Good morning or good afternoon, all. Welcome to the Amigo full year 2023 financial results call. My name is Adam, and I'll be your operator for today. If you'd like to ask a question at the Q&A portion of today's call, you may do so by pressing star followed by 1 on your telephone keypad. I will now hand the floor over to CEO, Danny Malone, to begin. Danny, please go ahead when you are ready.
Good afternoon. Thank you for joining us at short notice for Amigo Holdings PLC full year results for the year ended 31st of March, 2023. I am Danny Malone, Amigo's Chief Executive Officer, and with me today is Kerry Penfold, our Chief Financial Officer, as well as our Chair, Jonathan Roe. These results come at a very sad time for Amigo. Despite the hard work and dedication of all the team here, we were unable to raise sufficient capital to take the business forward. The business, as per the conditions of our court-sanctioned Scheme of Arrangement, is therefore in the process of being wind down. I will give more detail on how we reached this position and the wind down process in a moment. First, I'll provide a summary of the key business and financial headlines for the financial year before Kerry takes you through our financial position.
We will then open the call to questions. Let's look first at the business headlines on slide 5 of the presentation. At the end of March 2023, the board concluded that in the light of difficult market conditions, they did not expect to be able to raise sufficient funds to meet the conditions of the Preferred Solution and fund a sustainable business for the future by the scheme deadline of 26th of May, 2023. The decision was therefore taken to switch the scheme to the Fallback Solution. As required under the Fallback Solution, all lending was stopped with immediate effect, and an orderly solvent wind down was commenced and is ongoing. As a result, the board no longer considers Amigo to be a going concern. We continue to collect both the legacy Amigo and RewardRate loan books.
At the same time, we are pursuing options to sell both loan books. We expect the collection or sale of both books to be completed by early 2024. During the wind down process, it will be important to retain key roles and functions to support our customers, complete the Scheme, and manage the wind down itself. However, in order to maximize returns to creditors, we will need to progressively reduce costs and will sadly need to make redundancies. This process has already started and will continue over the coming financial year. In February 2023, we were grateful to the FCA for concluding their investigation into Amigo's past practices and recognizing that any financial penalty would impact our ability to redress Scheme creditors. The penalty was therefore reduced to nil. We have also now been removed from the FCA's watch list.
It is with deep regret that we have not to date been able to find a way to move the business forward, and that under the Fallback Solution, there will be no residual value for shareholders. As we announced last month, on ninth of June, Amigo entered into an agreement with shareholder Michael Fleming for him to seek investment to allow the business to continue. I will go into more detail shortly. The board considers there to be only a low likelihood of success. In May, as part of the wind down strategy, I resigned as CEO and will leave the business in November of this year. I joined Amigo last year as I could see the potential of the new proposition with RewardRate in a market which is crying out for supply.
Raising capital, particularly in this sector, and against one of the most challenging economic backdrops for some time, has not been possible. I would like to thank our teams who have shown remarkable resilience and commitment through this period and who continue to do so. Turning to the financial headlines on slide 6. As I've said, the wind down of Amigo will be an orderly process with the business remaining solvent. The net loan book has reduced by 67% year-over-year to GBP 45.4 million. Collections have remained robust despite the increased cost of living and continued rise in delinquency as the book runs off. This robust performance has been supported by strong post-charge-off recoveries. The complaints provision increased to GBP 195.9 million, an increase of 8.9%. This reflects both the large final number of...
the larger final number of claims received and the increase in upload rate as the claims are processed. There is an associated cost to the P&L of GBP 19.1 million. We therefore posted a loss before tax of GBP 34.7 million. The remaining GBP 50 million of senior secured notes were repaid in full in March 2023, resulting in a net interest saving. Our cash position remains strong, with net unrestricted cash at year-end of GBP 62.4 million, driven by continued collections and limited originations over the period. Current unrestricted cash is over GBP 121 million, and current restricted cash is over GBP 62 million. All net cash, however, is committed to scheme creditors. I will now hand over to Kerry, who will go through the numbers in more detail.
Thank you, Danny. Let's look first at the P&L. With revenue continuing to decline as the loan book runs off and an increase in the complaints charge owing to the higher volumes and expected upload rate, Amigo has reported a loss after tax for the year of GBP 34.8 million. Excluding exceptional items, the adjusted loss after tax was GBP 9.3 million. We continue to focus on cost efficiency. The increase in operating expenses over the period reflects the investment made in the development of the RewardRate product, as well as redundancy costs as the business is wound down. On the next slide, on the balance sheet, you can see that Amigo had net assets at year-end of GBP 12.6 million.
Substantially all of the shareholders' equity will be absorbed by the cost of the wind down, and any residual value is committed to scheme creditors. The complaints provision has increased from last year, driven, as I have said, by the larger known final volumes and an increase in the expected uphold rate. With over 90% of claims now processed, we have far greater visibility on this. As Danny has said, all remaining bonds were repaid in March. Let's move to the next slide to discuss our cash position. With no remaining debt, net unrestricted cash was GBP 62.4 million at March 31, 2023. The year-on-year movement reflects the payment of the GBP 97 million scheme contribution into a scheme fund and the repayment of the senior secured notes, offset by continued strong collections.
At year-end, restricted cash was GBP 107.2 million, which included the scheme fund as well as other balances held on trust for certain claimants. I will now set out briefly how Amigo will fund the solvent wind down of the business. Post year-end, in line with the Fallback Solution scheme conditions, GBP 51 million of the GBP 97 million scheme fund was repaid to Amigo. That is reclassified from restricted to unrestricted cash. This represents the estimated cost of the wind down, inclusive of further set-off refunds due to scheme claimants. Each month, Amigo will make payments back into the scheme fund, equal to collections from the loan book and any debt sales, less additional amounts, if any, required to provide for further costs, liabilities or expenses associated with the wind down.
In doing this, we expect the final cash fund for scheme creditors to return to approximately GBP 97 million. There will be no residual cash in the Amigo business. With that, thank you, and I will now hand back to Danny.
Thanks, Kerry. I want to spend a bit of time now explaining the events that led to the decision to switch the scheme to the Fallback Solution. It was not a decision that was taken lightly, nor was it taken before all other possibilities had been explored. The scheme that was sanctioned in May 2022 had two components, the Preferred Solution and the Fallback Solution. The Preferred Solution was conditional on Amigo returning to lending and raising equity via a minimum of 19 to 1 capital raise. We met the first condition in October last year, following the FCA granting permission for pilot lending to go ahead. We were not able to meet the second.
With the help of our financial advisors, we approached over 200 private and institutional investors to support the fund raise of GBP 45 million, which would provide a GBP 15 million contribution to scheme creditors and the working capital we needed to continue as a going concern. As I said earlier, this was at a time of increasingly difficult economic conditions, which was impacting both the capital markets and the outlook for consumer credit. We did not secure sufficient indications of interest, with investors citing affordability challenges for U.K. households, the regulatory environment, and also the significant upfront payment of GBP 15 million to scheme creditors. Without investors who were prepared to underwrite a capital raise, we were unable to produce an unqualified working capital statement in a prospectus. Without a prospectus, we were unable to solicit investment from our existing shareholders.
This, I know, has been frustrating, and we looked at other ways in which we could gauge what level of investment our shareholders might be able to provide. We explored the idea of a survey, but with circa 8,000 private individual investors, it would have been impossible to verify the responses. The indication that we were given by market experts was that existing shareholders might contribute around GBP 5 million to the raise. This could exclude one shareholder who made a significant offer, which had been included in the GBP 11 million of indicated interest. It was the best estimate that we could obtain and was not sufficient to continue the process. Once we had done all we could to satisfy the raise condition, we looked at how we could reduce or remove the GBP 15 million required contribution to the scheme.
This could only be done by pursuing an entirely new Scheme. We took legal advice from multiple advisors, including from King's Counsel, on how this might be possible. We would have needed to secure creditor approval and non-objection from the FCA and High Court sanction, and secure all this before the end of May 2023, when the existing Scheme would have switched automatically to the Fallback Solution. King's Counsel, in particular, was very clear in his assessment that we would not secure a High Court sanction for a new Scheme, which would remove the GBP 15 million Scheme contribution. We also had to consider the additional cost of a new Scheme and the feasibility that a new capital raise, albeit for a lower amount, was possible given the ongoing challenging market conditions and negative sentiment around the non-standard lending sector....
Bearing in mind also, that despite potential demand for a RewardRate product, the business model was not yet proven, and affordability challenges for U.K. households meant that most customer applications during the pilot phase were rejected. The board reluctantly concluded that given the associated costs, pursuing a new Scheme and subsequent capital raise had such a low chance of success, that it could not be in the best interest of creditors to do so. As a result, on the 23rd of March, we announced that the Scheme would switch to the Fallback Solution, and we commenced the wind down of the business. As I said at the beginning of this presentation, we have been in communication with shareholder Michael Fleming, and on the 9th of June, at his request, we entered into an exclusivity agreement with him to seek investment that might enable the business to continue.
The exclusivity agreement expires on the 6th of September, 2023. During this time, the steps that we need to take to wind down the business must continue, and the agreement will not stop the board from acting on any transaction governed by The Takeover Code. We are grateful to Mr. Fleming's continued interest in the future of Amigo, and the board will continue to leave no stone unturned in its efforts to return value to our shareholders who have supported the business. However, we must be very clear that establishing a new business and potentially creating value for shareholders in the longer term has significant execution risks and will require regulatory approval. The board believes there to be a low likelihood of successful conclusion to any discussions arising from this agreement.
Moving to the next slide, I'd like to go through the key elements of the wind down process, which is progressing in line with our expectations. It is expected to take approximately 12 months from when it was initiated, and therefore, to be substantively complete by March 2024. This allows for the completion of the scheme redress process. With all employees being placed at risk of redundancy immediately following the wind down announcement, we were pleased to be able to minimize the first round of redundancies by reducing scheme outsourcing requirements and redeploying internally. Redundancies will continue in a controlled manner over the remaining wind down period. All non-critical contracts have been terminated or notice given. In line with the wind down strategy, we have sought buyers for both the existing Amigo and RewardRate loan books, and we are engaging with interested parties.
The board currently intends to ask shareholders to vote at the AGM in September on proposals to delist the PLC shares, unless discussions with potential investors progress towards a successful conclusion. Before I finish, I'll give a brief summary of how the scheme redress process is progressing. We have both outsourced and insourced resource in place to process the almost 210,000 claims received as part of the scheme. This is done via both an automated process and manual checking. To date, we have processed over 90% of all claims received and have upheld just over 80% of those. Approximately 20,000 decisions have been relayed to claimants, of which less than 4% have been appealed, where the independent scheme adjudicator has reviewed cases. They have agreed with the outcome reached by Amigo in all cases.
We expect the first redress payment to be made in late 2023, the final payments made by the end of 2024. As Kerry described, GBP 51 million of the GBP 97 million payment to the scheme fund was repaid to Amigo as part of the Fallback Solution. The final cash redress amount, which we expect will return close to the original GBP 97 million, will be subject to cash recoveries from the wind down. In all eventualities, all net assets of the existing businesses are committed to scheme creditors. In summary, we, as a board, have left no stone unturned as we sought to provide the best outcome for all of our stakeholders. We are deeply sorry that we have to date been unable to raise the funds to continue, and for the impact this has had on our shareholders and employees.
Our priority now is to complete the orderly wind down of the group, to maximize returns for Scheme creditors, and to provide support for our customers and employees as we work through the process. Thank you for listening. I will now hand you back to the operator to open the call for questions.
Thank you. As a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad to enter the queue. When preparing to ask your question, please ensure your headset is fully plugged in and unmuted locally. That's star
followed by one on your telephone keypad. Final reminder, that's star one to ask a question over the phones today. We have no telephone questions at this time, I'll hand the call over to Kate Patrick for webcast questions.
Thanks, Adam. We have no questions either on the webcast. I think if there's no questions, we can hand back to Danny.
Okay, thank you everyone, for listening. On behalf of the board, I'd like to thank you for your support with historic and ongoing. I will now hand you back to the operator.
This concludes today's call. Thank you all very much for your attendance. You may now disconnect your lines.