving forward, and we will seek to implement the necessary changes to our processes as soon as possible.

Moving beyond regulation. Our immediate focus is to deliver sustainable growth from our core offer, increasing activity and driving operational enhancements throughout the business. I'll go into more detail in a few moments.

But we also have a heritage of constant innovation and experimentation. We'd like to test ways of increasing the relevance and competitiveness of our core proposition. In part, this is about pricing. And over the coming quarters, we'd like to test a more differentiated pricing structure. This is likely to include offering lower rates to lower-risk customers, potentially opening up our product to a broader consumer base. In addition, we've looked in-depth at customer needs and at developing variance of our core proposition. These make us more relevant for different loan purposes and help improve the penetration of our different broker segments.

We also intend to build on our leading position in the guarantor sector and test expansion into adjacent spaces. We've got a strong brand awareness and existing or historic relationships with a large number of customers. We will, of course, do this in a way that doesn't detract from our core. So over the next 12 months, we'll seek to develop and test product extensions with broader market appeal.

Internationally, we continue to support our business in Ireland, where we're seeing strong demand for our guarantor product and growing customer numbers. Once we're comfortable the U.K. business is operating to its potential, we'll look again outside of our current footprint.

Finally, keeping Amigo special is essential. Attracting, retaining and rewarding the best people is critical to the continued success of this business. If you get a chance, please do come down and see us in our offices in Bournemouth. It's a fantastic environment with a high-energy and passionate team.

Turning to Slide 23. In August, we spoke about the focus on new customer growth, and we are seeing the first encouraging results of this focus. Over the half year, we repositioned the brand with our new advertising campaign. We also made significant enhancements to our digital marketing approach. These 2 initiatives contributed to a substantial increase in applications and payout. This is all achieved without increasing our marketing spend, meaning a better return for each pound spent. The broker channel continued to grow, and ongoing investment in these key partners continued to produce positive results. The work we're doing on pipeline flow-through and conversion will complement marketing activity in terms of driving customer numbers.

We've not been contacting all our customers as quickly as I would like, and this does impact conversion levels. We're, therefore, making improvements to the customer journey, a key dropout point as well as investing in loan handling capacity, both in people and more efficient call-handling technology. This will facilitate an increase in customer numbers without a corresponding rise in customer acquisition costs.

Let's now look at Slide 24 and in more detail on what we've been doing to address the capacity constraints in our collections and the consequent impact on impairment levels. As we highlighted in August, our collections team hasn't grown in line with the increase in our loan book. Some of the gap has been filled with productivity improvements, but we have seen a fall in the collections activity per account. To address this, we have a major change program in place. We are significantly increasing the size of our collections team. Over the second quarter, we've stepped up recruitment in operations, and we've now signed the lease on a new property, which will provide additional space for our new team members from quarter 4. Getting new colleagues up and running and trained to Amigo standards will take time, but we expect to have the current intake fully productive towards the end of the current quarter.

In the meantime, we're increasing agent effectiveness by using third-party resource and technology. An outbound dialer has accelerated the number of customers we've been able to reach over the second quarter. This gives us more resource to spend more time on each call with our current customers.

We're also adopting more structured collections processes and will prioritize activity on the most effective areas through the use of predictive analytics. The data and analytics experience that we've got from our credit decisioning will support our work in collections. There's clearly much left to do, but I'm encouraged by the start we've made putting these action plans in place.

Turning to Slide 25. We're reconfirming our guidance for our key operating metrics for the full year. You'll note that we've shown here the operating cost-to-revenue ratio. Our intention for guidance for cost is to give insight into how we expect to manage the operational efficiency of the business. Whilst dealing with complaints shouldn't be treated as an exceptional and we don't -- and we do not do so, we believe stripping it out for our guidance provides a better idea of our underlying operating leverage.

So in summary, it's been an encouraging second quarter. We're seeing continued demand for our guarantor loan product and made a good start in addressing issues highlighted in the first quarter. And I'm pleased with the greater level of clarity that comes with the feedback from the FCA review into guarantor lending. We have a robust business model built on the premise that a personal guarantor doesn't just provide security, but it also encourages better behavior from the borrower. Our cash generation continues to grow, and we've reduced funding costs further over the first half. We're focused hard on driving the required improvements operationally. With the right action plans in place, we remain confident that we're heading in the right direction.

With that, I'll open up the presentation to questions. Thank you very much.

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Questions and Answers

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Benjamin Edward Bathurst, RBC Capital Markets, Research Division - Research Analyst [1]

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Ben Bathurst from RBC. And I'll start with a couple of questions on complaints. I just wondered, could you give any color possibly on the proportion of the added provision in Q2 that relates to future complaints versus relating to existing loans? And then maybe secondly on complaints. I just wondered, are you seeing any change in the propensity of new customers to make a complaint when you look at new business versus the historic levels? Is there any kind of change in what new customers -- or their attitude towards making a complaint?

Then moving on to product developments. I think you mentioned you're considering moving into adjacent spaces. Would you consider looking both higher and lower along the sort of the risk spectrum in terms of client profile, if you were to move into other places for new products? And I wondered also, is the current thinking to focus just on products that have a guarantor component or would you also consider other types of lending products as well?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [2]

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Ben, thanks for the questions. I'll try and answer them in turn. I think from a complaints provisioning point of view, at this point in time, I don't think we're particularly keen to kind of break out the provision into what we see as kind of complaints on the existing book versus future. There's some commercial sensitivity to the way we've done the complaints provisioning, so I wouldn't want to go into any further detail at this point in time.

In terms of the propensity, the velocity of complaints that are coming through, through the course of this financial year, we have seen a tick-up. I think Nayan has talked about that in his presentation. I don't think we're seeing particularly a marked difference in the type of complaints that we've been seeing. We have spent a lot of time internally looking through, analyzing sorts of complaints that we've been getting. We've been keen to make sure that we understand the root causes of any of those complaints, and where applicable, we are very actively flowing that back through into the kind of current live lending decisions that we're making, in particular, and anywhere else in the business.

From a product point of view, I think we're open to ideas. I think what I said at the beginning was we have historically been a very innovative entrepreneurial business. And therefore, I think we should use the assets that we've got: great brands, great operation down in Bournemouth, a great understanding of this type of consumer. And I'd be open to kind of moving in both directions, both higher and lower, moving into higher- and lower-risk profiles. But I wouldn't want to do anything before we've cracked the core business, and I wouldn't want to do anything before we've really tested and really understood what the impact is on our business.

So in the medium term, it's all about focusing on the core business. What I want to do is have one eye to the future and begin to think about the sorts of things we would do, begin to sow some seeds and begin to test things. But we'll do that with due care and consideration as we move forward.

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Colin Jackson, Goodbody Stockbrokers, Research Division - Research Analyst [3]

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Colin Jackson from Goodbody. Just a follow-up one on complaints. Can you just give us a sense of kind of where average uphold rates are currently and what you assume going forward? And do you assume kind of maintaining where it is at the minute? Is there a step-down? I know you said you're getting through the fast backlog. And what's kind of -- I'm just trying to get a sense of kind of what's employed within your -- within the current provisioning.

And then secondly, under investment in the team. Can you just give us a sense on how much the headcount in the collections team has increased? And kind of -- is that investment done now as you get people up to speed? Or is there kind of -- are you targeting kind of more higher there?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [4]

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Yes, certainly. Thanks, Colin. Taking the point around uphold rates and complaints first. We have been working very kind of collaboratively with FOS to kind of work through the backlog that we've got. And therefore, relatively speaking, the uphold rates have been relatively high. I think as we move forward, I would hope to see some of those uphold rates begin to reduce in part because we're taking some of the learnings, rolling that back through the business, but we're also spending more time examining each of the complaints as they come through, and I think that will help us with those uphold rates. So I think, as we look forward, there is an implied reduction in uphold rates as we move forward.

In terms of the investment in the team, I think through the second quarter, our collections team has increased by circa 20 FTE. I think there's probably still more to come. They're not yet on board. They're not yet productive because we're taking through our training academy. We have also complemented that with additional resource through our outsourcing partner, to the extent of the circuit, a dozen heads at the moment with our outsourcing partner. I would continue to see that increase because I think we're still under pressure. If you look at some of the core operational metrics within the complaints -- within the collections team, we're still feeling some of that pressure. So I think we will need to continue to build, and I think that's reflected in our operating cost income ratio as we move forward.

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John Cronin, Goodbody Stockbrokers, Research Division - Financial Analyst [5]

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I have one follow-up actually on that point. It's John Cronin from Goodbody. I'm sorry if you touched on this earlier because...

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [6]

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That's okay.

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John Cronin, Goodbody Stockbrokers, Research Division - Financial Analyst [7]

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I was at the [Diversion] Money presentation until a few minutes ago. But just on the arrears and on the development of arrears in the context of your investment in collections, would it be too soon to expect an improvement in arrears in the third quarter given that you're continuing to invest in your collections team? Any specific guidance you could give around how we should think about that in terms of evolution quarter-on-quarter would be helpful.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [8]

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Yes. I think it would be too soon to begin to think about a decrease coming through. We've got plans in place. I think they take time to kind of bed-in, not least on the people side, but we'll also be looking to bring new technology in to help us with our productivity.

I don't think it's quick fix. We've guided to the end of the year. We haven't changed that guidance on impairment. But I think as we look further out beyond the end of this fiscal year, I'll begin to see things kind of improving. But yet -- we've obviously yet to go on next year.

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Mark Thomas, Hardman & Co. - Analyst [9]

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So Mark Thomas of Hardman. Two quick follow-ups really. One, in terms of the provision against complaints. Can you give any indication or color as to how accurate in the past your received, but not processed has proved to be to the ultimate provision? It concerns as to whether or not, obviously, the level of provision is sufficient. So any color you can give on that?

And secondly, in terms of the cost-income ratio. Seems as something's pushing it up, obviously, in terms of the higher investment in collections and also to meet the incremental demands of the regulator. Can you give us some color as to the scale to which those are pushed up so we can then get a view on the color of the efficiency improvements that sort of bring it back down to leave it stable overall?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [10]

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Let's answer the first one first. Might -- I might need a bit further clarity on the second question and we can come back to that in a second.

From a provisioning point of view with complaints, the first provision that we made was in quarter 1, and the provision we've made in quarter 2 in H2 -- H1 is the second one. So I think it's very early to call out the accuracy of our historic provisioning. So it's, I think, too early to say on that front.

Could you repeat the second question for me on cost-to-income just so I'm really clear?

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Mark Thomas, Hardman & Co. - Analyst [11]

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Yes. So I mean I had the impression that you're basically saying where we are was broadly stable, you would expect, the cost-to-income ratio to go forward. What I was just wondering was a bit more color as to the bits pushing it up in terms of the regulation and the extra investment in the collection side and the bit pulling it down being the efficiency, just to get sort of a sense of the scale of each of those moving parts.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [12]

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Nayan?

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [13]

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So we are increasing investments, as we said, in all our operational functions. At the same time, we have reengineering initiatives to ensure that we become more efficient in many of our activities. For example, cost of paper, I mentioned last time, too, and we are focused on reducing some of those costs, bank fees, et cetera. So we -- while we're investing in improving the capacity of all our operation functions, not just in response to regulation but because we believe that's the right thing to do for us to serve our customers better, okay? We are trying to find [reengineering] saves so that -- we have guided to the cost-income ratio, and we are sticking with that operating cost-to-income ratio and should be fairly stable to what we have.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [14]

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I think the one bit of color I'd add to Nayan's answer -- thanks, Nayan -- is that payroll as a percentage of the cost-to-income is relatively small. So if you look at payroll to income, it's only 6% roughly. And therefore, the investments that we are making in the operational side of the business don't drive a very significant increase in the cost-to-income ratio. And so therefore, if you look at the other costs, for example marketing costs, I think we've done a good job of maintaining those in line, but working on the operational side of the business to make sure that marketing spend, as an example, is as efficient and productive as it can be. Thank you.

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Gurjit Singh Kambo, JP Morgan Chase & Co, Research Division - Head of Diversified Financials Research [15]

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It's Gurjit Kambo, JPMorgan. Just 3 questions. Firstly, just on the technology spend and the technology stack. How are you thinking about that in terms of -- you've been in the business now for a few more months. Do you see more investment required to meet, I guess, the future need of Amigo? And how significant do you think that will be? That's the first question.

Secondly, given the sort of operational capacity issues you highlighted at Q1, obviously we've seen some good growth in customer numbers and loan book in the quarter. I'm a little bit surprised by it given you flagged that there were issues on the capacity side than you already sort of started to grow that. And then finally, just on regulation. And Nick, is there anything in terms of some of the other areas that the FCA is looking at when we may hear from the FCA?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [16]

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Yes. Thanks, Gurjit. In terms of the technology stack, I've always been pretty impressed with the technology we've got at Amigo. In large part, virtually all of it is in-house. And the thing that I like about it is, we're very nimble. If we want to make changes, need to make changes, we're very good at implementing those. There are some things that we need to complement the current stack with. And so things like [dialer] technology and making sure that we've got expertise in that area in particular just to make sure that the [calling] environment is as efficient and productive as it can be. So there will be some investments. And equally, if we begin to look at other things like pricing and new products, that will require fairly significant changes. So at some point, if we're going to evolve the strategy into other areas, I think there will be some spend that we've got from a tech point of view.

The operational capacity constraints, yes, so I think it's a fair observation. We said it in quarter 1. Long-term value in this business is underpinned by customer growth, so we will seek to continue to drive customer growth. We just need to make sure we've got everything in the back end to support that growth, and we're focused really hard on doing that as well. Nick, from a regulation point of view?

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Nicholas Beal, Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer [17]

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Yes. In terms of regulation, the regulatory overview is being done by the supervision team within the FCA, and supervision will forever be ongoing. That's never going to stop. But one of the key -- there are 3 key things that they're working on that I had highlighted: the affordability, they'll look at vulnerability and relending. And I think we'll see FCA announcements in relation to all 3 of those in the first half of next year would be my guess.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [18]

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Any other questions in the room? Anand.

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [19]

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Yes. It's Anand from HSBC. I've got quite a few at the moment, I'm quite sure. On the increasing number of customers falling into arrears, aside from your operational collection issues, can you just remind us what are the main reasons there? And are they changing slightly from the customer side? And I'll do the rest later.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [20]

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Sorry. Just so I'm clear, so more customers falling into arrears?

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [21]

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Yes. Is it -- are there specific reasons from the customer side? And are they changing?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [22]

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I don't think so.

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [23]

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Or is it the same kind of mix as normal?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [24]

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I think it's a mix. So we've seen an uptick in the number of customers fall into arrears in each of our kind of risk segments, for example, each of the (inaudible) parts which is what in part leads me to think that as much as anything, when we've broken it down and analyzed it, a big part of it is around operational capacity. So we're seeing it across all different kind of customer groups. It's not confined to a particular segment. And therefore, I think that's an opportunity for -- that's why we focus so hard on the operational side.

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [25]

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On the debt, is it -- should we still be expecting that you basically retire all of that as soon as you can?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [26]

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Nayan?

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [27]

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So we -- we're looking at -- we'll continue to look at those open-market buying opportunities related to our cash flow. And -- but we still want to keep a diversified source of funding. So that's the balancing act. So...

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [28]

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How much is that diversified cost of funding worth to you? Because that debt is expensive, right? And you can clearly do better. I'm just trying to get a sense of, as we look into next 12, 18 months, potentially you could bring your interest rates down quite a long way.

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [29]

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Yes, we could. So we are going to look at -- as you know, the bonds become callable in January '20 at 3.8% premium. So we'll look at that, at that -- around that time line.

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [30]

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And then it's an operational one, I suppose. Can you just remind me? When your guys are on the phone to guarantors, can you just walk me through exactly what they say to them? So do they say, just FYI, one in x guarantors will end up making a payment across our business? On average, 1 in 10 payments is made by a guarantor? Is that how you lay out to them?

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Nicholas Beal, Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer [31]

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So that's -- so to date, that's not been part of the conversation we've been having. That's one of the things the FCA have sort of highlighted. We make it very clear that less than 10% of payments are made by a guarantor. That's -- I mean that's something that we've been very up front about in terms of individual guarantors stepping in. That's not something we've tackled to date.

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [32]

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I've still got some more. So there's a really long tail of small private companies that are sort of trying to get into it. Have you seen any change in behavior there?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [33]

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Getting into guarantor lending?

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [34]

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Yes.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [35]

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Yes. Not that it has impacted us to a particular extent. I think the bigger market dynamics that we're seeing are the kind of the significant pressure that has been on short term, high-cost lending and the number of operators in that space that have now exited the market. I mean that's had a flow-through into a little bit of disruption in the broker market and how they're marketing to customers. So I think from a demand point of view, we're not seeing particular kind of competitive dynamics changing in our part of the market and our product. But I think there are bigger kind of market changes that are happening currently.

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [36]

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Okay. I've just got 2 more. If I was going to be bearish, I'd say the fact that you guys are talking about new products is a bit weird, given where the share price is, given there's still quite a lot to do. So if I wanted to be bearish, I'd say, well, look, maybe they're saying -- they're seeing lower growth coming down the line, the economics aren't as good, maybe there's more competition, although you said that's not really the case. So okay. You guys have to think much longer term than we do. But why talk about new products when there's so much still to do on the existing stuff?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [37]

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It's not like you to be bearish, Anand. But I think the core economics of the product are excellent, right? I think the challenge for us is part of it is around strategy, part of it is about making the most of what you've got. And if I look at the assets that we've got as a business, there are opportunity to use some of those assets to a greater extent, leverage them, right? And so things talked about were the brand. We've got an excellent brand, high levels of awareness. We've got operations that, yes, we've got some challenges in the short term, so we're going to focus on those. But I think we've got an understanding of the customer, got credit decisioning team that really understand this part of the market better than anybody else. And we've -- and therefore, I think we've got a great opportunity to continue to grow. We have positioned growth in the medium term, [going into] the end of the year, it's kind of reasonably flat. I would like to assume that begins to pick up from a guarantor side. And therefore, we continue to be confident in the strength of the guarantor model itself.

But we can't keep on growing guarantor business forever, right? It is but one product in this broader alternative finance space. And my view is I'm thinking 3 to 5 years, right? So I am having to think a little bit further out. I'm beginning to think: What can we do in the future to continue to grow the business at some of the significant rates of growth that we've seen in the past? So I think it's about options, right? It's all about giving yourself options, yes.

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Anand Dhananjay Date, HSBC, Research Division - UK MidCap Equity Analyst [38]

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And then just a very last one, Nick. I think you were saying that in the first half, we can expect something on the other areas from the FCA. Would you be willing to sort of put your name against, these are things that are likely to happen, that we would not then be surprised by because you've already said it?

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Nicholas Beal, Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer [39]

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That's a...

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [40]

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Have you got your -- yes, you're ready to [certify].

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Nicholas Beal, Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer [41]

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Absolutely. So in terms of those 3 things, I think we know where the FCA is going in terms of vulnerability. They published some draft guidance in the summer. They're doing their cost-benefit analysis at the moment before they are likely to publish that as final guidance.

In terms of affordability, I think what we've seen in terms of the direction of travel from the FCA since they took over in 2014 is they're continuing to step up the bar, and we're continuing to keep ahead of that. I mentioned open banking, and we're using that with some of our customers today, and I suspect we'll use it more. And that would be part of the expectation going forward, but it's not an entire solution.

And in terms of relending, I don't think there's going to be a prohibition on relending, but I think the FCA are going to expect people to do a sort of additional level of check before relending to customers. And the fact that we've made -- we pulled back last quarter, that's part of us keeping ahead of where we think the regulations are going.

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [42]

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That's the key, Anand. Just trying to (inaudible) listening harder to our regulators. Even if they don't ask us to do things, we're trying to be a step ahead. So we believe that we are making good progress even before they come to us.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [43]

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Okay.

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Mark Thomas, Hardman & Co. - Analyst [44]

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Okay. So it's Mark again. I suspect this will be one for the FD. We're getting a lot more attention on the assumptions which are going into IFRS 9, and you obviously gave us a disclosure on the probability weightings. Could you tell us what the stress sensitivity is? So is, for example, your downside scenario -- you have 2 downside scenarios. Yes, does one of them have provisions doubling. The other has provisions quadrupling. Can you just give us a sense on the downside scenario as to how much the provisions increase compared to your base?

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [45]

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We believe we've been very conservative already. So we said that in Q1 that we have increased the probability of a base scenario from 50% to 40%, which means that we've increased the downside scenarios by 10 points. And we've kept that despite -- we believe there's going to be some light at the end of this tunnel, right, in the next couple of months. And so we have maintained -- although very conservative scenario in our impairment provision assumption.

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Mark Thomas, Hardman & Co. - Analyst [46]

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Can you give an indication of the (inaudible) of the surface scenarios compared to the base?

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [47]

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I'm not sure whether it's -- we've disclosed that publicly or not. So I'm sorry.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [48]

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Okay. Any more questions in the room? Questions on the phone?

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Operator [49]

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We have a question on the line from Mark Watts from Banca IMI.

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Mark Watts;Banca IMI, [50]

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I was just wondering, on the customer complaints slide, Slide 15, I know it -- there was a number mentioned of 20.8%. Can you just clarify what that is in relation to -- just the line's a little bit buzzy.

Second question relates to Stage 3 provisioning and what you guys have been talking out there. I know some of your peers have been mentioning that area being potentially one with a bit more profitability in terms of repayment plans. Do you guys see any kind of increased recovery rates amongst the Stage 3 claimant?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [51]

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Nayan, first -- yes.

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [52]

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First question, I'm not sure. So we have said that our cost-to-income ratio is 20.8% without complaints. And with complaints, it's 24.8% for the quarter.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [53]

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28.4%.

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [54]

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28.4%, sorry. So that's probably what you've heard. It's the total -- operating cost ratio versus total cost-to-income ratio. Stage 3 provision, absolutely, you're right. So we are focusing on improving our collection activities across all stages of collections. We are focused on prime arrears. We're focusing on pre-write-off, 2-plus down. And we are focusing on recoveries post write-off to a big extent. So we've done debt sales. We are doing spot placements, et cetera. And we -- you're right there, we are focusing on that because there's value to be obtained from the -- from that portfolio.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [55]

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Thanks, Mark. Any other questions on the line?

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Operator [56]

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We do have some further questions. Our next one is from [Raj Patel] from Blue Bay.

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Unidentified Analyst, [57]

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The first one is on complaints again. Could you give us an idea, is there maybe 1 or 2 specific issues which account for the vast majority of the [trends] you've seen? And if so, are those issues ones that you're able to advance such that you can effectively eliminate that going forward? And if so, what's the timetable in which that can be done? That's the first question.

And the second question is just to clarify the accounting (inaudible) on the provisions. You're not looking forward to a certain number of months or certain number of years. This is the entire estimated provisions that you expect on your current loan book, is that right?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [58]

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Right. So just take a couple of the -- I'll do my best to answer those questions, and Nayan can add anything that he thinks are worth adding.

The -- there is one area of complaints that would be -- represent the largest specific reason around complaints themselves, and that would be around the lending decision. And therefore, that's the thing we've been focusing hardest on. We are -- we've -- as I said before, we've been analyzing the complaints stack fairly intensively and trying to understand if there are things that we need to learn from and flow back into our forward-looking lending decisions. So that is current.

Just to be clear, the provision that we've taken is a combination of things that we have seen, complaints that we've already received and specific and we know about.

The second part of the provision is an allowance for a portion of complaints that we might see in the future. And that's really been worked through on the basis of where we see our risk appetite moving forward. So just to be clear, it isn't the entire forward-looking book of complaints.

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [59]

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And we have not disclosed the periods.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [60]

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Any other questions on the phone?

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Operator [61]

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Please go ahead.

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Unidentified Analyst, [62]

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Just one question. You said -- you mentioned -- and you mentioned that before that you were testing -- that you're going to be testing differentiated rates over the coming months. Can you give us any idea of what that might do to your rev and margin? And just give us any kind of steer for what that might consider. We've been trying to calculate what that might do to your NIM.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [63]

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Yes. I mean I think the first thing to say is that we're going to be testing this quite intensively before we kind of roll anything out. And so we would want to understand the elasticities involved, the trade-off between price and yield versus any volume uplift before we do anything. And therefore, yes, from a testing point of view, impact on the economics of the business will be relatively insignificant. And therefore, I wouldn't want to guide on that. Once we've got a better, clearer idea of that tradeoff, we'd be happy to share that with you.

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Operator [64]

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Our next question today comes from [Alex Newhagen] from Goldman Sachs.

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Unidentified Analyst, [65]

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The first one I had was just on the percent of your loan book which is overdue. It's now at, I think, 14.4% of your gross loan book is overdue. That's doubled in 2 years. How do you see that developing, I guess, maybe a year from now? The 14.5% to me is a big number. And I just wonder -- I know you're changing some of your collection methods. But is there anything going on where the consumer is just less able to pay as well? That's my first one.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [66]

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Yes. I mean I think it kind of comes back to a conversation that we've already had around collections and impairment levels. We have seen the number of customers entering arrears kind of increase. And as you kind of rightly point out, some of the trends have been reasonably marked. Therefore, I think that's why it's so fundamental that we get the collections strategy right, we get operations back on track. As I've already mentioned, I think we're seeing kind of more customers from across the different scorecards entering into arrears. And for me, that means that we've got to focus really hard on the operational side.

I think in terms of time lines, I talked about this not being a quick fix. It will take some time to kind of turn around. A big part of the answer lies in the -- in additional headcount and releasing some of that capacity constraint -- some of those capacity constraints that we've seen. I think we're starting to kind of -- we would like to see some green shoots sooner rather than later. But as I said before, we're yet to guide on next year. But right now, our best forward look is the guidance that we've given to the end of this year.

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Unidentified Analyst, [67]

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Great. And then just my other 2. Well, just on the FCA, what can we expect? The line has been a bit fuzzy, so it's been hard to hear what's the calendar there.

And then the second one on your moving into new products. What gives you confidence that you'll be able to compete there? I mean, you've always prided yourself being at the 50%, roughly, APR mark and a simple product, one fee, et cetera. And now you're going to go down and compete with other lenders. How are you going to do better than they are or they're currently doing? How do you think about that?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [68]

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Yes. Thanks, Alex. I'll let Nick answer the point, again, probably on the FCA, what can we expect?

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Nicholas Beal, Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer [69]

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So in terms of the FCA, I think there's 3 key things they're looking at across a wide range of supervised firms. So that's both across the high and mid-cost credit sector. Affordability is clearly one of their areas of focus alongside repeat lending. And then something that I think is being focused on across a range of regulators, not just in financial services but vulnerable customers, so people like Ofcom, et cetera, are looking at this, too, but the FCA have a real focus on the needs of vulnerable customers and ensuring that firms treat vulnerable customers fairly.

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Unidentified Analyst, [70]

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I meant more to the dates. When are they going to be publishing things for us to read?

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Nicholas Beal, Amigo Holdings PLC - Chief Regulatory & Public Affairs Officer [71]

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The FCA are never very good at giving dates looking ahead. I think probably, most of these are outlined for spring next year, but spring can be a fairly wide season.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [72]

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Yes. I mean, it's hard to get firm, definitive time lines out of the FCA as much as I think you'd like to hear them. We would, too, but I think we just need to kind of be patient, and we'll hear when we hear.

The -- from a product point of view, what gives us the confidence to compete? We do have a very simple product. But just to give you an example of the sorts of things that I think put us in a competitive advantage, we get a very significant number of leads coming into our business. We get a very significant number of those leads signing applications for a loan with Amigo. One of the most significant areas of fallout is finding a guarantor, as an example. We see a significant drop when customers are asked to find a guarantor. We know that we could, for example, serve that customer with a unsecured product of some kind, if we got the pricing right and we got the underwriting correct. So that is -- this is a good example of the way in which we can leverage the brand awareness, the volume of leads that we get into the business to provide credit to customers that we know want it. We've got some excellent underwriting credit decisioning analytics, and I think leveraging that in the future will give us opportunity.

Again, I'm not saying that we absolutely need to do it. I would like to test it because I look at it, I think it's a great opportunity. Go back to Anand's point. In a world where we've got 80% guarantor -- of 80% of the guarantor product in this space, if we want to grow -- we can continue to try and grow that guarantor product, but there's also great opportunities, I think, in those adjacent products, particularly as people come out of (inaudible).

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Unidentified Analyst, [73]

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I mean are these low-priced products -- are they an opportunity for you to keep up the repeat borrowing where you just say, look, you're a good borrower, why don't you borrow from us in the future just at a lower rate?

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [74]

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I think there's -- it's worth giving some consideration to the customer life cycle through different products. And a guarantor product might be the right product for a customer at a single point in time. They might take a product with us. For example, a guarantor might suit them for a period of time, and they might come out of that looking for an unsecured product. That might be an area where we can help them. So if you think about the same customer with different needs, at different times, there's a great opportunity for us to kind of play more of a role in that customer's kind of financial life.

Okay. Thanks, Alex. Any more on the phone?

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Operator [75]

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Our next question today comes from Alex Wright from Apollo.

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Alexander B. Wright, Apollo Global Management, Inc. - MD of Credit [76]

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I've got 3 questions. The first one is just wondering what kind of complaints provision you're expecting for the full year 2020.

Second question is whether you intend to increase your ABS capacity further. I think you're almost at GBP 300 million drawn, which is the size of the facility. So wondering if you have any intention to increase that further.

The third question is whether the cost of your ABS financing has increased or whether you expect it to increase post the recent profit warning.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [77]

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Nayan? Yes.

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Nayan Vithaldas Kisnadwala, Amigo Holdings PLC - CFO & Executive Director [78]

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The complaints provision, we've said that with the FOS backlog unwinding, we expect to have a revert to a more normalized, lower uphold rates and reduced average redress. We're ending the half year with GBP 7.5 million provision, so -- which we believe is -- addresses complaints we have in the pipeline, plus an allowance for expected valid future complaints related to certain existing loans based on our risk appetite. So that's what we have stated. So we -- it's hard to predict or forecast that. But we believe that at end of half year, we are -- we have provided for what we know -- based on what we know.

In terms of ABS capacity, so I've said we always want to look at our funding portfolio. We want to ensure that we keep it diversified from a tenor, from a counterparty, from a risk perspective. And we will look at all options in front of us, especially with the bond becoming callable in spring of next year. But there is room to do that within the ABS itself, but we want to look at the broader portfolio, too, at the same time.

I wouldn't want to disclose cost of ABS for commercial reasons.

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Hamish S. Paton, Amigo Holdings PLC - CEO & Executive Director [79]

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Okay. Brilliant. Thank you. No, I don't think there are any more questions on the phone. So I just want to say thanks, everyone, for listening. Thanks for attending here today in the stock exchange. Have a good day. Thank you.